Michigan - Taxpayer may use compact election to compute business income tax 

July 14:  The Michigan Supreme Court today issued a taxpayer-favorable decision holding that the modified gross receipts tax is an income tax for purposes of the Multistate Tax Compact and that the taxpayer was entitled to use the compact’s elective three-factor apportionment formula to calculate its 2008 Michigan taxes. International Business Machines Corp. v. Department of Treasury, No. 146440 (Mich. July 14, 2014)

Read the Michigan Supreme Court’s 45-page decision [PDF 235 KB]

Summary

The Michigan Court of Appeals (in a November 2012 unpublished decision) held that a taxpayer could not elect to use the Multistate Tax Compact’s allocation and apportionment provisions in computing its Michigan Business Tax (MBT) liability. Read TaxNewsFlash-United States [PDF 294 KB].


The Michigan Supreme Court today reversed the Court of Appeals and held that the modified gross receipts tax is an income tax for purposes of the Multistate Tax Compact and that the taxpayer was entitled to use the compact’s elective three-factor apportionment formula to calculate its 2008 Michigan taxes.


A more detailed discussion (including implications) of this decision will be provided in a future edition of TaxNewsFlash-United States.




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