Recent Sales and Use Tax Developments
Crown Motors of Charlevoix, Ltd. v Treasury Department. The Michigan
Tax Tribunal recently ruled that any motor vehicle that a dealer purchases
with the intention to resell may be used by the dealership for any purpose
and will not be subject to use tax. This is contrary to the position of the
Michigan Treasury Department which has consistently taxed dealers at the
rate of 2 ½% plus $30.00 per month, times 6% for miles in excess of 1,000
miles. This decision is being appealed to the Michigan Court of Appeals.
If upheld by the Court of Appeals, vehicles in inventory would be exempt
from use tax and dealers may be entitled to a refund for the tax paid for
all open years.
This is a significant victory for GM dealers. If the
Supreme Court ruled that parts supplied as policy adjustments were subject
to sales tax GM dealers would be liable for sales tax on parts installed as
policy adjustments for the prior four years.