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### STATE OF MICHIGAN

COURT OF APPEALS

MJR GROUP, LLC,

Petitioner-Appellee, UNPUBLISHED December 29, 2016

v No. 329119 Tax Tribunal DEPARTMENT OF TREASURY, LC No. 00-441767

Respondent-Appellant.

Before: R ONAYNE K RAUSE , P.J., and O’C ONNELL and G LEICHER , JJ.

R ONAYNE K RAUSE , P.J. (dissenting)

I respectfully dissent. Far from supporting the determination of the Michigan Tax Tribunal (MTT), the evidence une quivocally establishes that pet itioner’s Vice President of Operations intended to pay any sales tax out of petitioner’s “bottom line,” but ma thematically proves that petitioner actually collected the sales tax from its customers. There appears to be no real doubt as to the facts themselves; rather, the MTT and the majority inexplicably ignore petitioner’s undisputed conduct in f avor of the expressed subje ctive beliefs of some of petitioner’s executives. The arithmetic is simple, straightfor ward, and, I would have thought, inarguable. I would reverse and remand for judgment in favor o f respondent.

The MTT observed that there was “vast documentation” explainin g how petitioner calculated the amount of tax it o wed, but none of it establishe d whether petitioner or the customers paid it. This, however, makes little sense, because the manner in which petitioner calculated the amount of tax owed does establish who paid it. The MTT noted that petitioner did not simply multiply its gross concession sales by 6% to compute the sales tax owed; rather, it applied an “in gross calculation” of dividing the gross sales b y 1.06 “to determine the gross concessions without sales tax ; then, the 6% sales tax was computed using this number” (emphasis in original). This is, quite simply, all we needed t o know.

To clarify, the sales tax rate i s 6%. Consequently, if an ite m is priced at $1.00, then $0.06 is owed in sales tax. If the customer pays this tax, the final cost to the customer would be $1.06, and the seller would retain total proceeds of the listed price of $1.00. If the seller pays this tax, then the final cost to the customer would be the $1.0 0 list price and the seller would be required to remit $0.06, leaving th e seller with total proceeds of $0.94. If the listed price includes sales tax paid by the customer , then the “true” price of the item would be approximately $0.9434, which is therefore the amount the seller should retain , the remainder being owed in-2- sales tax. Although the difference is less than one cent per d ollar, the practical significance is that if the listed price includes tax collected from the custom ers, the seller is required to remit less money in sales tax than if the listed price does not inclu de tax and the seller chooses to absorb the sales tax cost. Pet itioner’s calculations are consi stent with including tax in the price rather than absorbing it. Whether the listed prices were inten ded to include sales tax or whether the in gross calculation was a mistake, what matters is that pe titioner actually did collect, and thus owes, the sales tax. The majority misunderstands the impl ications of what petitioner’s records show.

In the absence of fraud, appell ate review of an MTT decision i s limited to misapplication of the law or adoption of a wrong principle. Briggs Tax Serv
, LLC v Detroit Pub Sch , 485 Mich 69, 75; 780 NW2d 753 (2010). I conclude that the MTT’s elevati on of petitioner’s intentions over its actions constituted the adoption of a wrong principle. Tax collected by mistake is still tax collected . It is abundantly clear that t hose responsible for setting pr ices and those responsible for processing the proceeds never adequately communicated and h ad no functional understanding of what the other was doing. It is unrefuted tha t petitioner’s management intended to pay the sales tax itself, but it is irrefutable tha t the tax was in fact ultimately paid by the customers, leaving petitioner with slightly more revenue af ter all was said and done, but precluding its right to a refund here.

By applying a wrong principle, the MTT committed an error of l aw in concluding that petitioner was entitled to a refund, because a refund would unj ustly enrich petitioner. MCL 205.73(4). Therefore, I would reverse the MTT’s judgment for p etitioner and remand for entry of judgment in favor of respondent.

/s/ Amy Ronayne Krause