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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UNPUBLISHED 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: RONAYNE KRAUSE, P.J., and O’CONNELL and GLEICHER, JJ. 

PER CURIAM. 

 Respondent, Department of Treasury (the Department), appeals as of right the 

determination of the Michigan Tax Tribunal (the Tribunal) that petitioner, MJR Group, LLC, 

(MJR) was entitled to a refund of the sales tax MJR remitted on nontaxable bottled water and 

prepackaged candy for tax years 2007 to 2010. We affirm. 

I. FACTUAL AND PROCEDURAL BACKGROUND 

 MJR owns and operates a chain of movie theaters in southeast Michigan, and its 

concession stands sell bottled water and prepackaged candy. MJR’s menu boards list the final 

transfer price paid by the customer and stated that “All Prices Include Sales Tax.” From at least 

1991 going forward, MJR calculated its owed sales tax by multiplying its gross sales by the sales 

tax quotient, regardless of the items sold. 

 During an investigation about reimbursing sales tax to a group of Girl Scouts, MJR 

discovered that bottled water and prepackaged candy are nontaxable items. It subsequently 

sought a refund of $409,760.05 in excess sales taxes paid between 2007 and 2010. The 

Department denied the refund, concluding that even had MJR erroneously collected sales tax, 

MCL 205.73 prohibited MJR from keeping the sales tax it had wrongfully collected from 

customers. MJR appealed the denial of that refund, asserting that MJR “did not pass the burden 

of the tax to the customer. Instead [MJR] bore the direct legal incidence of the tax . . . .” 

 The hearing referee recommended denying MJR’s refund request because, although 

bottled water and prepackaged candy were not subject to sales tax, a refund would unjustly 

enrich MJR under MCL 205.73(4). The referee concluded that MJR’s contention that the 

customers did not pay sales tax was “misguided” because MJR included sales tax in the cost of 

the items sold. The Department adopted the referee’s decision, and MJR appealed to the 
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Tribunal, asserting that the menu price was the final transfer price and it did not add sales tax to 

the menu prices. Both parties sought summary disposition under MCR 2.116(C)(10), and the 

Tribunal ruled in favor of the Department. 

 MJR appealed to this Court, which reversed and remanded. MJR Group LLC v Dep’t of 

Treasury, unpublished opinion per curiam of the Court of Appeals, issued February 25, 2014 

(Docket No. 312745). This Court concluded that summary disposition was improper because 

MJR presented evidence that it did not add sales tax to the menu items’ stated prices and, 

accepting that as true, MJR had not wrongfully collected any tax from its customers. Id. at 5. 

The panel further concluded that summary disposition in favor of MJR was improper because 

there was a factual question regarding whether MJR had, in fact, collected sales tax from its 

customers. Id. 

 On remand, the Tribunal held a full hearing regarding whether MJR or its customers paid 

the sales tax on the concession items. Dennis Redmer, MJR’s vice president of operations, 

testified that he changed the concessions item prices about a year after he began working for 

MJR. Redmer explained that he implemented a pricing system to get people through the 

concessions stand faster, and he stated that he did not consider sales tax when setting the prices; 

rather, Redmer considered sales tax a cost of doing business. Redmer stated that this was true 

whether the item was taxable, like popcorn, or nontaxable, like bottled water. 

 Donna Kondek, MJR’s controller, testified that sales tax was not charged to the customer 

above the price stated on the menu board. This conflicted with one of Kondek’s previous 

affidavits, in which she stated that sales tax was included in the prices that MJR charged its 

customers. Kimberly Knoll, a Department auditor, testified that based on how MJR’s software 

worked, she could not tell whether the prices for bottled water and packaged candy included 

sales tax or not because the software did not have transactional details. 

 Following the hearing, the Tribunal found that MJR had not considered sales tax when 

establishing its prices and that the sales tax ultimately came out of MJR’s profits. The Tribunal 

reasoned that Redmer’s testimony clarified the discrepancies in the documentation showing how 

tax was collected and the confusion in Kondek’s statements. It reasoned that Kondek’s belief 

that the concessions prices included sales tax was irrelevant because Redmer, not Kondek, set the 

concessions prices. Finally, it found that the Department had not rebutted Redmer’s testimony 

about the way MJR collected sales tax. Because Redmer testified that he did not include sales 

taxes when setting the prices for the menu board, the Tribunal concluded that MJR had not 

charged its customers sales tax and thus was not inappropriately keeping sales tax it had actually 

collected from customers. 

II. STANDARDS OF REVIEW 

 This Court’s review of a decision by the Tax Tribunal is limited. Mich Props, LLC v 

Meridian Twp, 491 Mich 518, 527; 817 NW2d 548 (2012). We must accept the Tax Tribunal’s 

factual findings if “competent, material, and substantial evidence on the record” supports them. 

Const 1963, art 6, § 28. See also Mich Props, 491 Mich at 527. Substantial evidence supports 

the Tax Tribunal’s findings if a reasonable person would accept the evidence as sufficient to 
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support the conclusion. Wayne Co v Mich State Tax Comm, 261 Mich App 174, 186-187; 682 

NW2d 100 (2004). Substantial evidence “may be substantially less than a preponderance.” Id. 

III. ANALYSIS 

 The Department contends the Tribunal improperly found that MJR did not in fact collect 

sales tax from its customers. We disagree. 

 The only question presented after this Court’s previous remand was the factual question 

of whether MJR had actually collected sales tax from its customers. MJR Group LLC, unpub op

at 5. At the hearing in this case, the parties presented the Tribunal with conflicting evidence on 

this point. Redmer—who was responsible for setting the prices on the concessions stand items—

testified that he did not consider sales tax when setting the prices of items but instead considered 

sales tax a cost of doing business. Kondek made conflicting assertions at different times: in her 

first affidavit, she stated that MJR did not collect additional sales tax above the amounts listed on 

the board, but in her second affidavit and testimony, she stated that MJR itself ultimately paid 

taxes on all the items, including bottled water and packaged candy. Finally, Knoll testified that 

she could not tell whether MJR’s prices on bottled water included sales tax or not because MJR’s 

software did not include transactional details. 

 A reasonable mind could accept as true Redmer’s statements that he, as the person who 

set the menu prices, did not include sales tax in those prices but rather considered tax an eventual 

cost of doing business. And a reasonable person could credit Kondek’s later testimony that MJR 

was the party ultimately responsible for paying taxes on all items sold, particularly when it made 

more sense in light of MJR’s accounting software. Because a reasonable person could conclude 

that MJR did not, in fact, collect sales tax from its customers, we conclude that competent, 

material, and substantial evidence supported the Tribunal’s decision. 

 Moreover, contrary to the assertions of the dissent, MJR’s financial records do not 

indisputably establish that MJR customers paid sales tax on concession items. Rather, taken as a 

whole, record evidence supports a conclusion that MJR charged round prices for concession 

items to speed up transactions and then separated out the sales tax it was required to remit to the 

Department from its net profit. The Tax Tribunal could find that during the years in question, 

MJR miscalculated its net profit by remitting sales tax for nontaxable items. Given our limited 

review, we cannot accept the dissent’s theory of this case. 

 We affirm. 

/s/ Peter D. O’Connell 

/s/ Elizabeth L. Gleicher