205.93. Rate; presumption, M.C.L.A. 205.93

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 M.C.L.A. 205.93 MICHIGAN COMPILED LAWS ANNOTATED CHAPTER 205. TAXATION USE TAX ACT

205.93. Rate; presumption Sec. 3. (1) Levy; presumption.There is levied upon and there shall be collected from every person in this state a specific tax for the privilege of using, storing, or consuming tangible personal property in this state, which tax shall be equal to 4% of the price of the property, or services specified in section 3a, 1 and to the tax there shall be added penalties and interest where applicable as provided in this act. For the purpose of the proper administration of this act and to prevent the evasion of the tax, it shall be presumed that tangible personal property purchased shall be subject to the tax if brought into the state within 90 days of the purchase date and shall be considered as acquired for storage, use, or other consumption in this state. (2) Vehicles, ORV's, mobile homes, aircraft, snowmobiles, watercraft; collection of tax, price tax base. The tax imposed by this section for the privilege of using, storing, or consuming a vehicle, ORV, mobile home, aircraft, snowmobile, or watercraft shall be collected prior to the transfer of the vehicle, ORV, mobile home, aircraft, snowmobile, or watercraft, except transfers to a licensed dealer or retailer for purposes of resale, that arises by reason of a transaction made by a person who does not transfer vehicles, ORV's, mobile homes, aircraft, snowmobiles, or watercraft in the ordinary course of his or her business done in this state. The tax on a vehicle, ORV, snowmobile, and a watercraft shall be collected by the secretary of state before the transfer of any vehicle, ORV, snowmobile, or watercraft registration. The tax on a mobile home shall be collected by the department of commerce, mobile home commission, or its agent before the transfer of the certificate of title. The tax on an aircraft shall be collected by the department of treasury. Notwithstanding any limitation contained in section 2, 2 the price tax base of any vehicle, ORV, mobile home, aircraft, snowmobile, or watercraft subject to taxation under this act, except as authorized by section 2(f) 3 on and after January 1, 1984 and until the effective date of this 1984 amendatory act, for a motor vehicle, trailer coach, or titled watercraft, shall be not less than its retail dollar value at the time of acquisition thereof as fixed pursuant to rules promulgated by the department. (3) Nontaxable transfers.No use tax shall be payable in cases of transfer or purchase: (a) When the transferee or purchaser is the spouse, mother, father, brother, sister, or child of the transferor. (b) When the transfer is a gift to a beneficiary in the administration of an estate. (c) When a vehicle, ORV, mobile home, aircraft, snowmobile, or watercraft which has once been subjected to the Michigan sales or use tax is transferred in connection with the organization, reorganization, dissolution, or partial liquidation of an incorporated or unincorporated business and the beneficial ownership is not changed. (4) Services, information or records, furnished department of revenue.The department may utilize the services, information, or records of any other department or agency of the state government in the performance of its duties under this act, and other departments or agencies of the state government are required to furnish those services, information, or records upon the request of the department. 1986 Main Volume Credit(s) Amended by P.A.1982, No. 219, § 1, Eff. Jan. 1, 1984; P.A.1982, No. 478, § 1, Imd. Eff. Dec. 30; P.A.1984, No. 178, § 1, Imd. Eff. July 3.

1 Section 205.93a.

2 Section 205.92.

3 Section 205.92(f).205.93. Rate; presumption, M.C.L.A. 205.93

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 HISTORICAL NOTES

HISTORICAL AND STATUTORY NOTES 1986 Main Volume Historical and Statutory Notes

Source: P.A.1937, No. 94, § 3, Eff. Oct. 29. C.L.1948, § 205.93. P.A.1949, No. 273, § 1, Eff. July 1. P.A.1953, No. 211, § 1, Eff. Oct. 2. P.A.1957, No. 167, § 1, Imd. Eff. May 29. P.A.1959, No. 263, § 1, Eff. Sept. 1. P.A.1959, No. 272, § 1, Eff. Jan. 1, 1960. P.A.1960, 2nd Ex.Sess., No. 2, § 1, Eff. Jan. 1, 1961. P.A.1962, No. 219, § 1, Eff. July 1. P.A.1964, No. 48, § 1, Eff. Aug. 28. C.L.1970, § 205.93. P.A.1971, No. 51, § 1, Eff. Sept. 1. As appearing in the Compiled Laws of 1948, this section read: “There is hereby levied upon and there shall be collected from every person in this state a specific tax for the privilege of using, storing or consuming tangible personal property in this state after June 30, 1937, which tax shall be equal to 3 per cent of the price of such property. For the purpose of the proper administration of this act and to prevent the evasion of the tax hereby levied, it shall be presumed that tangible personal property purchased on or after June 30, 1937 by any person for delivery in this state is purchased for storage, use or other consumption in this state.” The 1949 amendment, at the end of the first sentence, added “and to such tax there shall be added penalties and interest where applicable as hereinafter provided”. For effective date provisions of P.A.1949, No. 273, see the Historical Note following § 205.92. The 1953 amendment added the second and third paragraphs to read: “The tax imposed by this section for the privilege of using, storing or consuming a motor vehicle shall be collected prior to the transfer of any motor vehicle title, except transfers to a licensed dealer for purposes of resale, that arises by reason of a transaction made by a person who does not transfer motor vehicles in the ordinary course of his business done in this state. Notwithstanding any limitation contained in section 2 of this act, the price of any motor vehicle subject to taxation hereunder shall be measured by the value in money thereof as fixed pursuant to rules and regulations promulgated by the department: Provided, That no value in money shall be established when the transaction is made by reason of a bona fide gift including transfer as a gift to a beneficiary in the administration of an estate or when the transaction is a sale by a public official in the administration or enforcement of law. “The department is hereby authorized to utilize the services, information or records of any other department or agency of the state government in the performance of its duties hereunder, and other departments or agencies of the state government are required to furnish such services, information or records upon the request of the department.” The 1957 amendment, in the second paragraph, substituted “vehicle” for “motor vehicle” throughout. P.A.1959, No. 263, in the first paragraph, in the first sentence, deleted “after June 30, 1937,” following “in this state” and substituted “which tax shall be equal to 4% of the price of such property, except that the tax shall equal only 1% of the price of205.93. Rate; presumption, M.C.L.A. 205.93

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3 such property when acquired in a transaction on which a tax is payable under the provisions of Act No. 167 of the Public Acts of 1933, as amended, being sections 205.51 to 205.78 of the Compiled Laws of 1948” for “which tax shall be equal to 3 per cent of the price of such property,”, and, in the second sentence deleted “on or after June 30, 1937” following “property purchased”. For effective date provisions of P.A.1959, No. 263, see the Historical Note following § 205.92. P.A.1959, No. 272, in the first sentence of the first paragraph, substituted “which tax shall be equal to 3% of the price of such property, except that the tax shall equal 4% for services specified in subsection (b) of section 3a of this act” for “which tax shall be equal to 4% of the price of such property, except that the tax shall equal only 1% of the price of such property when acquired in a transaction on which a tax is payable under the provisions of Act No. 167 of the Public Acts of 1933, as amended, being sections 205.51 to 205.78 of the Compiled Laws of 1948”. P.A.1959, No. 272, §§ 2 and 3 provided: “Section 2. The provisions of this amendatory act shall become effective January 1, 1960. “Section 3. This amendatory act shall not take effect unless House Bill No. 648 of the regular session of 1959, relating to the increase in corporation franchise fees, is enacted into law and becomes effective.” House Bill No. 648 was enacted as P.A.1959, No. 276, was ordered to take immediate effect and approved Dec. 22, 1959. P.A.1959, No. 272, was ordered to take immediate effect, and was approved Dec. 22, 1959. The 1960 amendment, in the first sentence of the first paragraph, substituted “which tax shall be equal to 4% of the price of such property, or services specified in section 3a of this act” for “which tax shall be equal to 3% of the price of such property, except that the tax shall equal 4% for services specified in subsection (b) of section 3a of this act”. P.A.1960, 2nd Ex.Sess., No. 2, § 2, provided that the act should take effect Jan. 1, 1961. It was ordered to take immediate effect, and approved Dec. 13, 1960.

The 1962 amendment rewrote this section to read: “There is hereby levied upon and there shall be collected from every person in this state a specific tax for the privilege of using, storing or consuming tangible personal property in this state, which tax shall be equal to 4% of the price of such property, or services specified in section 3a of this act, and to such tax there shall be added penalties and interest where applicable as hereinafter provided. For the purpose of the proper administration of this act and to prevent the evasion of the tax hereby levied, it shall be presumed that tangible personal property purchased shall be subject to the tax if brought into the state within 90 days of the purchase date and shall be considered as acquired for storage, use or other consumption in this state. “The tax imposed by this section for the privilege of using, storing or consuming a vehicle shall be collected by the secretary of state prior to the transfer of any vehicle title, except transfers to a licensed dealer for purposes of resale, that arises by reason of a transaction made by a person who does not transfer vehicles in the ordinary course of his business done in this state. Notwithstanding any limitation contained in section 2 of this act, the price of any vehicle subject to taxation hereunder shall be not less than its retail dollar value at the time of purchase thereof as fixed pursuant to rules and regulations promulgated by the department. “No use tax shall be payable in cases of transfer or purchase: “(a) When the transferee or purchaser is the spouse, mother, father, brother, sister or child of the transferor. “(b) When the transfer is a gift to a beneficiary in the administration of an estate.205.93. Rate; presumption, M.C.L.A. 205.93

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4 “(c) When a motor vehicle which has once been subjected to the Michigan sales or use tax is transferred in connection with the organization, reorganization, dissolution or partial liquidation of an incorporated or unincorporated business wherein the beneficial ownership is not changed. “The department is hereby authorized to utilize the services, information or records of any other department or agency of the state government in the performance of its duties hereunder, and other departments or agencies of the state government are required to furnish such services, information or records upon the request of the department.” P.A.1962, No. 219, §§ 2 and 3 provided: “Section 2. This amendatory act shall take effect July 1, 1962. “Section 3. This amendatory act shall not take effect unless House Bills Nos. 187, 315, 318, 375 and 724 of the 1962 regular session are enacted into law and become effective.” House Bills Nos. 187, 315, 318, 375 and 724 were enacted as P.A.1962, Nos. 217, 215, 218, 216 and 220, respectively. P.A.1962, No. 219, was ordered to take immediate effect. The enrolled act was presented to the Governor on June 14, 1962 and became a law without his approval upon the expiration of 10 days, Sundays excepted, after presentation. The 1964 amendment, in the second paragraph, added the second and third sentences and in each instance in the first and fourth sentences, following “vehicle”, inserted “aircraft or watercraft”; and in subd. (c) of the third paragraph, substituted “vehicle, aircraft or watercraft” for “motor vehicle”. The 1971 amendment inserted references to “snowmobile” in the second paragraph and subd. (c) of the third paragraph; in the second paragraph, substituted “department of treasury” for “department of revenue” and “time of acquisition” for “time of purchase”, and inserted “tax base”; and substituted “may” for “is hereby authorized to” in the fourth paragraph. P.A.1971, No. 51, § 2 provided that the act should take effect September 1, 1971. It was ordered to take immediate effect and was approved June 28, 1971. P.A.1980, No. 255, § 1, enacted an amendment to this section the effect of which was contingent upon Senate Joint Resolution X (Ballot Proposal C) of the 1980 regular session of the legislature becoming a part of the constitution, and also contingent upon other 1980 legislation. Ballot Proposal C was not approved by the voters at the November 4, 1980 election. P.A.1981, No. 22, § 1, enacted an amendment to this section the effect of which was contingent upon House Joint Resolution G (Ballot Proposal A) of the 81st Legislature becoming a part of the constitution. Ballot Proposal A was the not approved by the voters at the May 19, 1981 election. P.A.1982, No. 219, § 1, rewrote this section, which prior thereto read: “There is levied upon and there shall be collected from every person in this state a specific tax for the privilege of using, storing or consuming tangible personal property in this state, which tax shall be equal to 4% of the price of such property, or services specified in section 3a, and to such tax there shall be added penalties and interest where applicable as hereinafter provided. For the purpose of the proper administration of this act and to prevent the evasion of the tax, it shall be presumed that tangible personal property purchased shall be subject to the tax if brought into the state within 90 days of the purchase date and shall be considered as acquired for storage, use or other consumption in this state. “The tax imposed by this section for the privilege of using, storing or consuming a vehicle, aircraft, snowmobile or watercraft shall be collected prior to the transfer of any vehicle, aircraft, snowmobile or watercraft, except transfers to a licensed dealer or retailer for purposes of resale, that arises by reason of a transaction made by a person who does not transfer vehicles, aircraft,205.93. Rate; presumption, M.C.L.A. 205.93

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5 snowmobiles or watercraft in the ordinary course of his business done in this state. The tax on a vehicle, snowmobile and a watercraft shall be collected by the secretary of state prior to the transfer of any vehicle, snowmobile or watercraft registration. The tax on an aircraft shall be collected by the department of treasury. Notwithstanding any limitation contained in section 2, the price tax base of any vehicle, aircraft, snowmobile or watercraft subject to taxation hereunder shall be not less than its retail dollar value at the time of acquisition thereof as fixed pursuant to rules promulgated by the department. “No use tax shall be payable in cases of transfer or purchase: “(a) When the transferee or purchaser is the spouse, mother, father, brother, sister or child of the transferor. “(b) When the transfer is a gift to a beneficiary in the administration of an estate. “(c) When a vehicle, aircraft, snowmobile or watercraft which has once been subjected to the Michigan sales or use tax is transferred in connection with the organization, reorganization, dissolution or partial liquidation of an incorporated or unincorporated business wherein the beneficial ownership is not changed. “The department may utilize the services, information or records of any other department or agency of the state government in the performance of its duties hereunder, and other departments or agencies of the state government are required to furnish such services, information or records upon the request of the department.” P.A.1982, No. 219, § 2, provided: “This amendatory act shall take effect January 1, 1984.” P.A.1982, No. 219 was not ordered to take immediate effect and was approved July 8, 1982. P.A.1982, No. 478, in subsecs. (2) and (3), inserted the references to ORV's and mobile homes; in subsec. (2) inserted the third sentence, and in the fifth sentence substituted “as authorized by section 2(f) on and after January 1, 1984 for a motor vehicle, trailer coach, or titled watercraft” for “for a motor vehicle or titled watercraft purchased with a trade-in of a motor vehicle of titled watercraft with a trade-in of a titled watercraft as authorized by section 2(f)”; and in subsec. (3)(a) substituted “brother” for “brothers”. The 1984 amendment inserted “and until the effective date of this 1984 amendatory act,” in the last sentence of subsec. (2).

REFERENCES

CROSS REFERENCES

1986 Main Volume Cross References Sales tax, levy, rate, see § 205.52.

LAW REVIEW COMMENTARIES

1986 Main Volume Law Review Commentaries Interstate commerce, Compensating use tax, California Use Tax Act. Menefee D. Blackwell, 37 Mich.L.Rev. 818 (1939). Use tax on gasoline. M. D. Blackwell, 37 Mich.L.Rev. 681 (1939). Michigan's fiscal outlook. Harvey E. Brazer, 11 Wayne L.Rev. 430 (1965). Sales and use tax of computer software: Is software tangible personal property? 27 Wayne L.Rev. 1503 (1981).205.93. Rate; presumption, M.C.L.A. 205.93

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6 State and local taxation: Annual survey of Michigan law 1962. Burns Stanley and Edward Tunstall, 9 Wayne L.Rev. 114 (1962); Annual survey of Michigan law 1972. M. Burns Stanley and Edward W. Tunstall, 19 Wayne L.Rev. 643 (1973). Tax notes: Current developments in Michigan. Benjamin O. Schwendener, Jr. and Daniel V. Iannotti, 61 Mich.B.J. 572 (1982). Taxation: Annual survey of Michigan law 1983. Lawrence D. Wiethorn and Mark Zartarian, 30 Wayne L.Rev. 789 (1984).

LIBRARY REFERENCES 1986 Main Volume Library References

Taxation 1231, 1241, 1261, 1281, 1316. C.J.S. Licenses §§ 26 to 31, 46, 48, 49. M.L.P. Taxation § 508.

UNITED STATES SUPREME COURT 1989 Pocket Part United States Supreme Court Commerce clause, use tax on direct mail catalogs printed out of state, see D.H. Holmes Co. LTD. v. McNamara, 1988, 108 S.Ct. 1619, 100 L.Ed.2d 21.

ANNOTATIONS

NOTES OF DECISIONS In general 2 .................................................. enter p Actions and proceedings 7 ..................................... enter p Costs 9 ....................................................... enter p Foreign persons or corporations 5 ............................. enter p Nature of use tax, in general 4 ............................... enter p Presumptions and burden of proof 8 ............................ enter p Purpose of law 3 .............................................. enter p Storage, use, or other consumption 10 ......................... enter p Taxable property and transfers 6 .............................. enter p Validity 1 .................................................... enter p See, also, Notes of Decisions following § 205.91. 1. Validity Department of Treasury rule providing that use tax on product affixed by manufacturer to real estate for others shall be on inventory value of property, including all costs of manufacturing, fabricating, and processing, is not invalid as exceeding scope of § 205.92(f) defining “price,” for purposes of use tax. Honeywell, Inc. v. Department of Treasury (1988) 423 N.W.2d 223, 167 Mich.App. 446. As used in former constitutional prohibition against levy of “sales tax” of more than 3% (Const.1908, Art. 10, § 23; see, now, Const.Art. 9, § 8), quoted words did not mean literally that, and 1959 “use” tax amendment (P.A.1959, No. 263), when taken in conjunction with existing sales tax, offended such constitutional prohibition. Lockwood v. Nims (1959) 98 N.W.2d 753, 357 Mich. 517. 2. In general205.93. Rate; presumption, M.C.L.A. 205.93

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7 Use tax on fire, security, and energy management systems manufactured and installed by taxpayer was on value of finished products brought into Michigan by taxpayer to be installed, including all manufacturing, fabricating, and processing costs. Honeywell, Inc. v. Department of Treasury (1988) 423 N.W.2d 223, 167 Mich.App. 446. By imposing use tax on consumer involved in isolated transaction, isolated-transaction exception to sales tax was not rendered meaningless, but, rather, sales tax exception's purpose was fulfilled, as nonretailer-seller was not burdened with legal incidence of tax imposed on privilege of engaging in business of selling at retail. Terco, Inc. v. Department of Treasury (1983) 339 N.W.2d 17, 127 Mich.App. 220. In those cases where rummage sales, garage sales and church bazaars were in fact isolated transactions and no sales tax was due, there was no unconscionability in exaction of use tax from purchaser. Terco, Inc. v. Department of Treasury (1983) 339 N.W.2d 17, 127 Mich.App. 220. Provision of Sales Tax Act (§ 205.51 et seq.) requiring payment of tax on sale of tangible personal property to one leasing for seven days or more in state other than Michigan, and exempting therefrom a sale made for leasing intrastate, if rentals under lease were subject to Michigan Use Tax Act, indicated general policy of state not to impose a double burden of taxes. Don McCullagh Inc. v. State (1958) 93 N.W.2d 252, 354 Mich. 413. Where at time of adoption of former constitutional provision [Const.1908, Art. 10, § 1] that all subjects of taxation contributing to primary school interest fund should continue to contribute to that fund, telephone company was not taxed on an ad valorem property basis but was subject to a property tax computed on gross receipts, telephone company was liable for tax imposed by the use tax act, although the tax was put into general state fund and not primary school interest fund. Western Elec. Co. v. State (1945) 20 N.W.2d 734, 312 Mich. 582. An administrator or executor was not a “public official” within the meaning of P.A.1937, No. 94, § 3, as amended, and sales of vehicles by an administrator or executor, including sales pursuant to court order or otherwise, were not exempt from use tax. Op.Atty.Gen.1959-60 Vol. 1, No. 3425, p. 148. The Use Tax Act which did not take effect until the expiration of ninety days from the end of the session at which same was passed, could not legally operate retrospectively. Op.Atty.Gen.1937-38, p. 83. 3. Purpose of law The Use Tax Act was enacted for purpose of levying a specific tax for privilege of using, storing, or consuming tangible personal property in Michigan. Terco, Inc. v. Department of Treasury (1983) 339 N.W.2d 17, 127 Mich.App. 220. 4. Nature of use tax, in general “Use tax” is tax for privilege of using, storing and consuming tangible property brought from out of state after it has come to rest. Honeywell, Inc. v. Department of Treasury (1988) 423 N.W.2d 223, 167 Mich.App. 446. While General Sales Tax Act [§ 205.51et seq.] levies tax on person making sale at retail, as conduit or means of collecting sales tax from customers, “use tax” provides for more direct collection of tax from consumer where purchase is made out of state. Honeywell, Inc. v. Department of Treasury (1988) 423 N.W.2d 223, 167 Mich.App. 446. Sales Tax Act (§ 205.51 et seq.) and Use Tax Act are designed to raise revenue from taxation of privilege of engaging in certain business transactions. Don McCullagh, Inc. v. State (1958) 93 N.W.2d 252, 354 Mich. 413, appeal dismissed 79 S.Ct. 897, 359 U.S. 343, 3 L.Ed.2d 927. 5. Foreign persons or corporations The Michigan Use Tax Act could not have been so applied as to have made an Illinois corporation the collector of a tax upon merchandise, manufactured, sold and, in the course of interstate commerce, delivered in Illinois for carriage thereof to owners205.93. Rate; presumption, M.C.L.A. 205.93

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8 in the state of Michigan, since neither the legislature nor administrative officials could reach into another state and mandate persons there to so serve. J. B. Simpson, Inc., v. Gundry (1941) 298 N.W. 81, 297 Mich. 403, certiorari denied 62 S.Ct. 137, 314 U.S. 674, 86 L.Ed. 539. A corporation which operated a merchant tailoring establishment in Illinois, which took orders in Michigan and filled such orders in Illinois under agreement vesting title in purchasers on delivery of merchandise in Illinois to an interstate carrier, was not required to pay use tax in connection with such sales, nor to register under the use tax act, but remedy of state under the Act, if any, was against consumers. Id. 6. Taxable property and transfers This section and administrative rules (1979 AC R 205.13 and R 205.135) did not provide exclusive list of tangible personal property subject to use tax upon transfer in isolated transaction, but, rather, described method for collecting use tax on transfer of property requiring vehicle title or registration, and thus use tax did not only apply to isolated transactions involving vehicles, airplanes, snowmobiles and watercraft. Terco, Inc. v. Department of Treasury (1983) 339 N.W.2d 17, 127 Mich.App. 220. Taxpayer, which elected not to pay sales tax at time of purchase of aircraft, but rather to pay use tax on rental receipts derived from rental of aircraft purchased, was not required to pay use tax on charges for pilot and instructional services it provided in conjunction with its rental of aircraft to customers; where customers were free to and did rent aircraft without purchasing such services, income attributable to instructional and pilot services rendered was not part of the “price” of the aircraft to which use tax applied. Kal-Aero, Inc. v. Department of Treasury (1983) 333 N.W.2d 171, 122 Mich.App. 46. Taxpayer, which elected not to pay sales tax at time of purchase of aircraft, but rather to pay use tax on rental receipts derived from rental of aircraft purchase, was not required to pay use tax on those transactions in which it subleased to its customers aircraft it had leased from third party, where third party had paid state sales or use tax on aircraft at time of its purchase. Id. Sales to or purchases by a motel operator of tangible personal property were taxable transactions under both the sales tax act (§ 205.51 et seq.) and use tax act notwithstanding that the property so acquired was made available to a person for use or consumption during period of occupancy of motel accommodations. Op.Atty.Gen.1961-62, No. 4005, p. 317. The acquisition of trading stamps by the trading stamp company was taxable under the sales tax act (§ 205.51 et seq.) and use tax act. Op.Atty.Gen.1959-60 Vol. 2, No. 3463, p. 66. A casual or isolated sale of an automobile was subject to use tax and the tax was to be collected prior to transfer of title. Op.Atty.Gen.1955-56 Vol. 2, No. 2830, p. 730. An automobile used as a general demonstrator was taxable under the use tax act. Op.Atty.Gen.1951-52, No. 1255, p. 47. Daily and weekly newspapers and magazines were not tangible personal property within the meaning of use tax act, and they were not subject to such tax. Op.Atty.Gen.1947-48, No. 288, p. 280. Sales of materials to cost-plus-fixed-fee contractors for use by them in performing contracts for federal government, state government, or other tax exempt agencies or institutions, which sales were made out of state, were subject to use tax. Op.Atty.Gen.1941-42, No. 21885, p. 435. Rentals from business machines are subject to use tax. Op.Atty.Gen.1941-42, No. 19020, p. 108. Drugs purchased from firms out of state and furnished patients are subject to use tax. Op.Atty.Gen.1939-40, p. 39. 7. Actions and proceedings The presence of a use tax in the Michigan tax system would be significant in determining whether purchaser at retail was real party in interest entitled to prosecute suit for judgment declaring taxability of sales made to it, since the sales tax act (§ 205.51 et205.93. Rate; presumption, M.C.L.A. 205.93

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9 seq.) and the use tax act peculiarly intercorrelate and in some respects use tax act is complementary to the sales tax act. National Bank of Detroit v. Department of Revenue (1952) 54 N.W.2d 278, 334 Mich. 132. It is justiciable question whether or not national bank can assert federal immunity from state sales and excise taxes, regardless of whether or not the legal incidence of tax falls upon national bank, and such bank may plead that it has been deprived of federal right especially when burden of tax falls upon it in economic sense, and will not be deprived of hearing as to claimed federal immunity. Id. 8. Presumptions and burden of proof Exemptions from general tax measures, such as a use tax on tangible personal property, are not favored, and the burden rests on one asserting the right to an exemption to establish his claim. Romeo Homes v. Nims (1960) 105 N.W.2d 186, 361 Mich. 128. Where water softening units rented to householders for residential service were subject to use tax but units used to service industries were exempt, proof by taxpayer that all units at one time or another would be used by industrial users was insufficient to sustain burden on taxpayer of overcoming presumption that residential units were subject to use tax. Kress v. Department of Revenue (1949) 39 N.W.2d 235, 326 Mich. 15. The presumption is that property bought outstate for delivery in Michigan is purchased for storage, use or other consumption in Michigan, and is therefore subject to the use tax, and the burden of overcoming the presumption or of establishing an exemption rests upon the taxpayer. Kress v. Department of Revenue (1949) 39 N.W.2d 235, 326 Mich. 15.

9. Costs Where appeal involved constitutionality of the use tax act, no costs would be awarded, since a “public question” was involved. J. B. Simpson, Inc., v. Gundry (1941) 298 N.W. 81, 297 Mich. 403, certiorari denied 62 S.Ct. 137, 314 U.S. 674, 86 L.Ed. 539. 10. Storage, use, or other consumption Taxpayer clearly exercised its powers of ownership over airplane since it directed and alone determined that plane should be repaired and later kept in state and plane clearly came to rest within state prior to being thrust into interstate stream of commerce; thus, “taxable moment” occurred in state and imposition of use tax was justified. Master Craft Engineering, Inc. v. Department of Treasury (1985) 366 N.W.2d 235, 141 Mich.App. 56. Fact that airplane was clearly removed from service during time it was repaired in state, together with definition of “storage” for purpose of use tax, supported imposition of use tax under reasoning of case which intimated that “storage” connotes removal of object from service. Master Craft Engineering, Inc. v. Department of Treasury (1985) 366 N.W.2d 235, 141 Mich.App. 56.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.