-1- 

STATE OF MICHIGAN 

COURT OF APPEALS 

ASHLEY CAPITAL, LLC, 

 Plaintiff-Appellee, 

UNPUBLISHED 

November 10, 2015 

v No. 322386 

Court of Claims 

DEPARTMENT OF TREASURY, LC No. 12-000132-MT 

 Defendant-Appellant. 

Before: GADOLA, P.J., and HOEKSTRA and M. J. KELLY, JJ. 

PER CURIAM. 

 Plaintiff, Ashley Capital, LLC, filed an action in the Court of Claims, asserting that 

defendant, Department of Treasury (treasury department), improperly calculated the tax owed by 

Ashley Capital under the former Michigan Business Tax Act (BTA), MCL 208.1101, et seq., for 

the tax years 2008, 2009, and 2011.1 Ashley Capital specifically contested the order in which the 

treasury department applied certain carryforward credits from the Single Business Tax Act 

(SBTA), MCL 208.1 et seq., when calculating its BTA liability.2 The treasury department 

appeals as of right from an opinion and order denying its motion for summary disposition 

brought under MCR 2.116(C)(8) and granting judgment in favor of Ashley Capital under MCR 

2.116(I)(2). Because the Court of Claims correctly determined the order in which the credits 

available to Ashley Capital under the BTA should be applied, we affirm. 

 This case involves the order in which credits should be applied against tax liability under 

the BTA. In particular, there are four types of credits at issue. They are: (1) the “unused 

carryforward credit” described in § 401 of the BTA; (2) the “brownfield rehabilitation credit” 

referred to in § 437 of the BTA; (3) the “compensation credit” set forth in § 403(2) of the BTA; 

and (4) the “investment tax credit” provided for by § 403(3) of the BTA. Two of these credits—

 

1

 The MBTA was repealed by 2011 PA 39, and replaced with the Corporate Income Tax Act, 

MCL 206.601 et seq. See Int’l Business Machines Corp v Dep’t of Treasury, 496 Mich 642, 650 

& n 23; 852 NW2d 865 (2014). 

2

 The SBTA (1975 PA 228; MCL 208.1 to 208.145) was repealed by 2006 PA 325, effective 

December 31, 2007, and replaced by the now former MBTA, effective January 1, 2008. 
-2- 

the unused carryforward credit and brownfield rehabilitation credit—were available under the 

SBTA and they were carried forward into the BTA. The other credits—the compensation credit 

and the investment tax credit—were created by the BTA. Regarding the ordering of credits 

under the BTA, MCL 208.1403(1) provides that: “Notwithstanding any other provision in this 

act, the credits provided in this section [i.e., the compensation credit and investment tax credits] 

shall be taken before any other credit under this act.” 

 Although the language of MCL 208.1403(1) indicates that the compensation credit and 

investment tax credits must be taken “before any other credit under this act,” the treasury 

department crafted a form which required taxpayers to take carryforward credits and brownfield 

rehabilitation credits before taking compensation credits and investment credits. In this case, 

however, when Ashley Capital filed its returns, it did not follow the ordering of the form and it 

claimed its compensation credits and carryforward credits first. The treasury department then 

issued a BTA annual return notice of refund adjustment for the 2008 tax year, reducing Ashley 

Capital’s requested refund. Ashley Capitol challenged the adjustment, and an informal 

conference was held with the treasury department’s hearing referee. The hearing referee issued a 

recommendation that Ashley Capital receive a refund, but the treasury department issued a 

decision and order of determination overruling the hearing referee. 

 Adding claims for the 2009 and 2011 tax years, Ashley Capital appealed the decision to 

the Court of Claims, which reversed the treasury department’s decision. The Court of Claims 

concluded that MCL 208.1403(1) evinced a legislative intent to “create a ‘super’ priority for 

Compensation Credits and Investment Tax Credits.” Thus, the Court of Claims reasoned that the 

compensation credits and investment tax credits must be taken first, before all credits that 

originated under the BTA as well as those credits that were created by the SBTA and carried 

forward by the BTA. Because Ashley Capital ordered the credits in this manner, the Court of 

Claims determined that Ashley Capital was entitled to summary disposition under MCR 

2.116(I)(2). The treasury department now appeals to this Court as of right. 

 The issue before this Court on appeal is one of statutory interpretation. That is, both 

parties contest the interpretation of MCL 208.1403(1) and the ordering of credits under this 

provision. The parties both recognize that compensation credits and investment tax credits must 

be taken before other credits under the BTA, but they disagree with regard to what constitutes a 

“credit under [the BTA].” Specifically, the treasury department argues that credits under the 

BTA consist only of credits created by the BTA, meaning that the phrase does not include the 

brownfield rehabilitation credits and the carryforward credits that originated under the SBTA. In 

contrast, Ashley Capital argues that the brownfield rehabilitation credits and carryforward credits 

are credits provided for under the BTA and thus, under the plain language of MCL 208.1403(1), 

the compensation credits and investment tax credits must be taken before the brownfield 

rehabilitation and carryforward credits. 

 We review de novo a trial court’s decision on a motion for summary disposition. 

Jimkoski v Shupe, 282 Mich App 1, 4; 763 NW2d 1 (2008). “A court may grant summary 

disposition to the opposing party under MCR 2.116(I)(2) if it determines that the opposing party, 

rather than the moving party, is entitled to judgment.” Jaguar Trading Ltd Partnership v 

Presler, 289 Mich App 319, 322; 808 NW2d 495 (2010). We review de novo an issue of 
-3- 

statutory construction, which is a question of law. Lear Corp v Dep’t of Treasury, 299 Mich 

App 533, 537; 831 NW2d 255 (2013). 

 “When interpreting statutory language, our obligation is to ascertain the legislative intent 

that may reasonably be inferred from the words expressed in the statute.” Koontz v Ameritech 

Services, Inc, 466 Mich 304, 312; 645 NW2d 34 (2002). To this end, we “must give effect to 

every word, phrase, and clause in a statute, and must avoid an interpretation that would render 

any part of the statute surplusage or nugatory.” Id. Statutory words must be read in context, and 

undefined terms are given their plain and ordinary meaning. Midamerican Energy Co v Dep’t of 

Treasury, 308 Mich App 362, 370; 863 NW2d 387 (2014). “If the language of the statute is 

unambiguous, the Legislature must have intended the meaning clearly expressed, and the statute 

must be enforced as written.” Ford Motor Co v Treasury Dep’t, 496 Mich 382, 389; 852 NW2d 

786 (2014) (quotation marks and citation omitted). “A provision of law is ambiguous only if it 

‘irreconcilably conflict[s]’ with another provision or ‘when it is equally susceptible to more than 

a single meaning.’” In re Application of Indiana Mich Power Co for a Certificate of Necessity, 

869 NW2d 276, 277; __ NW2d __ (2015), quoting Koontz, 446 Mich at 318. “When there is an 

ambiguity, tax laws are generally construed in favor of the taxpayer, Lear Corp, 299 Mich App 

at 537, but “tax statutes that grant tax credits or exemptions are to be narrowly construed in favor 

of the taxing authority because such statutes reduce the amount of tax imposed,” Alliance 

Obstetrics & Gynecology v Dep't of Treasury, 285 Mich App 284, 286; 776 NW2d 160 (2009). 

However, “[w]hile tax-exemption statutes are strictly construed in favor of the government, they 

are to be interpreted according to ordinary rules of statutory construction.” Inter Co-op Council 

v Tax Tribunal Dept of Treasury, 257 Mich App 219, 223; 668 NW2d 181 (2003). We note as 

well that an administrative agency’s “interpretation is entitled to respectful consideration and, if 

persuasive, should not be overruled without cogent reasons.” Younkin v Zimmer, 497 Mich 7, 

10; 857 NW2d 244 (2014) (citation omitted). 

 In this case, the statute at issue is MCL 208.1403(1), which provides in full: 

 Notwithstanding any other provision in this act, the credits provided in 

this section shall be taken before any other credit under this act. Except as 

otherwise provided in [MCL 208.403(6)], for the 2008 tax year, the total 

combined credit allowed under this section shall not exceed 50% of the tax 

liability imposed under this act before the imposition and levy of the surcharge 

under section 281. For the 2009 tax year and each tax year after 2009, the total 

combined credit allowed under this section shall not exceed 52% of the tax 

liability imposed under this act before the imposition and levy of the surcharge 

under section 281. [Emphasis added.] 

 Considering the plain language of the statute, we conclude that the Court of Claims 

correctly recognized that MCL 208.1403(1) placed the compensation credits and investment 

credits in a “‘super’ priority” position relative to all other credits a taxpayer might claim under 

the BTA. That is, it is unmistakable that the credits described in MCL 208.1403(1), i.e., 

compensation credits and investment credits, must be taken before “any other credit under this 

act.” Further, in our judgment it is equally clear that “any other credit under this act” refers to 

any credit described in a section of the BTA other than MCL 208.1403. The term “this act” 

obviously denotes the BTA. See MCL 208.1101(1). And, for a credit to be “under” the BTA, it 
-4- 

must be “within the group or designation of” the BTA or “subject to the authority, control, 

guidance, or instruction of” the BTA. See Merriam-Webster’s Collegiate Dictionary (2014) 

(defining the word “under”). Given this ordinary understanding of what it means to be “under” 

the BTA, we agree with the Court of Claims conclusion that the brownfield rehabilitation credits 

and carryforward credits constitute other credits under the BTA. The BTA expressly provides 

for the carryforward credits under MCL 208.1401 and for brownfield rehabilitation credits under 

MCL 208.1437. Both MCL 208.1401 and MCL 208.1437 are contained within the BTA and 

more specifically within the chapter entitled “credits,” meaning that, quite simply, these are 

credits “under” the BTA. As such, it is clear that these credits are also subject to the ordering 

provision found in MCL 208.1403(1) because they are included in the phrase “any other credit[s] 

under [the BTA].” Consequently, Ashely Capital correctly ordered its credits when it claimed 

the compensation credits and investment credits before the brownfield rehabilitation credits and 

carryforward credits. See MCL 208.1403(1). 

 In contrast to this conclusion, the treasury department maintains that only credits created 

by the BTA are a “credit under this act.” However, this interpretation impermissibly reads 

additional language into the statute, which we will not do. See Book-Gilbert v Greenleaf, 302 

Mich App 538, 542; 840 NW2d 743 (2013). Had the Legislature only intended to place the 

compensation credits and investment credits before those credits created by the BTA, it would 

have so specified. Instead, it chose the phrase “under this act,” which clearly encompasses all 

credits provided for under the BTA, including the brownfield rehabilitation credits and 

carryforward credits. Indeed, although it is true that these credits originated under the SBTA, the 

SBTA has been repealed. See Int’l Bus Machines Corp, 496 Mich at 649 & n 21, citing 2006 PA 

325. Consequently, while the credits in question might have originated under the SBTA, as of 

January 1, 2008, the SBTA no longer existed and these credits were then governed solely by the 

BTA. In these circumstances, these credits exist “under” the BTA such that they are covered by 

the ordering provision of MCL 208.1403(1). 

 In a different formulation of essentially the same argument, the treasury department also 

argues that the Legislature intended a textual distinction between a “carryforward” from the 

SBTA and a “credit” under the BTA such that credits carried forward from the SBTA cannot be 

considered a “credit” for purposes of the BTA.3

 This argument from the treasury department 

draws a distinction without a difference. Under the BTA, the carryforward credits, brownfield 

rehabilitation credits, investment credits, and compensation credits are all available to offset 

taxpayer liability under the BTA. The mere fact that some credits were carried forward by the 

Legislature from the SBTA does not obviate the clear fact that such carryforwards are 

nonetheless credits which, like other credits, may be used under the BTA to offset liability 

arising under the BTA. Indeed, MCL 208.1403(1) refers broadly to “any other credit under this 

 

3

 For example, regarding carryforward credits, MCL 208.1401 states that “[e]xcept as otherwise 

provided under this act, any unused carryforward for any credit under former 1975 PA 228 may 

be applied for the 2008 and 2009 tax years and any unused carryforward after 2009 shall be 

extinguished.” The treasury department asserts that given this phrasing there is a distinction 

between a “credit” and an “unused carryforward for any credit.”
-5- 

act,” and it makes no distinction between those credits carried forward from the SBTA and those 

originating under the BTA. We decline to read such language into the statute. See Book-Gilbert, 

302 Mich App at 542. Because the brownfield rehabilitation credits and carryforward credits 

may be used under the BTA to offset liability arising from the BTA, they plainly constitute 

“credits” under the BTA. 

 Finally, the treasury department asserts that its interpretation of MCL 208.1403(1) 

should prevail because the treasury department was delegated the discretionary authority to 

administer the BTA, including the authority to prescribe forms for use in effectuating the BTA. 

In these circumstances, the treasury department maintains that its interpretation is entitled to 

respectful consideration and its forms delineating the ordering of credits should be subjected to a 

rational basis review. 

 It is clear that the treasury department has authority to administer the tax imposed by the 

BTA, MCL 208.1513(1), to “prescribe forms for use by taxpayers,” MCL 208.1513(3), and to 

“promulgate rules in conformity with” the BTA, MCL 208.1513(3). Moreover, “[a]gencies have 

the authority to interpret the statutes they are bound to administer and enforce.” By Lo Oil Co v 

Dep’t of Treasury, 267 Mich App 19, 46; 703 NW2d 822 (2005). However, the Administrative 

Procedures Act (APA), MCL 24.201, et seq., provides that an administrative agency’s “form 

with instructions, an interpretive statement, a guideline, and informational pamphlet . . . [is not a 

promulgated rule and] does not have the force and effect of law but is merely explanatory.” 

MCL 24.207(h). Further, although the treasury department has authority to prescribe forms 

under the BTA, its designation in those forms of the order in which credits should be taken is not 

subject to rational-basis review because the Legislature expressly set the order of credits in the 

BTA and did not grant such discretion to the treasury department. See MCL 208.1403(1). Cf. 

Guardian Indus Corp v Dep’t of Treasury, 198 Mich App 363; 499 NW2d 349 (1993) (holding 

that where the statute granted the commissioner of revenue discretion to require a taxpayer to 

consolidate tax returns, rational-basis review of decision to not apply decision retroactively was 

appropriate). Ultimately, while the treasury department’s interpretation of the BTA is entitled to 

respectful consideration, it is simply not persuasive because it does not comport with the plain 

language of the statute. See Younkin, 497 Mich at 10; Kmart Mich Prop Servs, LLC v Dep't of 

Treasury, 283 Mich App 647, 651; 770 NW2d 915 (2009). Consequently, because there are 

cogent reasons why the treasury department’s interpretation should not be upheld, the Court of 

Claims properly applied the plain language of the statute and granted summary disposition to 

Ashley Capital. 

 Affirmed. 

/s/ Michael F. Gadola 

/s/ Joel P. Hoekstra 

/s/ Michael J. Kelly