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Docket # 272042, 273137

Daimler Chrysler Corporation,		MTT Docket No. 272042, 273137
Petitioner,
v
Michigan Department of Treasury,		Tribunal Judge Presiding
Respondent.		Michael A. Stimpson

OPINION AND JUDGMENT

Petitioner, Daimler Chrysler Corporation, identified under account number 38-2673623, and whose principal place of business is 1000 Chrysler Drive, Auburn Hills, Michigan, filed two petitions in the Tribunal, one appealing the denial of refund requests for motor fuel tax, and the other requesting interest on an amount that had been refunded.  Respondent is the Michigan Department of Treasury (Department).  Tribunal Docket No. 272042 seeks the refund requests that were denied by the Department on June 16, 1999 and Docket No. 273137 seeks interest on the amount refunded by the Department on September 16, 1999.  The issues are: (1) whether the one-year statute of limitations provided for in MCL 207.112(2) is applicable to Petitioner’s activities or the four-year statute of limitations provided for in MCL 205.27a and §205.30 apply; (2) whether Petitioner is entitled to interest on its refund check issued September 16, 1999, received for the period of February 1, 1997 through June 30, 1998 and for the period July 1, 1998 through December 31, 1998.  The parties, through their representatives, filed a Joint Stipulation of Facts and a Motion to Hear on Briefs and Oral Argument.  The Tribunal found that this matter could be heard on briefs without the necessity of oral argument.

FINDINGS OF FACT

Daimler Chrysler is engaged in the business of manufacturing automobiles at four assembly plants within Michigan.  During the automobile manufacturing process a certain amount of gasoline is consumed in off-highway testing procedures at Petitioner’s facilities.  Stipulation ¶ 6.  The amount of gasoline that is not consumed in off-highway testing activities remains in each vehicle’s fuel supply tank.  Stipulation ¶ 7.  Some of the new vehicles are shipped out of state and not operated on the public roads of this state.  The shipment of gasoline out of Michigan in fuel supply tanks of new vehicles does not constitute consumption or combustion of gasoline and the gasoline is not consumed in off-highway testing activities within the state of Michigan.  Stipulation ¶ 10.

Petitioner filed documents on January 30, 1998 requesting a refund of overpayments of motor fuel tax in the amount of $108,666.00 on gasoline placed in vehicles that were shipped out of the state of Michigan for the period covering January 1, 1997 through June 30, 1997.  On June 29, 1998, Petitioner filed an additional document requesting a refund of tax in the amount of $1,585,158.00 for the period of July 1, 1994 through June 30, 1998.  On October 14, 1998, Petitioner filed another amendment to its June 29, 1998 refund request revising the amount to $3,004,774.00.  Stipulations ¶ 12-14.  None of the requests for refunds was accompanied by a Michigan Department of Treasury Form 680 or any similar form.  Stipulation ¶ 15.  On April 26, 1999, Petitioner sent schedules to the Department specifically requesting a refund of Michigan Motor Fuel Taxes paid for the period July 1, 1998 through December 31, 1998 in the amount of $491,097.00.  Stipulation ¶ 16.

The Department formally denied the requests for refunds for the period January 1, 1994 through January 31, 1997 by letter dated June 15, 1999.  It further requested additional documentation in order to accept Petitioner’s refund request for the period February 1, 1997 through June 30, 1998 later amended to recognize the October 14, 1998 amended request.  Stipulation ¶ 17.  On July 15, 1999, Petitioner filed its petition with the Tribunal.  On August 6, 1999 Petitioner provided Respondent with the requested additional information.  On September 16, 1999 the Department issued a refund check in the amount of $1,268,803.00 for the period February 1, 1997 through June 30, 1998, and $491,097.00 for the period July 1, 1998 through December 31, 1998.  Although the refund check did not include interest, it did not expressly state that interest was denied.  Stipulations ¶ 18-22.  On October 27, 1999, Petitioner submitted a letter to request interest related to the September 16, 1999 refund, which the Department denied on November 2, 1999.  Whereby, Petitioner filed its second petition with the Tribunal.  At issue is the timeliness of the refund claim for that portion of the period January 1, 1994 through January 31, 1997 and whether Respondent received proper and adequate notice of a claim and is obligated to pay interest after 45 days of said claim.

The parties agree that the fuel stored in the tanks of vehicles shipped outside of Michigan does not constitute consumption or combustion of gasoline used to generate power for these vehicles upon the public roads and highways of Michigan by Petitioner.  The Department’s Letter Ruling 90-12, issued prior to the 1992 amendment to the Motor Fuel Tax Act (MFTA), clearly states Michigan gas tax does not apply to gasoline that is placed in the fuel supply tanks of new motor vehicles manufactured in Michigan and shipped to locations outside of Michigan.

Petitioner contends that the one-year limitations period for refunds contained in MCL 207.112 applies “only to community action agencies,” and is silent with regard to Petitioner’s activities.  Petitioner argues that the language of §207.112 is “clear and unambiguous” in this regard.  By applying the one-year statute of limitations to other users of gasoline enumerated in §207.112, Petitioner contends, the Department is unlawfully expanding the statute.  Petitioner further argues that, had the Legislature intended to apply the one-year statute of limitations to all of the categories listed in §207.112 and not just community action agencies, they would have expressly done so; however, in the absence of such language, inclusion of Petitioner’s activities under the one-year limitations period is an unlawful inference. 

Petitioner contends that, since the MFTA remains silent as to the refund provisions for Petitioner’s activities, the refund is controlled pursuant to the Revenue Act, specifically, MCL 205.27a and 205.30, which allows a four-year statute of limitations for taxes wrongfully collected.  Petitioner argues that this interpretation creates less conflict between the MFTA and the Revenue Act, and allows the statutes to “be read in harmony with each other.”  Petitioner alleges that the Department interprets MCL 207.112 to create a conflict, which, under the provisions of MCL 207.201, allows the MFTA to control. 

Petitioner contends that its interpretation is supported by recent legislative changes to the MFTA.  MCL 207.1047, effective April 1, 2001, states that a person seeking refund on motor fuel tax paid shall file the claim “within 18 months after the date the motor fuel was purchased.”  Petitioner contends that the Department lobbied for this change to broaden the motor fuel tax refund provision under the new MFTA to include automobile manufacturers.  Petitioner argues that §207.1047 expands the MFTA to include all claims for refund, and that this change was in response to §207.112, which only provided for refunds to community action agencies.

Petitioner also contends that the MFTA does not apply because Petitioner does not “use” the motor fuel to propel vehicles on Michigan’s roads.  Petitioner argues that, since MCL 207.102 states the intent of the MFTA is “to impose a tax upon the owners and drivers of motor vehicles using an internal combustion type of engine upon the public roads and highways of this state by requiring them to pay for the privilege of using the public roads and highways of this state,” Petitioner’s activity does not fall within this intent, and the MFTA does not apply.  Petitioner further contends that §207.112 requires the motor fuel be “used” by Petitioner in Michigan to fall under the MFTA, and that Petitioner does not “use” the fuel in Michigan, thereby making the MFTA inapplicable.  Petitioner argues that, while the MFTA does not provide a definition for “use,” the common definition and the intent of the language in the MFTA require “use” to mean “consumption by combustion” of the motor fuel.  Petitioner contends that the gasoline put in the vehicles that are shipped out of state is not “used” as thus defined, but rather the fuel is simply “stored” in the fuel tanks of the vehicles.  Petitioner contends that, since the MFTA cannot be applied because the gasoline is not consumed in Michigan, the only remedy available to recover the tax paid on the motor fuel is under the Revenue Act.

Petitioner further contends that it is entitled to interest on its refund check issued by the Department on September 16, 1999, received for the period of February 1, 1997 through June 30, 1998 and for the period July 1, 1998 through December 31, 1998.  MCL 205.30 states that interest shall be added to a refund commencing 45 days after the claim is filed.  Petitioner contends that the claim was filed on January 30, 1998, with the first notice that a refund was due.  Petitioner contends that this refund request gave the Department adequate notice that the refund was due, and interest thus began accruing on the refund March 17, 2001 (45 days after the claim is filed) and continued accruing until the issuance of the check on September 16, 1999.  In support of its position, Petitioner relies on Lindsay Anderson Sagar Trust v. Department of Treasury, 204 Mich App 128; 514 NW2d 514 (1994).  In Sagar Trust, the Michigan Court of Appeals struck down Department Revenue Administrative Bulletin (RAB) 1989-36, which stated, “Interest will not be applied to a refund until 45 days after the Department receives information sufficient to determine the return is valid and that the claim for refund is correct.”  In striking down the RAB, the Court stated,

The Revenue Administrative Bulletin is not consistent with the statute as written.  The statute clearly provides that, as long as the department determines that a claim for refund is valid, interest begins to accrue forty-five days after the claim is filed.  It does not provide that interest begins to accrue forty-five days after sufficient information to process the claim is received.  That condition precedent, however reasonable, may not be read into the statute…In other words, a claim is filed when defendant receives adequate notice of the claim.

204 Mich App 128, 131-132 (1994).  In the current case, Petitioner contends that the Department violates §205.30 by requiring that “sufficient information” must be submitted for a refund claim to be considered valid, and the Department’s policy is contrary to the Court of Appeals’ ruling in Sagar Trust.

Petitioner contends that, although the Department issued a letter November 2, 1999 denying interest because the Department did not consider the claim to have been filed until August 6, 1999, the Department has admitted on other occasions that the claim was considered filed on January 30, 1998.  In a letter sent to Petitioner dated June 15, 1999, the Department stated, “refunds will be issued for the time periods February 1, 1997 through June 30, 1997 (claim dated January 30, 1998)….” Petitioner contends this is an admission of filing date as January 30, 1998.  Petitioner further contends that, although the Department claims that the refund was considered filed on August 6, 1999, one of the refund checks was issued for the time period beginning February 1, 1997.  Petitioner argues that if the Department did not consider the claim to be filed until August 6, 1999, under its own belief that a one-year statute of limitations exists, the Department would have only refunded as far back as August 7, 1998.  Petitioner contends that this inconsistency demonstrates that the Department considers the refund request filed as of January 30, 1998.

Petitioner further contends that jurisdiction of this Tribunal was properly invoked.  Under MCL 205.22, Petitioner had 35 days to appeal the decision of the Department that no interest would be paid.  Petitioner contends the 35-day appeal period began when the Department issued the November 2, 1999 letter denying interest.  Petitioner argues that the check issued September 16, 1999 contained no comment concerning interest, and Petitioner thought perhaps interest would come via a separate check.  On October 27, 1999, Petitioner requested the Department to pay the statutory interest, and the November 2, 1999 letter ensued.  Petitioner contends that, since it filed for appeal December 6, 1999, the appeal sufficiently invoked the jurisdiction of the Tribunal.

Respondent contends that MCL 207.112 refund provisions apply to all of the enumerated users and activities of the statute, not just to “community action agencies.”  Respondent argues that, although a reading of §207.112 could create confusion, a look at the history of the statute demonstrates an intent for the one-year statute of limitations to apply to all of the categories listed in the statute.  Respondent contends that there is no evidence of legislative intent to eliminate the statute of limitations for the other parties, and the Legislative changes to §207.112 were an attempt to break up an extraordinarily long sentence into two sentences.  Respondent contends that the one-year statute of limitations has been consistently applied to all refunds under the MFTA.  The Department’s guidelines in 1979 AC, R 207.11, clearly state that all purchasers of gasoline entitled to a refund must file within one year from the date of purchase.  Thus, Respondent argues, the one-year statute of limitations controls, and Petitioner’s argument that the four-year limitation under the Revenue Act controls is erroneous.

Respondent contends that the recent legislative changes actually support its position and not Petitioner’s.  Respondent argues that the 18-month statute of limitations under MCL 207.1047 is an extension of the original 12-month limitation under MCL 207.112, rather than a limitation of the four-year limitation under the Revenue Act.  Had the new legislation reduced the four-year limitation to 18 months, there would be several years’ worth of available refunds that would be eliminated, and Respondent contends that the fact the Legislature did not address this is indicative that the new statute of limitations is an extension rather than a reduction of time.

Respondent contends that the gasoline was “used” by Petitioner in a manner that falls within the provisions of the MFTA.  Respondent argues that “use” does not require consumption by combustion, but rather the gasoline was “used” when it was taken from storage and placed in vehicles by Petitioner.  Since the gasoline was used, but not “used in producing or generating power for propelling motor vehicles used upon the public roads and highways of this state,” Petitioner is exempt from the tax under the MFTA and must seek a refund under the provisions of the Act.

Respondent further contends that Petitioner is not entitled to interest on the refund received because the refund was made within 45 days of the filing of the claim for refund.  Respondent contends the claim was not filed until August 6, 1999, when Petitioner provided additional documentation requested by the Department in its June 15, 1999 letter.  Respondent argues that prior to August 6, 1999, Petitioner did not have a verifiable claim because it did not comply with the requirements of the MFTA or the rules under 1979 AC, R 207.11, to properly request a refund.  Respondent contends that since the claim was considered filed August 6, 1999, the refund made to Petitioner on September 16, 1999 was within 45 days of receipt of the claim and no interest was due.

Respondent contends that Lindsay Anderson Sagar Trust v Dep’t of Treasury does not apply to the current case.  Respondent contends that Sagar Trust dealt with refunds under section 30 of the Revenue Act, which requires payment of refunds 45 days after filing, and the Department in Sagar Trust conceded filing occurred at an earlier date.  In the current case, Respondent argues the refund is controlled under section 12 of the MFTA, which requires the filing of “a verified claim with the department upon forms prescribed and to be furnished by it,” as well as the “original invoice received by the purchaser.”  MCL 207.112.  Thus, Respondent contends, the heightened requirements of section 12 means the refund claim was not filed until the additional documentation was received on August 6, 1999.

Respondent further contends that the claim for refund interest filed with this Tribunal is barred by the 35-day statute of limitations set forth in MCL 205.22.  Respondent contends when it sent Petitioner the refund check September 16, 1999, with no interest included, this put Petitioner on notice that interest was denied.  Thus, the filing with the Tribunal on December 6, 1999 was past the 35-day limitation for appeals.  In support of its position, Respondent relies on Curis Big Boy, Inc v Dep’t of Treasury, 206 Mich App 139; 520 NW2d 369 (1994).  In Curis Big Boy, the Court of Appeals held that communications with the Department do not toll the appeal period.  Respondent argues that the appeals period began running when Petitioner received the check, and that subsequent correspondence with the Department did not toll the period.

CONCLUSIONS OF LAW

The first issue to be determined is whether the one-year statute of limitations provided for in MCL 207.112 is applicable to Petitioner’s activities, or if the statute merely provides a statute of limitations for community action agencies, leaving the other enumerated activities under §207.112 to seek their refund under MCL 205.27a and 205.30.  Petitioner’s argument is based on what it calls “clear and unambiguous language” that the one-year provision applies only to community action agencies.  The relevant section of MCL 207.112 reads as follows:

The purchaser of gasoline used for a purpose other than the operation of a motor vehicle on the public roads, streets, and highways of this state, a person operating a passenger vehicle of a capacity of 5 or more under a municipal franchise, license, permit, agreement, or grant, respectively, a person operating a passenger vehicle for the transportation of school students under a certificate of authority issued by the state transportation department pursuant to section 5 of article II of the motor carrier act,…and community action agencies as described in former title II of the economic opportunity act of 1964, Public Law 88-452, which are not a part or division of a political subdivision of this state shall be entitled to a refund of the tax on the gasoline.  Community action agencies shall make the refund a state-contributed non-federal share to grants received by such community action agencies from the community services administration under former title II of the economic opportunity act of 1964, by filing a verified claim with the department upon forms prescribed and to be furnished by it, within 1 year after the date of purchase, as shown by the invoice.  A claim mailed within the 1-year period, as evidenced by the postmark, when received by the department, shall be considered as filed within the required time.

MCL 207.112(2).  At first blush, this statute could very well read as Petitioner argues it does.  A quick scanning of the text of the statute would seem to indicate that the first sentence lists the users and activities that are exempt from the motor fuel tax, while the second and third sentences refer only to the process a community action agency must go through to obtain a refund.  Thus, under this interpretation, all exempt users of motor fuel other than community action agencies must seek their refund provisions elsewhere, namely the Revenue Act.

However, the Tribunal doesn’t find the statute “clear and unambiguous” as the Petitioner believes.  An in-depth reading of the statute and the legislative history of MCL 207.112 creates ambiguities and inconsistencies that must be resolved.  When reading the statute, it must be determined whether the second part of the second sentence (after the comma, beginning with by filing a verified claim…) refers solely to community action agencies.  If the entire second sentence does refer solely to community action agencies, one must determine whether the third sentence simply follows as a modifier to the second sentence, or refers back to the first sentence and all of the enumerated users listed.  A look at the statutory history of the statute further clouds the issue.  Prior to the adoption of 1992 PA 225, the relevant section of §207.112 listed supra read as two sentences, with the first and second sentences combined into one long 269-word sentence.  Under this prior language, the statute indicated that all users of motor fuel exempt from the tax were required to file a verified claim within the one-year statute of limitations.  Thus, it must be determined whether the adoption of 1992 PA 225 was an attempt to limit the one-year limitation to only community action agencies, or was merely an attempt to break up a long sentence into two sentences.

Where the statutory language is of doubtful meaning, the conditions and circumstances must be examined and a reasonable construction must be given, looking to the purpose of the act.  State Treasurer v Wilson, 423 Mich 138; 377 NW2d 703 (1985).  Once legislative intent is discerned, it must be given effect, even if doing so might appear with the letter of the statute.  People v Stoudemire, 429 Mich 262, 414 NW2d 693 (1987).  A reading of the Declaration of Intent for the MFTA reveals an intent to, among other things, “provide for certain exemptions and refunds and for the disposition of the proceeds of this tax.”  The sense that the MFTA controls all refund provisions is further bolstered by MCL 207.201, which provides that “[i]n case of conflict between [the Revenue Act] and this act, this act shall prevail.”  These provisions, combined with the statutory history of §207.112, indicate a legislative intent that the proceeds and refunds of motor fuel tax be controlled by the MFTA.

Furthermore, there is language in §207.112 that indicates the enumerated users and activities are part of an inclusive group, and therefore subject to the same provisions of the section.  The list of different categories exempt from the tax ends with “…and community action agencies” (emphasis added).  The word “and,” while sometimes used as a disjunctive word, is more commonly a conjunctive term.  See L.A. Darling Co v Water Resources Com’n, 341 Mich 654, 67 NW2d 890 (1955).  As a conjunctive term, the word “and” includes community action agencies with the other categories and suggests they are guided by similar provisions.  This would include having a similar length of time to file for refund.  However, if §207.112 were to be read as Petitioner suggests, then community action agencies would have only one year to file for refund, while the other categories would have a four-year statute of limitations.  Nowhere in the statute does it mention why the Legislature would disparage the community action agencies by requiring them to file for the refund within one year, while allowing the other exempt groups four years to claim refunds, nor does Petitioner provide any explanation why this would be so.  Therefore, to give §207.112 its full and intended effect, the Tribunal holds that the one-year statute of limitations applies to all the users and activities listed in the language of the statute.

Recent legislative changes to the MFTA support the Tribunal’s holding.  In enacting MCL 207.1047, the Legislature provides that all claims for refund shall be filed within 18 months after the date of purchase of motor fuel.  Under the new statute, all purchasers of motor fuel exempt from the tax have an equal statute of limitations for claiming a refund.  This follows a natural progression from the Tribunal’s interpretation of §207.112, which also gives all exempt users an equal amount of time to file for refund.  Under Petitioner’s interpretation, however, §207.1047 would expand the time to file for refund for community action agencies, while limiting the time for all other exempt users, and provide no reason why it would do so.  Furthermore, reading §207.1047 as an expansion of time to file for refund from 12 months (one year) to 18 months for all groups does not disrupt any current or pending refunds.  However, under Petitioner’s interpretation, §207.1047 would eliminate a large portion of refunds for those groups who originally had four years to file for refund, without providing what should be done in such cases.  The Tribunal’s interpretation of §207.112 is more in harmony with the recent legislative changes than Petitioner’s interpretation.

Petitioner further argues that the MFTA does not apply because Petitioner does not “use” the motor fuel to propel vehicles on Michigan’s roads.  Petitioner contends that to “use” the motor fuel it must be “consumed by combustion.”  Since the fuel remaining in the tanks of vehicles shipped outside of Michigan is not thus “used,” Petitioner argues, the MFTA is inapplicable.  The Tribunal does not agree with this interpretation of the word “use.”  Petitioner asks the Tribunal to create a dangerous precedent by insisting that the MFTA is not applicable to fuel in the tanks of vehicles shipped to other states.  Under Petitioner’s logic, all fuel purchased and placed in vehicles in Michigan but not consumed totally on Michigan roads is subject to a refund under the Revenue Act.  Using such logic, drivers of vehicles who purchase gas in Michigan and then drive into other states could claim a refund on the gas not consumed in Michigan.  A more consistent interpretation of “use” would be that the fuel is used once it is taken out of storage and placed into the vehicles.  Then, when the gasoline was not used to propel motor vehicles upon the roads of Michigan, Petitioner fell into an exempt category under the MFTA, and was entitled to a refund under its provisions.  Thus, this Tribunal holds that the MFTA is applicable to Petitioner’s activities, and Petitioner must seek a refund according to the provisions of the MFTA.

The other issue to be determined is whether Petitioner is entitled to interest on its refund check issued September 16, 1999.  Before answering this question, this Tribunal must determine the preliminary issue of jurisdiction.  Respondent contends that Petitioner did not properly invoke the jurisdiction of the Tribunal under MCL 205.22 because the appeal was filed more than 35 days after the final determination.  Respondent contends the final determination that no statutory interest would be included in the refund was made when the Department issued the September 16, 1999 check to Petitioner containing no interest.  Petitioner contends the final determination came when the Department issued a letter dated November 2, 1999, explicitly denying the request for interest.  The Tribunal holds that a “final determination” must contain some indication of a decision made, along with the reasons for that determination, to allow a party to perfect an appeal.  The check issued September 16, 1999 is mute on the subject of interest, and therefore does not meet the definition of a “final determination.”  The November 2, 1999 letter is the first correspondence between the Department and Petitioner that formally states the decision made and the reason for the decision.  This is what the Tribunal considers the “final determination.”  Since Petitioner filed its appeal within 35 days of the November 2, 1999 letter, the Tribunal asserts jurisdiction over this matter.

Respondent contends Petitioner is not entitled to interest on the refund received because the refund was given within 45 days of the filing of the claim for refund.  Respondent claims that, under the requirements set forth in MCL 207.112 and the rules under 1979 AC, R 207.11, Petitioner did not properly file for refund until August 6, 1999.  Respondent’s contentions, however, are inconsistent with the Department’s actions.  The September 16, 1999 refund check issued by the Department contained refunds for the period beginning February 1, 1997.  Under the one-year statute of limitations for claiming refunds under the MFTA, this refund period coincides with Petitioner’s initial filing for refund on January 30, 1998.  The Department thus concedes it considers the refund claim filed as of that date.  Furthermore, Respondent’s contention that the claim was not filed until the requirements of §207.112 were met is without merit.  In Respondent’s own words, under §207.112, Petitioner must file “a verified claim with the department upon forms prescribed and to be furnished by it,” as well as the “original invoice received by the purchaser.”  Petitioner never used the Department’s forms or provided an original invoice, yet the Department still issued a refund check.  The Department, therefore, decided that filing could occur without explicitly following the requirements of §207.112.  Therefore, the Tribunal holds that the claim was considered “filed” on January 30, 1998, and interest began accruing on the refund March 17, 2001 (45 days after filing) and continued accruing until the issuance of the September 16, 1999 refund check.

JUDGMENT

IT IS ORDERED that Petitioner’s request for a refund of motor fuel tax for the period January 1, 1994 through January 31, 1997 is DENIED.

IT IS FURTHER ORDERED that Petitioner’s request for statutory interest on its refund check issued September 16, 1999, received for the period of February 1, 1997 through June 30, 1998 and for the period July 1, 1998 through December 31, 1998 is GRANTED.

IT IS FURTHER ORDERED that Respondent shall re-calculate the amount owed, consistent with this opinion, including interest to the date of this order, and submit a check to Petitioner in that amount within 20 days of this order.

                                                                                    MICHIGAN TAX TRIBUNAL

                                                                                    By: Michael A. Stimpson

Entered:  8/15/01