Amicus Brief

International Business Machines Corporation v Michigan Department of Treasury

Case Year: 2014
Case Forum: Michigan Supreme Court
Keywords: Business Tax Act, Single Business Tax Act, Multistate Tax Compact Act
Amicus Counsel:

Jerold Lax (P16470) | Pear Sperling Eggan & Daniels, PC | 24 Frank Lloyd Wright Drive, Suite D2000 | Ann Arbor, Michigan 48105 | 734-665-4441

CoAmicus Parties:

Michigan Townships Association (MTA)
Michigan Association of Counties (MAC)


Local governments rely on revenue sharing to provide vital public services to their citizens, which will be significantly impaired if state revenues are reduced by an amount in excess of one billion dollars, as is estimated to be the likely result of this Court’s decision.
Where the language of a statute is clear, no other than a literal construction should be given to it.
This case focuses primarily on statutory interpretation – that repeal by implication is disfavored, and that to the extent possible seemingly-conflicting statutes should be harmonized. The dissent correctly concluded that the apportionment option of the MTC could not be reconciled with the requirement of the BTA that the apportionment formula of the BTA be applied “except as otherwise provided in this act”, and that the MTC option, not being part of the BTA, was therefore not available to IBM.


Court of Appeals judgment reversed; Court of Claims order granting summary disposition in favor of the Department reversed; case remanded to the Court of Claims for entry
of an order granting summary disposition in favor of IBM.

MSC requested LDF amicus brief? No

In 2008, the Michigan Legislature enacted the Michigan Business Tax Act, MCl 208.1101 et seq. requiring business taxpayers to apportion their income using a sale-factor
formula. It expressly repealed the immediately previous tax act, the Single Business Tax Act, MCl 208.1 et seq. However, neither the Single Business Tax Act nor the Michigan Business Tax Act repealed the previously enacted Multistate Tax Compact
Act, MCl 205.581 et seq. In 2012, the Legislature repealed the Business Tax Act.
In its lawsuit, first brought in the Court of Claims, plaintiff, IBM, argued that it could elect to use the Multistate Tax Compact Act apportionment formula to calculate its 2008 Michigan taxes. The Court of Claims and the Court of Appeals determined that IBM could not use the Multistate Tax Compact Act apportionment formula: The Court of Appeals held that the Michigan Business Tax Act had impliedly repealed the Multistate Tax Compact Act’s apportionment formula. The
Michigan Supreme Court held, in a 3-1-3 decision, that IBM could elect to use the Multistate Tax Compact Act apportionment formula. On August 4,2014, defendant, the
Department of Treasury, filed motions for a stay, rehearing, and immediate consideration. On August 11, 2014, IBM filed a response to the Department’s motions.

Case Number: 2014-08
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