Finance Company Sales Tax Applicability

Paper Summary:

This paper presents the case of a Michigan finance company that financed consumer purchases of automobiles from affiliated dealers, including the cost of sales tax. The paper examines whether the finance company is entitled to a refund of the sales tax paid if the debt is later deemed to be uncollectable.

Table of Contents:
Facts
Issue
Reasoning
Analysis
Conclusion

From the Paper:

"In Daimler Chrysler Services North America LLC v. Department of Treasury, Michigan Court of Appeals, No. 264323 (2006), the Court was called upon to address a similar issue. The creditor, Daimler Chrysler, overpaid tax revenue to the treasury for motor vehicles sold to consumers by its affiliated dealers and sought relief under the bad-debt provision of the General Sales Tax, which allowed taxpayers to recover overpayment when expected sales proceeds were not received. The trial court determined that Daimler Chrysler was not a taxpayer, and determined that there was no nexus between the bad debt and the retail sales of the automobiles by the dealers. The Court disagreed with the trial court's decision and held that Daimler Chrysler was a taxpayer under the bad-debt provision, that there was a nexus between Daimler Chrysler's pad debt and the retail sales, and that Daimler Chrysler could recover under the bad-debt provision."

Sample of Sources Used:

• MCL 205.51 1(h). Retrieved July 12, 2008, from Michigan Legislature Web site: http://www.legislature.mi.gov/(S(0gdhcgv2es2k1g45xd5zez55))/mileg.aspx?page=GetObject&objectname=mcl-205-51
• MCL 205.52 2(2)(c). Retrieved July 12, 2008 from Michigan Legislature Web site: http://www.legislature.mi.gov/(S(0gdhcgv2es2k1g45xd5zez55))/mileg.aspx?page=GetObject&objectname=mcl-205-52
• MCL 205.52 2(1). Retrieved July 12, 2008 from Michigan Legislature Web site: http://www.legislature.mi.gov/(S(0gdhcgv2es2k1g45xd5zez55))/mileg.aspx?page=GetObject&objectname=mcl-205-52
• Daimler Chrysler Services North America LLC v. Department of Treasury, Michigan Court of Appeals, No. 264323 (2006). Retrieved July 12, 2008 from Michigan Court of Appeals. Web site: http://courtofappeals.mijud.net/DOCUMENTS/OPINIONS/FINAL/COA/20060725_C264323_49_122O.264323.OPN.COA.PDF

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