Prompt action may be required.
Michigan taxpayers may have an opportunity for a use-tax refund for tax paid on cloud-based products. The opportunity stems from the October 27, 2015, decision by the Michigan Court of Appeals in Auto-Owners Insurance Company v Department of Treasury (Auto-Owners). The decision held that:
Importantly, the Michigan Department of Treasury subsequently announced in its Notice dated January 6, 2016, that it will give this decision full retroactive effect — even in the presence of contrary guidance issued by the Department prior to the decision. As a result, Auto-Owners will be applied to all open tax years.
The decision combined with the Department’s support create a potential refund opportunity for taxpayers who paid Michigan use tax on cloud-based products within the past four years (or longer, depending on the tax return’s deadline. According to the requirements outlined in the Notice, refund-seekers must:
A special note was made that taxpayers who paid tax to a vendor must request a refund directly from that vendor.
Contact a member of your service team if you think you may be entitled to a refund of Michigan use taxes in light of these changes.
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