U.S. Supreme Court Asked to Review a Michigan Real Estate Transfer Tax Case
The U.S. Supreme Court has been asked to review a Michigan case that held that a taxpayer was liable for the Michigan Real Estate Transfer Tax based on the value of the lots as improved by the homes. The tax is imposed on recorded instruments and the only recorded instrument in the transaction was the deed. The “value” exchanged for that deed included both the cost of the lot and the home, and so the Tax Tribunal correctly held that that value was the proper measure for taxation. However, the Tribunal's order imposing penalties on the taxpayer was reversed. The Department of Treasury did not prove that the taxpayer acted negligently or with any intent to defraud when it paid taxes on the value of the unimproved land and the imposition of penalties is not warranted in the absence of such evidence. (Lake Forest Partners 2, Inc. v. Michigan Department of Treasury, Mich. S. Ct. (2008) 743 NW2d 881 , cert filed, U.S. S. Ct. Dkt. No. 08-109, 07/22/2008.)
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