Trucks operated by two interstate motor carriers, Alvan Motor Freight and United Parcel Service, wholly within Michigan were entitled to an exemption from use tax.  The specific use tax exemption was for rolling stock used in interstate commerce.  Because the trucks were carrying freight originating from or destined to locations outside Michigan, the Michigan Court of Appeals overturned the Michigan Tax Tribunal decision in Alvan Motor Freight, Inc. et al. v. Department of Treasury, Docket Numbers 276511 and 276736, September 23, 2008.

For taxes levied after December 31, 1992 and before May 1, 1999, Section 4k(4) of the Use Tax Act  [MCL 205.94k(4)] provides the following exemption from the Michigan Use Tax:

(4) For taxes levied after December 31, 1992, the tax levied under this act does not apply to the storage, use, or consumption of rolling stock used in interstate commerce and purchased, rented, or leased by an interstate fleet motor carrier.

Section 4k(4) allowed an exemption from use tax for the storage, use, or consumption of rolling stock used in interstate commerce and purchased, rented, or leased outside Michigan by an interstate motor carrier.   Both taxpayers are interstate motor carriers that operate rolling stock in Michigan.  Any rolling stock that is used to carry the persons or property which are the objects of commerce from a point outside the state to a point inside the state or from a point inside the state to a point outside the state is “used in interstate commerce,” and the plain language of the statute contains no requirement that the implements of moving the objects of commerce from point to point, that is, the rolling stock, must also cross state lines.  The Tax Tribunal improperly relied on the Treasury Department's Internal Policy Directive 2003-1, 09/30/2003 because the IPD improperly imports the definition of interstate motor carrier to the definition of interstate commerce and is contrary to the plain meaning of the statute. (Alvan Motor Freight, Inc. et al. v. Department of Treasury, Docket Numbers 276511 and 276736, September 23, 2008)