Opinion
No. 330262
01-24-2017
DEPARTMENT OF TREASURY, Plaintiff-Appellee, v. ROBERT LIPSITZ, Defendant-Appellant.
UNPUBLISHED Ingham Circuit Court
LC No. 15-000360-CZ Before: O'CONNELL, P.J., and MARKEY and MURRAY, JJ. PER CURIAM.
Defendant appeals by right the judgment entered against him for corporate taxes, penalties, and interest in the amount of $141,887.17 as the responsible party under MCL 205.27a(5). Defendant sought to defend plaintiff's collection action by asserting he did not receive adequate notice of the tax assessments. Plaintiff asserts that defendant was provided and received notice of the final tax assessments, failed to timely or effectively appeal the assessments in either the Michigan Court of Claims or the Michigan Tax Tribunal, so, consequently, the tax assessments were final and not subject to collateral attack. The trial court agreed and granted plaintiff judgment on its motion for summary disposition. We affirm.
At the time of the final assessments at issue, MCL 205.22 provided in pertinent part:
(1) A taxpayer aggrieved by an assessment, decision, or order of the department may appeal the contested portion of the assessment, decision, or order to the tax tribunal within 35 days, or to the court of claims within 90 days after the assessment, decision, or order. . . . .
* * *
(5) An assessment is final, conclusive, and not subject to further challenge after 90 days after the issuance of the assessment, decision, or order of the department, and a person is not entitled to a refund of any tax, interest, or penalty paid pursuant to an assessment unless the aggrieved person has appealed the assessment in the manner provided by this section. [MCL 205.22.]
I. SUMMARY OF FACTS
Defendant Robert Lipsitz was the majority owner and principal officer of all the corporate entities that were assessed the taxes at issue. He caused all of the companies to file for bankruptcy in July 2008. The corporate entities and the taxes, penalties, and interest assessed are: Double JJ Resort Ranch, Inc. (final assessment Q270174 for 2007 single business tax (SBT) in the amount of $6,599.23, issued 05/14/09); Outdooresources, Inc. (final assessment Q296536 for 2007 SBT in the amount of $39,595.32, issued 05/07/09, and final assessment Q414840 for June 2008 sales tax in the amount of $69,949.39, issued 05/07/09); Carpenter Ridge Inc. (final assessment Q270184 for 2007 SBT in the amount of $6,693.99, issued 09/09/09); and American Appaloosas, Inc. (final assessment Q866873 for 2007 SBT in the amount of $2,249.90). Defendant acknowledges that he contemporaneously received all five final assessments at issue and promptly provided them to his attorney, Jerome Frank. Unfortunately for defendant, Frank did not perfect a valid appeal through either the Tax Tribunal or the Court of Claims. This fact would later prove dispositive. See MCL 205.22(5).
Plaintiff filed this collection action in Ingham Circuit Court on May 6, 2015 for unpaid taxes, penalties, and interest in the amount of $141,887.17 based on the five tax assessments listed above. Defendant filed his answer and affirmative defenses on June 12, 2015. Defendant asserted as affirmative defenses that the assessments were not properly determined and that he was not a responsible party for the corporate taxpayers. Defendant also asserted a due process defense claiming he was not given timely notice of the final assessments and not given notice of plaintiff's "intent to assess." After discovery, plaintiff moved for summary disposition under MCR 2.116(C)(9) (fail to state a valid defense to a claim), and MCR 2.116(C)(10) (no genuine issue as to any material fact). Both parties submitted affidavits in support of and in opposition to the motion for summary disposition.
While the parties frame their appellate arguments as whether the circuit court had jurisdiction, plaintiff's complaint asserts and defendant admits, that the circuit court possessed jurisdiction of the instant case pursuant to MCL 600.705.
Treasury postdates assessments to provide taxpayers sufficient time to meet appellate deadlines. See PIC Maintenance, Inc v Dep't of Treasury, 293 Mich App 403, 409; 809 NW2d 669 (2011).
Because only the pleadings may be considered when deciding a motion under MCR 2.116(C)(9), see MCR 2.116(G)(5), and the parties and the circuit court relied on the parties' affidavits, we review the circuit court's decision under MCR 2.116(C)(10). See Cuddington v United Health Servs, Inc, 298 Mich App 264, 270; 826 NW2d 519 (2012).
The parties presented their arguments on the motion for summary disposition to the circuit court on November 4, 2015. Plaintiff's counsel argued that defendant had failed to assert a valid defense and that the one attempt to appeal to the small claims division of the Tax Tribunal was rejected because that court could not hear a challenge to the assessment. Plaintiff's counsel also argued that defendant's asserted defense of not receiving the notices of Treasury's "intent to assess" would, at best, be harmless error, and could have been raised in the Tax Tribunal. As for defendant's claim of not being the responsible party for the corporate tax debt, plaintiff's counsel asserted that this claim also should have been raised in a direct appeal.
Defense counsel argued that when defendant was assessed, his life was very hectic. Counsel conceded "[i]t's possible that a notice to assess was sent to him. He just doesn't have any record of it, and when he did get the final assessments he forwarded [them] to counsel immediately and it was dealt with." Counsel also complained that the Tax Tribunal threw away his letter appeal because a petition was required, noting that it was "not our responsibility to follow up on how the tribunal handles procedure . . . ." To this, the circuit court "beg[ged] to differ with you on that." The circuit court also noted that it was defendant's responsibility "as an officer of a company, to keep [authorities advised of] a proper address for them to send documentation such as this type of thing." The circuit court also noted that defendant should have complained to the Tax Tribunal.
The circuit court entered judgment against defendant for $141,887.17. Defendant now appeals by right.
II. ANALYSIS
A. STANDARD OF REVIEW
This Court reviews de novo the trial court's grant or denial of a motion for summary disposition. Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). A motion for summary disposition under MCR 2.116(C)(10) tests the factual sufficiency of a claim and must be supported by affidavits, depositions, admissions, or documentary evidence. Bronson Methodist Hosp v Auto-Owners Ins Co, 295 Mich App 431, 440; 814 NW2d 670 (2012); see also MCR 2.116(G)(3)(b); MCR 2.116(G)(4). When considering the motion, a court must view the submitted evidence in the light most favorable to the party opposing the motion. Corley v Detroit Bd of Ed, 470 Mich 274, 278; 681 NW2d 342 (2004). If the moving party carries its initial burden, the party opposing the motion must then demonstrate that there is a disputed material fact question by submitting evidence, "the content or substance would be admissible as evidence to establish or deny the grounds stated in the motion." MCR 2.116(G)(6); See Maiden, 461 Mich at 120-121. "The motion should be granted if the affidavits or other documentary evidence demonstrate that there is no genuine issue with respect to any material fact, and the moving party is entitled to judgment as a matter of law." Miller v Purcell, 246 Mich App 244, 246; 631 NW2d 760 (2001). "A genuine issue of material fact exists when the record, giving the benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds might differ." West v Gen Motors Corp, 469 Mich 177, 183; 665 NW2d 468 (2003).
B. DISCUSSION
We affirm the judgment in favor of plaintiff. Because the undisputed facts show that Treasury gave statutory notice to defendant of its intent to assess and of the final tax assessments at issue and because defendant failed to timely or effectively appeal to either the Michigan Court of Claims or the Michigan Tax Tribunal, MCL 205.22(1), the circuit court correctly determined that plaintiff was entitled to judgment as a matter of law. MCR 2.116(C)(10); MCL 205.22(5).
The undisputed facts show that Treasury properly served defendant with each of the corporate officer final assessments, MCL 205.27a(5), "by certified mail addressed to the last known address of the taxpayer." MCL 205.28(1)(a). While the statute does not require that the taxpayer actually receive the assessments, PIC Maintenance, Inc v Dep't of Treasury, 293 Mich App 403, 410, 414; 809 NW2d 669 (2011), defendant acknowledged in his affidavit in opposition to summary disposition that he in fact received all five final assessments within a timeframe that would have permitted defendant to appeal, raising any defects in the assessment process or his status as the party responsible for the corporate taxpayers. See MCL 205.22(1).
Defendant acknowledges receiving four of the five final assessments at a point in time when they were still appealable either to the Tax Tribunal (35-day appeal period) or to the Court of Claims (90-day appeal period). MCL 205.22(1). One of the final assessments, Q866873, was issued on May 15, 2013 and defendant acknowledges receiving it in July 2013. Consequently, this assessment was still appealable to the Court of Claims. --------
Defendant's claim that he was denied due process is without merit. The undisputed facts are based on the unrebutted affidavit of Treasury's representative that defendant was notified by mail of Treasury's intent to assess regarding each of the responsible party assessments at issue. See MCL 205.21. While defendant asserts he did not receive each notice of intent to assess, Treasury's representative averred none of the notices Treasury mailed to defendant were returned by the United States Post Office as undeliverable or unclaimed. See Jones v Flowers, 547 US 220, 223, 234; 126 S Ct 1708; 164 L Ed 2d 415 (2006) (holding that when a tax notice is mailed and returned undelivered, due process requires that the government take additional reasonable steps to provide notice before taking the owner's property); Sidun v Wayne Co Treasurer, 481 Mich 503, 509; 751 NW2d 453 (2008) (due process requires notice reasonably calculated to reach the interested party so that party is apprised of the action and afforded the opportunity to present their objections). But where notice is reasonably calculated to reach its intended recipient, "[d]ue process does not require that a property owner receive actual notice before the government may take his property." Jones, 547 US at 226; see also Sidun, 481 Mich at 509, and PIC Maintenance, 293 Mich App at 414-415. In this case, defendant acknowledged actually receiving all five final assessments within a timeframe that an appeal to the proper court could have been initiated and any alleged deficiency in the assessment process presented for decision. Thus, defendant was accorded due process because he was afforded the opportunity to present his objections to the appropriate court charged with hearing and deciding such cases. Jones, 547 US at 223; Sidun, 481 Mich at 508-510; PIC Maintenance, 293 Mich App at 414-415.
Defendant's argument that Treasury failed to comply with MCL 205.8, which requires notice to the taxpayer's official representative in certain circumstances, is also without merit. Specifically, that statute provides:
If a taxpayer files with the department a written request that copies of letters and notices regarding a dispute with that taxpayer be sent to the taxpayer's official representative, the department shall send the official representative, at the address designated by the taxpayer in the written request, a copy of each letter or
notice sent to that taxpayer. A taxpayer shall not designate more than 1 official representative under this section for a single dispute. [MCL 205.8.]In Fradco, Inc v Dep't of Treasury, 495 Mich 104, 114-115; 845 NW2d 81 (2014), our Supreme Court held that this statute "unambiguously directs the department to furnish a taxpayer's representative with [copies of notices and letters] whenever the taxpayer is entitled to receive the same." Thus, when it is required give notice to the taxpayer, "the department must notify the taxpayer and any representative duly appointed by the taxpayer." Id. at 116.
Under the facts and circumstances of this case, any failure to fully comply with MCL 205.8 does not warrant reversal. Treasury issued final assessments Q270174, Q296536, and Q414840 to defendant before it received on June 5, 2009, attorney Jerome Frank's May 29, 2009 letter that contained defendant's signed June 3, 2009, power of attorney regarding "2008/2009 Single Business/Sales Taxes." Further, Q270174 and Q296536 concern 2007 single business taxes owed, so the power of attorney did not apply to them. While Q414840 concerned 2008 sales tax, the final assessment had already been issued, and it is also clear from Frank's letter that he had received copies of all three final assessments. Defendant's affidavit confirms that he provided Frank with copies of all the final tax assessments at issue. Consequently, MCL 205.8 is not implicated with respect to final assessments Q270174 and Q296536. Any error with respect to providing a copy of the notice of intent to assess for Q414840 is harmless because the final assessment had already been issued, and Frank received a copy from defendant. Alleged error concerning the notice of intent could have been pursued through the Tax Tribunal. See Keith v Dep't of Treasury, 165 Mich App 105, 109; 418 NW2d 691 (1987) ("A defect in formal notice does not violate due process if notice was in fact given.").
Similarly, final assessments Q270184 and Q866873 were both for 2007 single business taxes. Defendant's June 2009 power of attorney to Frank related to "2008/2009 Single Business/Sales Taxes." So, the power of attorney did not apply to assessments for amounts owed for 2007 single business taxes. Thus, the power of attorney did not relate to the tax disputes at issue in final assessments Q270184 and Q866873.
In summary, Treasury assessed defendant under the corporate officer liability statute, MCL 205.27a(5), as a responsible person liable for the tax debt of four corporations. The undisputed facts as set forth in the affidavit of the Treasury's representative show that with respect to each assessment, it mailed a notice of intent to assess to defendant, MCL 205.21, and defendant was properly served with each of the final assessments "by certified mail addressed to the last known address of the taxpayer." MCL 205.28(1)(a). The Treasury's unrebutted affidavit also shows that none of the notices it mailed to defendant were returned as unclaimed or undeliverable. And, finally, defendant admitted in his own affidavit that he received all five final assessments. Patently, defendant had the opportunity to appeal the assessments to the Tax Tribunal or the Court of Claims. MCL 205.22(1). The record shows defendant was accorded due process notice and a meaningful opportunity to be heard regarding his claims of defects in the assessment process. Accordingly, because defendant failed to appeal four of the assessments at issue and abandoned an attempt to appeal one of them, the assessments became final and not subject to further collateral attack in the instant collection action. MCL 205.22(5). The circuit court properly granted plaintiff judgment on summary disposition. MCR 2.116(C)(10).
We affirm. As the prevailing party, plaintiff may tax its costs pursuant to MCR 7.219.
/s/ Peter D. O'Connell
/s/ Jane E. Markey
/s/ Christopher M. Murray