Opinion
No. 210887.
March 24, 2000 at 9:00 a.m.
Appeal from Jackson Circuit Court, Michigan, LC No. 96-077233-AA.
Before: Hoekstra, P.J., and McDonald and Meter, JJ.
In this case involving the Michigan Income Tax Act of 1967, MCL 206.1 et seq.; MSA 7.557(101) et seq., defendant appeals by leave from the circuit court's ruling, in an appeal from a decision by the Revenue Commissioner, that (1) the circuit court had jurisdiction to hear the appeal, and (2) plaintiff's tuition increase for the 1995-1996 academic year was low enough that its students, under MCL 206.274; MSA 7.557(1274), could claim a tax credit on their 1995 tax returns for a percentage of the tuition and fees they paid to plaintiff.
The Tax Credit Statute
MCL 206.274(1); MSA 7.557(1274)(1) allows a resident claimant with a household income of $200,000 or less to claim an income tax credit for fees and tuition "paid by the claimant . . . to a qualified institution of higher learning." The credit consists of a certain percentage, depending on the tax year, of fees and tuition paid, not to exceed a specified dollar amount for each student for each tax year. MCL 206.274(2); MSA 7.557(1274)(2). Prior to December 22, 1996, a "qualified institution of higher learning" was defined as an institution that, among other things:
has provided a letter of notification to the state treasurer before July 1 of the tax year that states that the institution will not increase tuition rates during the ensuing academic year by more than the annual average percentage increase in the United States consumer price index in the immediately preceding tax year. [See former MCL 206.274(8)(iv); MSA 7.557(1274)(8)(iv); emphasis added.]
On December 22, 1996, an amendment to the statute took effect. A "qualified institution of higher learning" is now defined as an institution that, among other things, has certified that it will not increase " fees and tuition rates" by a specified amount during the ensuing academic year. MCL 206.274(8)(b)(iv) and (v); MSA 7.557(1274)(8)(b)(iv) and (v) (emphasis added). The amendment is retroactive back to January 1, 1996. See the Historical and Statutory Notes to MCL 206.264; MSA 7.557(1264).
An additional amendment took effect on July 25, 1997. The 1997 amendment is not relevant to the instant case.
The amended statute specifies that for the 1995 tax year (the year at issue in the instant case), a qualified institution must certify that its fees and tuition rates will not increase "by more than the annual average percentage increase in the United States consumer price index in the immediately preceding tax year." See MCL 206.274(8)(b)(iv); MSA 7.557(1274)(8)(b)(iv). Except for the inclusion of fees in the cost increase calculation, this language parallels the language in the statute as it existed prior to the 1996 amendment.
Factual Background
The parties do not dispute the relevant facts. Plaintiff certified that its tuition increase for the 1995-1996 academic year would be 2.59 percent. This percentage increase was lower than the annual average percentage increase in the United States consumer price index for 1994, which was 2.60 percent. Accordingly, plaintiff believed that it was a "qualified institution of higher learning" and that its students could claim a tax credit under MCL 206.274; MSA 7.557(1274) for fees and tuition paid to plaintiff in 1995.
However, plaintiff also instituted a $1.50 "billing contact fee" for the 1995-1996 academic year; this fee applied only to those students taking more than one credit hour of classes. Approximately eighty percent of plaintiff's students paid this fee. In determining whether plaintiff's cost increase allowed it to be a "qualified institution of higher learning" under MCL 206.274; MSA 7.557(1274) for the 1995 tax year, defendant included the $1.50 billing contact fee. By including the fee, defendant determined that plaintiff's cost increase exceeded 2.6 percent and that plaintiff's students thus could not claim a tax credit for the 1995 tax year.
Plaintiff requested an informal conference to challenge defendant's decision. Plaintiff claimed that it was indeed a "qualified institution of higher learning" because (1) the billing contact fee should not have been included in the eligibility calculation, since the calculation should only have included tuition increases, not fee increases; and (2) the billing contact fee should not have been included in the calculation since the fee was not "uniformly required to be paid by all students." After the conference, a hearing referee concluded, in a February 23, 1996, opinion, that plaintiff was a "qualified institution of higher learning" for the 1995 tax year because the plain language of the statute mandated that only "tuition" be included in the eligibility computation. The hearing referee further opined that if the statute required the eligibility computation to include fees uniformly required to be paid by all students (which it did not), the billing contact fee should be included, since it "is uniformly applied to all students even though all students do not pay the fee."
Prior to the 1996 amendment, MCL 206.274(1); MSA 7.557(1274)(1) allowed a resident claimant with a household income of $200,000 or less to claim an income tax credit for " fees uniformly required to be paid by all students and tuition paid by the claimant . . . to a qualified institution of higher learning" (emphasis added).
Following the hearing referee's decision, defendant filed a statement of rebuttal with the Revenue Commissioner in which it stated that it disagreed with the referee's recommendation. Defendant argued that the referee's interpretation would circumvent the legislative intent of the statute, which was to encourage educational institutions to keep their overall costs — not just their tuition — low. On July 15, 1996, the Acting Commissioner of Revenue issued his decision, finding that for the reasons set forth in the statement of rebuttal, plaintiff did not meet the requirements of MCL 206.274(8)(a); MSA 7.557(1274)(8)(a) as a "qualified institution of higher learning" and could not, therefore, be certified as an eligible institution for purposes of the college tuition tax credit for the 1995 tax year.
Plaintiff sought review of the Revenue Commissioner's decision in the circuit court. Along with arguing the substantive merits of the case, defendant contended that the circuit court had no jurisdiction to hear the appeal because exclusive jurisdiction was vested in the Michigan Tax Tribunal or the Court of Claims. On October 10, 1997, the court issued an opinion in which it held that (1) the circuit court's jurisdiction was proper under MCL 24.301-303; MSA 3.560(201)-(203), since this was a "contested case" subject to review under these Administrative Procedures Act ("APA") statutes; and (2) the plain language of the tax credit statute, during the time period applicable to the instant case, mandated that only "tuition" — and not "fees" — be included in the eligibility computation. The court therefore held that plaintiff was a "qualified institution of higher learning" for the 1995 tax year. The court noted that the tax credit statute had since been amended to include fees in the eligibility computation, but the court did not address the fact that this amendment was to be retroactive back to January 1, 1996.
Jurisdiction with the Circuit Court was Proper
Defendant first argues that the circuit court had no jurisdiction to hear the appeal because (1) exclusive jurisdiction for cases arising under the Income Tax Act is vested in the Tax Tribunal or the Court of Claims, and (2) circuit court jurisdiction under the APA was inappropriate because the instant case was not a "contested case" under MCL 24.203(3); MSA 3.560(103)(3). This Court reviews jurisdictional questions de novo. Dep't of Natural Resources v Holloway Construction Co., 191 Mich. App. 704, 705; 478 N.W.2d 677 (1991). Where a court is without jurisdiction in a particular case, its acts and proceedings are null and void. Fox v Bd. of Regents of the University of Mich, 375 Mich. 238, 242; 134 N.W.2d 146 (1965).
A litigant seeking judicial review of an administrative agency's decision has three potential avenues of relief: (1) the method of review prescribed in the statutes applicable to the particular agency, (2) the method of review prescribed by the APA, MCL 24.201 et seq.; MSA 3.560(101) et seq., or (3) an appeal under MCL 600.631; MSA 27A.631, a provision of the Revised Judicature Act. Living Alternatives v Dep't of Mental Health, 207 Mich. App. 482, 484; 525 N.W.2d 466 (1994). We will address each of these alternatives in turn.
The statutes applicable to the Department of Treasury provide for review with the Tax Tribunal or the Court of Claims. See MCL 205.22; MSA 7.657(22). However, the Tax Tribunal's exclusive and original jurisdiction, as stated in MCL 205.731; MSA 7.650(31), is limited to proceedings under the property tax laws. Because the instant case did not involve a property tax law issue, the Tax Tribunal did not have jurisdiction to hear the appeal. To gain jurisdiction with the Court of Claims, an "appellant shall first pay the tax, including any applicable penalties and interest, under protest and claim a refund as part of the appeal." MCL 205.22(2); MSA 7.657(22)(2). Such "payment under protest" was not possible in the instant case, since plaintiff was not a taxpayer for purposes of the dispute. Accordingly, the Court of Claims did not have jurisdiction to hear the appeal. Review prescribed in the statutes applicable to the particular agency, then, was not possible.
The next question is whether review under the APA was appropriate. The APA provides that "[w]hen a person has exhausted all administrative remedies available within an agency, and is aggrieved by a final decision or order in a contested case," the person may petition for review in the circuit court. MCL 24.301-303; MSA 3.560(201)-(203). A contested case is defined as "a proceeding . . . in which a determination of the legal rights, duties, or privileges of a named party is required by law to be made by an agency after an opportunity for an evidentiary hearing." MCL 24.203(3); MSA 3.560(103)(3). Defendant contends that review under the APA was inappropriate because (1) this was not a contested case, since there was no requirement that the Revenue Commissioner hold an evidentiary hearing prior to issuing his decision; and (2) this case arose from an informal conference, which is specifically exempt, under MCL 205.21(2)(d); MSA 7.657(21)(2)(d), from the APA's judicial review provisions. We agree that this was not a "contested case" within the meaning of the APA.
We first note that the statute governing certain informal conferences with defendant specifically indicates that informal conferences are not to be governed by the judicial review provisions of the APA. See MCL 205.21(2)(d); MSA 7.657(21)(2)(d). However, this rule applies to conferences regarding the refusal by a taxpayer to make a return or payment or to provide adequate tax information. MCL 205.21; MSA 7.657(21). The informal conference at issue here did not involve such a refusal by a taxpayer, and defendant's argument regarding the language of MCL 205.21(2)(d); MSA 7.657(21)(2)(d) is therefore unpersuasive. Defendant's alternative argument, however, is valid. Indeed, there was no requirement that the Revenue Commissioner hold an evidentiary hearing prior to issuing his decision, since plaintiff merely requested an informal conference. Accordingly, we conclude that this was not a "contested case" within the meaning of the APA, and the APA's judicial review procedures were therefore inapplicable.
We now turn to the Revised Judicature Act. MCL 600.631; MSA 27A.63 states:
. . . [R]eview of any order, decision, or opinion of any state board, commission, or agency . . . from which an appeal or other judicial review has not otherwise been provided for by law, [lies with] the circuit court of the county of which the appellant is a resident or [with] the circuit court of Ingham County. . . .
Here, a formal decision and order was issued by the revenue division of the Department of Treasury, which held that plaintiff was not a "qualified institution of higher learning" and could not be certified as an eligible institution for purposes of the college tuition tax credit. As discussed earlier, review of this decision has not been specifically provided for by law. Therefore, under MCL 600.631; MSA 27A.631, jurisdiction lay with the circuit court. See also Living Alternatives, supra at 484-485.
The Circuit Court Properly Ruled that the Billing Contact Fee should be Excluded from the Eligibility Computation
Defendant next argues that the circuit court erred in concluding that the billing contact fee should be excluded from the tax credit eligibility computation, since the legislative intent of the tax credit statute was to encourage educational institutions to keep all costs — not just tuition — low. Whether the billing contact fee should have been included in the eligibility computation is a question of statutory interpretation. This Court reviews questions of statutory interpretation de novo. Benedict v Dep't of Treasury, 236 Mich. App. 559, 563; 601 N.W.2d 151 (1999). However, "although it remains our responsibility to determine the meaning of the statute, we give `appropriate deference' to the agency's interpretation." Faircloth v Family Independence Agency, 232 Mich. App. 391, 406; 591 N.W.2d 314 (1998). We "ordinarily defer to the construction of a statute by the agency charged with applying it unless the interpretation is `clearly wrong.'" Id.
The primary goal of judicial interpretation of statutes is to ascertain and give effect to the intent of the Legislature. Frankenmuth Mutual Ins. v Marlette Homes, Inc., 456 Mich. 511, 515; 573 N.W.2d 611 (1998). The first criterion in determining intent is the specific language of the statute. House Speaker v State Administrative Bd, 441 Mich. 547, 567; 495 N.W.2d 539 (1993). The Legislature is presumed to have intended the meaning it plainly expressed. People v Venticinque, 459 Mich. 90, 99-100; 586 N.W.2d 732 (1998). If the plain and ordinary meaning of the language is clear, judicial construction is generally neither necessary nor permitted. Heinz v Chicago Rd. Investment Co., 216 Mich. App. 289, 295; 549 N.W.2d 47 (1996). Indeed, courts may not speculate as to the probable intent of the Legislature beyond the words expressed in the statute. In re Schnell, 214 Mich. App. 304, 310; 543 N.W.2d 11 (1995).
We conclude that the circuit court was correct in determining that prior to the 1996 amendment of MCL 206.274; MSA 7.557(1274), only tuition — and not fees — were to be considered in determining whether an institution's cost increase was low enough for its students to take a tax credit under the statute. Indeed, prior to the 1996 amendment, MCL 206.274(8)(iv); MSA 7.557(1274)(8)(iv) specifically defined a "qualified institution of higher learning" as an institution that, among other things:
has provided a letter of notification to the state treasurer before July 1 of the tax year that states that the institution will not increase tuition rates during the ensuing academic year by more than the annual average percentage increase in the United States consumer price index in the immediately preceding tax year. [Emphasis added.]
This language was clear in indicating that tuition could not be increased beyond a certain amount, and any speculation as to the Legislative intent beyond these words was inappropriate. In re Schnell, supra at 310. Accordingly, prior to the 1996 amendment, fees should not have been included in an institution's eligibility computation under MCL 206.274; MSA 7.557(1274).
The problem with the circuit court's analysis, however, was that it did not consider the retroactive effect of the 1996 amendment, which specifically indicated that tuition and fees are now to be considered in the eligibility computation. MCL 206.274(8)(b)(iv) and (v); MSA 7.557(1274)(8)(b)(iv) and (v). The Legislature indicated that the amendment was retroactive back to January 1, 1996. This retroactivity made the statute applicable to the 1995 tax returns of plaintiff's students, since (1) those returns could not be filed until January 1, 1996; and (2) the amendment specifically indicated that the eligibility computation for the 1995 tax year was to include fees and tuition. See MCL 206.274(8)(b)(iv); MSA 7.557(1274)(8)(b)(iv). At first blush, then, it appears that the circuit court erred in concluding that the billing contact fee should not have been considered in determining plaintiff's eligibility computation for the 1995 tax year.
However, the 1996 amendment also added a section stating that:
"Fees" means fees required of and uniformly paid by all students and that have been promulgated and published in the catalog of the qualified institution of higher learning. [MCL 206.274(8)(a); MSA 7.557(1274)(8)(a).]
This provision plainly indicates that the term "fees" includes only fees "uniformly paid by all students." The fee at issue here was not uniformly paid by all students; it was paid only by those students taking more than one credit hour of classes. Accordingly, under the plain language of the amended, retroactively-applied statute, the billing contact fee should not be considered by defendant in determining whether plaintiff was a "qualified institution of higher learning" for the 1995 tax year. Accordingly, the circuit court ultimately reached the correct result. We will not reverse a trial court's decision if it reached the correct result, albeit for the wrong reasons. Norris v State Farm Fire Casualty Co., 229 Mich. App. 231, 240; 581 N.W.2d 746 (1998).
Affirmed.