One of the first rules of business is that you don’t leave money on the table. That adage is equally important in tax matters. Taxpayers can leave behind funds by failing to follow the rules. The importance of compliance with the procedural requirements in requesting a refund was highlighted in the recent Michigan Tax Tribunal decision in Comerica, Inc. v. Michigan Dep't of Treasury, MTT Docket No. 17-000150 (Mar. 18, 2025).
At issue in Comerica was whether the company was entitled to interest on refunds paid by the Department of Treasury (the “Department”). The company challenged an assessment, and after decisions from the Tax Tribunal, the Court of Appeals, and the Michigan Supreme Court, the Department paid the company refunds of almost $11 million. The company then filed a motion with the Tax Tribunal related to its request of over $6 million in interest and costs.
The Department argued, in part, that the company did not request refunds and, therefore, interest was not permitted under the statute. On review, the Tax Tribunal reiterated that in order to receive interest on a refund, there are three required steps. First, the tax must have been paid. (It is unsurprising that it is not possible to receive a refund of something if it was never paid.) Second, the taxpayer must make a claim for a refund or petition for a refund. Finally, the refund claim (or petition) must be filed.
In Comerica, the only issue was whether a claim or petition for the refund had been made (i.e., step two). Notably, the Tax Tribunal stated that there is no specific form or manner by which the refund must be claimed. Instead, it must merely be a request for the refund. While the company requested a refund in a letter to the Department during the audit, the Tax Tribunal held that was premature as the Department had not made a determination until the audit was complete.
In reviewing the petitions originally filed in the matter, the Tax Tribunal noted that there was no explicit request for a refund. Nevertheless, the Tax Tribunal held that filing a petition constitutes a claim for refund. Therefore, it held that the company was entitled to interest under the statute starting 45 days after the petition was filed to the date of the refund payments.
In addition, the Tax Tribunal held that the company was entitled to costs and attorney fees related to the proceedings on remand related to the request for interest because the Department’s payment of the refunds undermined the Department’s arguments that interest was not permitted.
The decision in Comerica serves as an important reminder to ensure you always request all of the funds to which you may be entitled. Because if you don’t ask for it, you won’t receive it.
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