The General Sales Tax Act (GSTA); Sales, use & withholding (SUW) tax returns; MCL 205.52; “Gross proceeds” (MCL 205.51(1)(c)); “Sales price” (MCL 205.51(1)(d)); MI Admin Code, R 205.117(3); Documentation requirements; MCL 205.68(1) & (4); Applicability of the prima facie presumption of correctness; Audit; MCL 205.21(1); MI Admin Code, R 205.2009(1); Reliance on an audit report & an audit supervisor’s affidavit; Hearsay & foundation challenges; Whether the audit report was prepared in anticipation of litigation; MCR 2.116(C)(10) standard; Procedural due process; Opportunity to be heard

Rejecting plaintiff-taxpayer’s (Sav-Time) evidentiary challenges, the court held that Sav-Time’s records failed to meet the GSTA’s “requirement for accurate and complete recordkeeping.” Thus, the evidence overwhelmingly showed no genuine issue of material fact existed as to the accuracy and consistency of its records during the audit period. The court also held that Sav-Time was not denied “an opportunity to be heard because the Court of Claims disposed of the case via summary disposition[.]” Thus, it affirmed summary disposition for defendant-Department of Treasury in this dispute arising from its audit of plaintiff’s SUW tax returns. The court first concluded that the challenged audit report and affidavit were not hearsay, Sav-Time’s argument that the affidavit lacked proper foundation was flawed, and that “the audit report and schedules were clearly not prepared in anticipation of litigation.” It also disagreed with the assertion “the Department ignored Rule 205.117 in favor of the more exacting standard” in the GSTA. It held that the GSTA controlled, “and Sav-Time was required to demonstrate that labor sales or charges were separately itemized in its financial documents or records in order to qualify for an exemption from sales tax on the labor sales.” Further, even if it were to agree “the Department ‘ignored’ its own duly promulgated Rule 205.117, the invoices that Sav-Time submitted to the auditor do not clearly itemize the cost of tangible personal property required by Rule 205.1173(3).” The court also rejected the claim that MCL 205.68(4)’s conditions precedent were not “satisfied, and that the trial court thus had no basis to apply the prima facie presumption of correctness” here. It found that “the documentation originally submitted to the auditor gave the Department reason to believe that Sav-Time’s records, or the returns it filed, were inaccurate and incomplete. Consequently, the Department’s tax assessments were ‘prima facie correct’” under the statute and Sav-Time bore “the burden of refuting them.” The court also found that Sav-Time’s “failure to provide proper documentation to the auditor, combined with the contradictory nature of its postaudit submissions and the generic nature of its ‘nontaxable’ classifications, underscores how [it] failed to meet its burden to overcome the prima facie correctness of the Department’s tax assessments. No genuine issue of fact” existed as to whether the “records were adequately itemized . . . .”