The United States Supreme Court denied an appeal by a Ford Motor Co. unit to get a $16 million refund on its Michigan taxes related to a dispute over the power of states to impose levies retroactively.
The US Supreme Court upheld a ruling by a Michigan court that had rejected Ford’s request for a refund of sales taxes that the company paid on vehicles sold to people who later defaulted on their loans. The sales tax refund case is centered on a Michigan requirement that the entire sales tax has to be paid up front, even in instances when the consumer is paying by installments.
There was a ruling – in which Ford is not involved – in 2006 where a Michigan court ruled that companies that pay the sales tax for buyers can take a deduction if the consumers ultimately default. Nonetheless, the tax laws were then amended by the Michigan legislature, with the objective of to overturn the court decision while blocking companies that are eyeing to get up to $100 million in refunds.
Michigan courts then clarified that the amendment indicated that Ford wasn't really entitled to a $16 million refund it was seeking on taxes paid over a five-year period.
Arguing its case at the Supreme Court, Ford cited a 1994 high court ruling that said the Constitution bars retroactive tax increases that reach back more than a “modest” period of time. The justices in this case, however, had affirmed a tax increase that extended back 14 months.
Michigan Attorney General Michael A. Cox said that the 1994 ruling isn’t applicable to the Ford case since the state's legislature was only correcting a misinterpretation by the courts, not enacting a new retroactive tax.
Headquartered in Dearborn, Michigan, Ford Motor Co. is an American multinational carmaker founded by Henry Ford on June 16, 1903. It was incorporated with 12 investors owning a total of 1000 shares. At the time, Ford, only 39 years of age, owned a quarter of the company. Ford builds and sells passenger and commercial vehicles under the Ford brand as well as luxury vehicles under the Lincoln brand. Ford is considered as the second-largest carmaker in the United States and one of the largest in the world. It also boasts of having one of the most recognizable corporate logos in the world.
When the automotive industry crisis rumbled in 2008, Ford was one of the companies severely affected. In 2008, Ford posted $14.7 billion in losses. Nevertheless, while the other members of the Detroit 3 – General Motors and Chrysler filed for Chapter 11 bankruptcy protection in 2009, Ford managed to post $2.7 billion in profit that year.