Skip to main content

Revenue Administrative Bulletin 1989-23


Approved: April 6, 1989




RAB-89-23. This Bulletin contains a notice to Michigan taxpayers, particularly those that may be affected by the United States Supreme Court decision in Davis v Michigan Department of Treasury (hereafter referred to as Davis).

Summary of the Davis Decision

The United States Supreme Court held that Section 30 of the Michigan Income Tax Act (MCL 206.30, MSA 7.557(130)) violates principles of intergovernmental tax immunity by favoring retired state and local government employees over retired federal employees. Section 30 authorizes a complete deduction from adjusted gross income for retirement or pension benefits received from a public retirement system but limits the deduction for retirement or pension benefits from any other retirement system to $7,500 for a single return and $10,000 for a joint return.

The United States Supreme Court further held that the appropriate remedy was a question of state law within the special expertise of the Michigan courts. Accordingly, the Court reversed the judgment of the Michigan Court of Appeals and remanded the case for further proceedings.

Implications for Affected Michigan Taxpayers

Until Michigan courts articulate the legal remedy in this case, the Department advises taxpayers to file their Michigan income tax returns under the pre-Davis law. Taxpayers may preserve their right to claim a refund for tax year 1988 by timely filing an amended return no later than Monday, July 17, 1989, on Form MI-1040X in accordance with Section 27a of the Revenue Act. (MCL 205.27a; MSA 7.657(27a))

In accordance with Subsection (6) of Section 27a of the Revenue Act (MCL 205.27a(6); MSA 7.657(27a)(6)) a claim for refund that is filed for tax years 1984, 1985, 1986, and 1987 will be denied by the Department as having been untimely filed. Subsection (6) provided that a claim for refund based upon the validity of a tax law under the laws or constitution of the United States or the Michigan Constitution of 1963 shall not be paid unless the claim is filed within 90 days after the date set for filing a return.

The decision of whether a refund should be authorized for tax year 1988 will be determined by the Michigan courts or an amendment to Michigan’s Income Tax Act.