Dine Brands: Michigan Unclaimed Property Act’s Ten-year Statute of Limitations is Not Tolled by Examination
On January 19, 2023, the Michigan Court of Appeals issued a published opinion in the Dine Brands case in favor of the holder regarding the construction of the unclaimed property statute of limitations. In that case, Michigan opened examinations on Dine Brands to determine their compliance with the Unclaimed Property Act. The auditors then issued a determination against Dine Brands for an amount due to the State. Dine Brands argued that the amount due was barred by the ten-year statute of limitations and that the start of the examination did not toll the statute of limitations.
The statute in Michigan provides that “an action or proceeding shall not be commenced by the administrator with respect to any duty of a holder under this act more than 10 years… after the duty arose.”2 In response to the taxpayer’s arguments, the Department argued that under the language of the statute, an examination fell under the meaning of an “action or proceeding” which tolls the statute of limitations.
The Michigan Court of Appeals affirmed the lower courts in holding for Dine Brands. The Court focused on statutory interpretation and found that the statutory language of “action or proceeding” was not intended to include examinations for tolling the statute of limitations. The Court noted that “examination” was used in other portions of the statutes and “action or proceeding” continually referred to judicial actions and proceedings. The Court emphasized that based on the reading of the entire Unclaimed Property Act, the Legislature omitted the word "examination" from the tolling statute purposefully.
Therefore, the Michigan Court of Appeals held that the start of an audit conducted by the Michigan Treasury does not toll the statute of limitations for years exposed to audit.