TREASURY
Issued: January 20, 2021
On November 19, 2020, the Court of Appeals issued its published decision in
Emagine Entertainment, Inc., et. al. v Dep’t of Treasury, Mich App (2020).[1] Emagine operated movie theaters. At issue was whether Emagine’s sales of prepackaged candy constituted the taxable sale of prepared food and whether Emagine had collected the sales tax from its customers on those sales for purposes of its refund claim. As explained further below, the Court of Appeals upheld the Michigan Tax Tribunal, which invalidated part of the Department’s administrative rule that established a standard used to determine when otherwise exempt food is taxed as prepared food based on the seller providing eating utensils to their customers in specific ways. However, the court also upheld the Tribunal’s finding that Emagine had collected the tax from its customers and had not refunded them, therefore, it was not entitled to the refund because it would be u