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Property Tax Measures In Effect
According to Jeffrey S. Ammon, a lawyer with the Miller Johnson law firm, Friday is the statutory deadline for a business to file its personal property statement.
Ammon also noted that new legislation expands the exemption for special tools, providing more opportunity for taxpayers to reduce expenses.
He said that’s one of several significant changes in the property tax law that became effective this year.
Ammon noted that in 2002, the Michigan Supreme Court invalidated the State Tax Commission’s rule regarding taxation of special tools.
“That rule had helped assessors by greatly expanding the legislative intent with respect to taxation of tools, jigs, dies, fixtures and other property used to make specific parts,” Ammon indicated.
But as of Dec. 30, the legislature sent the governor a bill reversing the STC interpretation.
“The new law clarifies and expands the statutory exemption for special tools,” Ammon said. “If your business owns or uses a significant amount of special tool property, you should consult with experienced legal counsel before you file your personal property statement to consider how the new legislative amendments can assist you.”
Among the notable changes he listed were:
- Separately Assessed Leasehold Improvements. January’s assessment notices must separate “leasehold improvement” assessments and taxable values from the balance of an assessment. “This is good news for taxpayers,” Ammon indicated, “because it gives you more detailed information about the makeup of your assessment.”
He said assessors also can choose whether to give leasehold improvements a separate permanent parcel number.
“If the assessor chooses to do so,” he said, “you will not only get a separate assessment notice for those leasehold improvements, you will also receive a separate tax bill. This is a significant opportunity for tenants and landlords in leased facilities to determine whether leasehold improvements are being fairly assessed, and whether the taxation of those improvements is adequately addressed in the lease.”
- Occupancy Rate Increases and Decreases. Ammon said some businesses may recall the WPW case ruling that Proposal A’s cap prevents assessors from increasing taxable value above the inflation rate based on increased occupancy rates.
“Landlords should also pay more attention to decreases in value caused by lower occupancy rates,” he said. “Those situations now present a more attractive opportunity for an appeal, since any future increases in occupancy rates would be capped.”
He urged property owners to carefully examine their assessment notices and to evaluate it against their leased property, fair market value and taxable value.
- Homestead Exemption Changes. Ammon said the Homestead Exemption has undergone two significant changes for 2004 and one flip-flop.
He said the first change is that the name of the Homestead Exemption has been changed to the “Principal Residence Exemption.”
He said the second change is that appeals from an assessor’s denial of one’s exemptions are now made to the Small Claims Division of the Michigan Tax Tribunal. The appeal deadline, he said, remains no later than 35 days after receipt of notice from the assessor.
He said that the flip-flop is that in July 2003, the status date for the Principal Residence Exemption was changed from May 1 to Dec. 31. In December, the legislature changed it back to May 1.
- Board of Review Meeting Date Changes. Beginning this year, Ammon advised, a city or township may authorize an alternative starting date for the March Board of Review. Previously, he said, the Board of Review always met beginning the second Monday in March.
“The new law allows a city or township to adopt an ordinance or a resolution authorizing the Board of Review to begin on either the Tuesday or Wednesday following that second Monday,” Ammon said. He recommended that property owners check the date when the local Board of Review begins meeting this year; it may be different from last year.
“Remember, that appearance at the Board of Review is a necessary step to preserve your right to appeal your property tax assessment,” he stressed.
- State Tax Commission Communications By E-mail. In April 2003, the State Tax Commission authorized any interested person (not just assessors and equalization directors) to sign up for automatic e-mail receipt of State Tax Commission bulletins, letters and other communications.
To sign up for this system, Ammon said interested parties must enter their e-mail address at www.state.mi.us/listserv/subscribe.html.
“The list that you want to receive is called TREAS-STC-PTD,” Ammon said.
He said any interested taxpayer should take advantage of this service to stay current on STC property tax communications in Michigan.
- Personal Property Tax Audits. Last autumn, the state appropriated funds for local governments to conduct enhanced personal property tax audits.
“Grant funds are available to local governmental units and many units have applied for these grants,” Ammon said. “Whether or not you have property in a local governmental unit receiving a grant,” he added, “you can expect more attention by assessors to personal property tax audits. Unless taxpayers handle these audits correctly, assessors can use this technique to create significant increases in taxpayer personal property taxes.”
- Mobile Home Property Taxation. The legislature is considering several bills to subject mobile homes to property taxation like other real property. Ammon noted that mobile homes are exempt from property taxes, being subject instead to a fee.
“If your business involves mobile home or mobile home site ownership or leasing,” he said, “you should know that the law may likely undergo dramatic changes in the coming months.”
Ammon said that if any property owner suspects one or more problems with assessment notices, taxable values or transfer of ownership issues, a quick decision is necessary.
“You must carefully consider the pros and cons of filing an appeal,” he said, “including the likelihood of success and the impact on other relationships with your local city or township.”
He strongly advised seeking legal counsel in such situations.