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A new tax year is upon us! Last December, the State Tax Commission (“STC”) released several new bulletins that provide guidance to assessors of local units of governments. In this E-Letter we discuss and highlight those bulletins. In addition to the new information regarding property taxes, we would be remiss to not highlight the recent legislation affecting the ability of local units of government to provide information about local ballot proposals.
The STC had a busy meeting in December 2015. It addressed everything from interest rates on tax tribunal judgments to property tax exemptions. The new information was released through multiple bulletins. Although we highlight the information that is relevant to townships, the STC archives its bulletins on its website. You can view those here: http://www.michigan.gov/treasury/0,1607,7-121-1751_2228—,00.html#BULLETIN
State law requires that the Tax Tribunal interest rate be calculated twice per year for the periods of January 1 to June 30 and July 1 to December 31. The interest rate is calculated by adding 1% to the “adjusted prime rate.” The interest rate for January 1 to June 30, 2016, has been set at 4.25%, which remains unchanged since the Legislature adopted this method of establishing the interest rate in 2012.
Under PA 96 of 1994, there are certain instances when the qualified personal property of a qualified business may be assessed to the user of the personal property rather than the qualified business that owns the property. This situation usually arises in the context of a leasing company. One of the requirements for a qualified business is that it must have 30 or fewer employees during a week selected at random each year by the STC. The week selected for 2015 assessment purposes is Monday, June 22, 2015, through Sunday, June 28, 2015.
The STC made mention of the following areas for assessing officers and boards of review to take note for 2016:
Disabled Veterans Exemption
The STC wants boards of review to keep in mind that a determination of whether a veteran is 100% disabled or individually unemployable is made by the U.S. Department of Veteran Affairs. Thus, boards of review do not have the authority to make an independent determination of whether a veteran is 100% disabled or individually unemployable. This also means that boards of review do not have the authority to determine that a veteran is not 100% disabled or individually unemployable once the U.S. Department of Veterans Affairs has issued a determination that the individual is indeed one of those things.
Qualified Errors
The STC has noticed numerous July and December boards of review that make changes that are contrary to state law. MCL 211.53b provides that the boards of review can correct “qualified errors” for the current year and one prior year, unless otherwise provided by state law. Qualified errors are
The STC considers a “clerical error” to only include those of a typographical nature. Boards of review are not allowed to revalue or reappraise property due to the fact that the assessor did not originally consider all relevant information. The STC considers a “mutual mistake of fact” to be an erroneous belief that is shared and relied upon by both the assessor and the taxpayer, about a fact that affects the assessment of the property.
New Personal Property Tax Exemption
A number of significant changes have been made recently to the personal property tax, and 2016 is the first year in which they take effect. One that has significant impact on local units is that qualified new personal property and qualified previously existing personal property located on occupied real property (property occupied as a single site by the taxpayer) is exempt from ad valorem taxes and is instead subject to the State Essential Services Assessment (“SESA”). To claim the exemption, property owners must fill out an Affidavit and Statement for Eligible Manufacturing Personal Property and Essential Services Assessment. The SESA is a state-level assessment. Local units will be reimbursed for the loss in revenue from the Michigan Use Tax. Certain property eligible for the Industrial Facilities Exemption and new personal property are also subject to the SESA.
Proper Documentation for Board of Review Changes
The STC has noticed many instances in which boards of review are not maintaining the proper documentation of decisions. This documentation must include
Board of review minutes must include:
Capped Value Inflation Rate
The inflation rate multiplier is calculated for 2016 by averaging the 12 monthly values for the United States consumer price index for October 2014 through September 2015, and dividing it by the average of the 12 monthly values for the consumer price index for October 2013 through September 2014. Based upon those calculations, the inflation rate multiplier for 2016 is 1.003. No other multiplier may be adopted or used. The STC is insistent on local units being able to explain to taxpayers how the multiplier is developed.
County Multipliers
The STC has had instances in which some boards of review have developed their own county multipliers. However, a local unit or board of review does not have the authority to develop county multipliers. Only the multipliers developed by the STC are permissible.
Alternate Start Dates for July or December Boards of Review
State law was amended to permit July or December boards of review to have an alternate start date. To do this, a township board must adopt, by ordinance or resolution, alternate start dates that comply with the following:
Poverty Exemptions
A recent Michigan Court of Appeals Case, Ferrero v Township of Walton, found that money received pursuant to the homestead property tax credit is considered a rebate of property taxes and is not income for purposes of making a poverty exemption determination. Statutory changes were also made that allow for an affidavit to be filed for all persons living in a residence who were not required to file federal or state tax returns in the current or immediately preceding year.
Of interest to assessors and treasurers, PA 140 of 2015 permits local units to prepare a tax roll and accounts receivable system that is maintained by a computer system and its software. To do so, the computerized tax roll preparation and accounts receivable system must be approved for use by the STC. The STC will evaluate any program based upon the following requirements of the law:
To request approval of such a system, Form 2696 must be filed with the STC, which requires affirmation that all state law requirements will be met. Once approved, there is a recertification process that occurs every three years, prior to May 1.
Michigan Certified Assessing Technician (MCAT) Course:
The MCAT course will continue to be offered in a three-day format with a comprehensive exam offered at the completion of the course. Outside organizations may continue to request approval to offer the course using STC approved materials. The MCAT exam fee will be $50.
Michigan Certified Assessing Officer (MCAO):
The STC will offer two paths to certification at the MCAO level:
Michigan Advanced Assessing Officer (3) (MAAO)
Michigan Master Assessing Officer (4) MMAO (An assessor must hold the MAAO certification for a minimum of two years prior to applying to the MMAO Program or beginning any MMAO classes in the self-paced option):
At the tail-end of the Legislature’s 2015 agenda, Senate Bill 571 was passed (and subsequently signed into law by Governor Snyder) which has been referred to as a “gag order” for local officials by some critics. The bill set forth various election-law-related changes and restrictions, but one that raised the awareness of local officials across the state was a 60-day period before elections that prohibits taxpayer resources from being used to communicate any information, even factual information, about a local ballot question by radio, television, mass mailing, or pre-recorded telephone message. While the stated intent of this provision was to prohibit the use of taxpayer funds to advertise (thus advocating) for ballot questions (mainly millages), it has raised serious questions about the ability of local units to lawfully provide any information to the taxpayers about a ballot proposal, even if it is purely factual. While the governor signed the legislation, he made it clear that he wanted a legislative fix to follow that would clarify the language and potentially alleviate some of the concerns of local officials.
Several bills have already been introduced in response to the concerns regarding SB 571. Senate Bill 703, which was introduced by Senator Dale Zorn (R-Ida Twp.), and House Bill 5221, introduced by Representative Andy Schor (D-Lansing), would completely repeal the provision in question. The Michigan Townships Association is encouraging its members to voice their support for these measurers. Additionally, House Bill 5219 was introduced by Lisa Posthumus Lyons (R-Browne Twp.), and would allow local officials to communicate to local residents the language of the local ballot questions, the date of the election, and allow discussion at meetings that are televised. The Michigan Townships Association opposes this bill as it believes that the bill does not sufficiently allow officials to communicate objectively and factually to inform voters.
A lawsuit has also been commenced by 18 municipalities across the state that claim that the new law not only infringes on free speech, but also is too confusing to be enforced fairly. The local units filing suit allege that the law provides no clarity as to what they are and are not able to do in terms of conveying information about local ballot questions. Thus, there is concern that the state could enforce the law arbitrarily, depending upon the subject matter of the issue presented. Since there are potential criminal penalties, this concern could lead a chilling of free speech, as officials could be afraid to provide any information. This is what has led opponents of the bill to refer to it as a “gag order.”
This is clearly an issue that is still developing, so please stay tuned! But please be advised that if you have a ballot question on the March 8, 2016, ballot, your township will likely be bound by the newly passed law as it stands.
By: Steve Koski
Click here for a PDF version of this publication.
Fahey Schultz Burzych Rhodes PLC, Your Township Attorneys, is a Michigan law firm specializing in the representation of Michigan townships. Our lawyers have more than 150 years of experience in township law, and have represented more than 150 townships across the state of Michigan. This publication is intended for our clients and friends. This communication highlights specific areas of law, and is not legal advice. The reader should consult an attorney to determine how the information applies to any specific situation.
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