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Property Tax Update

The Michigan Tax Tribunal (“MTT”) released updates regarding the 2016 calendar year and new procedures for 2017. In this E-Letter we discuss and highlight those updates. In addition, we highlight some recent, relevant decisions of the Michigan Court of Appeals.

Michigan Tax Tribunal Updates

MTT by the numbers for 2016

  • 5,800: open cases at the MTT at the beginning of 2016
  • 5,700: new appeals filed during 2016
  • 7,500: cases closed during 2016
  • 4,000: open cases at the end of 2016
  •  97%: small claims cases closed within 14 months of filing
  • 100%: entire tribunal cases closed within 36 months of filing
  • 15: GovDelivery messages provided in 2016

To subscribe to the MTT’s GovDelivery message system, go to www.michigan.gov/taxtrib, click on “GovDelivery,” and then click “subscribe.” Copies of all of the MTT’s prior GovDelivery messages are available in .pdf format on the MTT’s website as well.

Updates and Changes at the MTT

Small Claims Threshold for Special Assessment Appeals and Non-Property Tax Cases

The Small Claims Division of the Tax Tribunal has jurisdiction over non-property tax appeals and special assessment appeals where the disputed amount is $20,000.00 or less, adjusted for inflation. For 2017, that threshold has been adjusted to $23,259.00.

The Tribunal is Going Paperless

Beginning in 2017, the Tribunal will scan and upload closed files from 2014 on to its Caseload/Docket Look-up system. The only files the Tribunal will retain in paper form will be those that are too large or not otherwise easily scanned. All new Entire Tribunal appeals filed in 2017 will be paperless. All new Small Claims appeals will be paperless starting in 2018. All documents not filed electronically will also be scanned and uploaded.

Pertinent Filing Deadline Dates​

The deadline for filing valuation appeals involving:

– Commercial real property;
– Industrial real property;
– Developmental real property;
– Commercial personal property;
– Industrial personal property; or
– Utility personal property
is WEDNESDAY, MAY 31, 2017

        The statutory deadline for filing 2017 Tribunal petitions involving:

– Agricultural real property;
– Residential real property;
– Timber-cutover real property; or
– Agricultural real property
is MONDAY, JULY 31, 2017

Addition of 2017 Tax Year to Pending Appeals

Under Tax Tribunal Rule No. 271(3), for Small Claims appeals and exemption appeals (including those exemption cases pending in the Entire Tribunal Division), all tax years after the year that was first appealed will be automatically included case while it is still pending. The Tribunal will include the 2017 tax year into any small claim hearing or exemption appeal held on or after April 1, 2017. If you are participating in a small claim hearing or exemption appeal that will be held on or after Saturday, April 1, 2017 (that was initiated during 2016), make sure to submit and exchange with the opposing party any valuation or other documentary evidence that relates to the 2017 tax year, at least 21 days before the hearing.

Un-redacted Documents

Effective immediately, the MTT will be returning documents that need redaction. The sender may then resubmit the documents, having made all necessary redactions.


Court of Appeals Decisions

Foreclosure Judgement Notice

The Court of Appeals, in Pung v Isabella County Treasurer, held that the foreclosure judgement did not violate a property owner’s constitutional right to due-process when the County had satisfied the statutory-notice requirements of the General Property Tax Act (GPTA). On appeal by both the County Treasurer and Property Owner (Pung), the Court of Appeals determined that the County’s nine notices, many accompanied by return receipt requests and others sent certified mail, to the property owner’s correct address, were sufficient to satisfy the property owner’s due-process rights. In addition, the Court noted that when a property owner fails to timely redeem the property or appeal the foreclosure, the only way to invalidate the judgment of foreclosure is by finding a violation of due-process.

Subject-Matter Jurisdiction

In Half Pipe LLC v Livingston Township, the Court of Appeals accepted the parties’ agreement to settle tax year 2013 in an appeal that was filed in May, 2014. The MTT originally rejected the parties’ agreement as to tax year 2013 on the grounds of lack of subject-matter jurisdiction, since the appeal was not timely filed as to that specific tax year. The Court of Appeals, however, found the parties’ agreement to be acceptable by distinguishing the MTT’s “subject-matter jurisdiction” (the power to adjudicate a certain class of cases or matters of a particular legal nature) and the procedural requirements set forth in statute requiring a petition to be filed by a certain date.

MTT’s Grant of Unrequested Exemption Upheld; Legality of Occupancy Deemed Irrelevant

When a property owner claims a tax exemption, the property owner typically relies on one of the various statutory exemptions. In Welcome Missionary Baptist Church v City of Pontiac, the MTT granted an exemption as a “nonprofit charitable organization” (MCL 211.7o) even though the property owner claimed an exemption as a “house of worship” (MCL 211.7s). The Court of Appeals upheld the MTT’s decision because the MTT had made it clear to the parties before trial that it was considering MCL 211.7o; therefore, the City had actual knowledge (adequate notice) that the MTT was considering the additional exemption.

Specific tax exemptions, such as MCL 211.7o, require that the taxpayer use and occupy the subject property. Even temporary storage and a “regular physical presence” may be sufficient to prove “use” and “occupation” of property for tax exemption purposes. In addition, the lack of an occupancy permit may not mean the property is unoccupied, as “nothing in the tax exemption statute at issue, MCL 211.7o, requires that the use of the property must be legal.”

Substitution of Trust Beneficiary Constitutes Immediate Transfer of Ownership of Property

Unless an exception applies, transfers of ownership of property will result in the “uncapping” of that property’s taxable value. Uncapping a property’s taxable value can give rise to increased tax liability (for the property owner) and revenue (for the taxing entities) if property has appreciated in value after it was acquired. In cases involving uncapping taxable values, the question of what constitutes a “transfer of ownership” and when a transfer occurs are often dispositive issues. Last month, the Michigan Court of Appeals examined these two issues as they related to changes in beneficiaries of trusts.

When a trust beneficiary accepts successor trusteeship following the death of the original trustee, it may be a transfer of ownership subject to uncapping, even where the original trustee is a first-degree relative of the successor-trustee. However, although Michigan law does not include the substitution of a parent, sibling, or child as the beneficiary of a trust within the definition of “transfer of ownership,” this exception only applies to transfers made after December 31, 2014. Fifarek House Trust v Township of Long Lake.

— Ross K. Bower II

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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