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February Tax Appeals Update

February 3, 2015
Personal property tax exemption deadlines approaching

The year 2015 will be the second year of the so called “small business” personal property tax exemption. If the value of the commercial and industrial personal property owned or leased by a taxpayer or related party in a particular city or township is less than $80,000, then the property is entitled to exemption. However, the exemption does not occur automatically. It must be claimed by filing an affidavit with the local assessor by February 10 each year. It has been estimated that approximately half of the eligible businesses in the state took advantage of the credit in 2014.

Taxpayers may find it very helpful to start conferring now with a property tax professional about the new personal property exemption for “Eligible Manufacturing Personal Property (EMPP). For example, while the EMPP exemption does not begin until next year, taxpayers will notice that the first line of the 2015 personal property statement includes a question about whether the property reported in 2015 is EMPP. According to the statement, if the “Part” box is checked, then Form 5201 must be completed and attached to it. Both the personal property statement and the supplemental form are due on February 20. Taxpayers may want to quickly obtain help with this tax compliance matter.

Benefits of asset inventory and tagging

Historically, taxpayers have been able to reduce their property tax burdens by performing occasional full fixed asset inventories. The inventory process will identify ghost assets, which can be removed from personal property tax statements for future years and often offer an opportunity to obtain refunds for past years taxes. Inventories can also identify misclassified or exempt assets.

Even taxpayers that expect to be exempt by virtue of the EMPP exemption can benefit from an inventory. For example, an inventory can assist in documenting that a particular parcel meets the 50% test to qualify for the EMPP exemption. This can be especially important if the calculation is close to 50%. Taxpayers can also save on income taxes when discovered ghost assets can be completely written off. Please contact us if you are interested in learning more about fixed asset inventories.

Board of Review requirements

Remember that a protest to the local board of review is required to preserve your appeal rights to the Michigan Tax Tribunal for property classified as agricultural real, residential real and timber cut-over real or for classification appeals. Appeal rights to the Tribunal involving personal property are preserved if the taxpayer either (a) files a personal property statement before the Board of Review meets, or (b) timely protests to the Board of Review. Taxpayers must protest to an assessors review board before the protest can be made to the Board of Review in some cities. Such cities include Detroit (February 1-15), Grand Rapids (February 2-13) and Wyandotte (February 17-24).

For more information regarding this or any another tax appeals related issue, please contact any of our Tax Appeals professionals.