New Michigan Property Tax Exemptions

Important exemptions due February 20, 2016:

In December 2012, initial legislation was passed that significantly changed the taxation of personal property for Michigan taxpayers. The Acts exempt about half of personal property from taxation through two main provisions:

1. Small Business Taxpayer Exemption
2. Eligible Manufacturing Personal Property Exemption (EMPP)

The Acts also established a replacement specific tax on exempt personal property which is the Essential Services Assessment (ESA). The ESA was enacted in order to reimburse local unit’s lost revenue.

The focus of this article is on the Eligible Manufacturing Personal Property Exemption. EMPP means all personal property located on occupied real property if that personal property is predominantly used in industrial processing or direct integrated support. The exemption phases in over several years and starting in 2023, all EMPP is exempt and will only be subject to the lower ESA specific tax. In order to claim the exemption, an eligible claimant must file Form 5278, Affidavit and Statement for Eligible Manufacturing Personal Property and Essential Services Assessment, with the local tax collecting unit where the personal property is located no later than February 20th of each tax year. Because February 20th falls on a Saturday in 2016, they are due to the assessor by February 22nd this year. It should be noted that a postmark is not sufficient, it must be received by February 22nd. The State Tax Commission has determined that late-filed Form 5278s should not be accepted by the local unit. Therefore, late filed 5278s could jeopardize the ability to claim the exemption.

It should also be noted that there are some complex rules regarding the treatment of parcels that have an Industrial Facilities Tax (IFT) Certificate. Additionally, each taxpayer claiming the exemption will need to register with Michigan Treasury Online (MTO) in order to accept their Michigan ESA statement. More information regarding the new filing requirements and exemptions can be found at www.michigan.gov/ppt. Please contact your tax advisor to ensure compliance with the new law or contact Jeannine Honderich, Brian Hake or Shaun Mawhorter at Kruggel Lawton.

Key Dates for 2016:

• February 22 - Form 5278 due to Local Unit
• May 1 - Electronic ESA statement available
• August 15 - Completed statement and full payment due to Department of Treasury
• October 15 - Late filed statement and penalty due
• December 5 - STC issues order to rescind
• December 31 - Deadline to file an appeal to the STC