Michigan State and Local Tax Updates July 2019

Michigan sales tax rates for fuel trend slightly downward for August

July 31, 2019

The Michigan Dept. of Treasury has announced that, effective for the period of Aug. 1, 2019, through Aug. 31, 2019, the prepaid sales tax rate for the purchase of gasoline will decrease to 14.1¢ per gallon from the July 2019 rate of 14.8¢ per gallon. Additionally, for the same period of time, the prepaid sales tax rate for the purchase of diesel fuel will decrease to 15.6¢ per gallon from the July 2019 rate of 16.0¢ per gallon.

Taxpayers must reside at property for exemption

July 31, 2019

The Michigan Court of Appeals ruled that a taxpayer wasn’t entitled to a principal residence exemption (PRE) because he didn’t occupy the property. The taxpayer’s affidavit claiming the PRE stated that he’d occupied the property for tax years 2013 through 2015. The taxpayer appealed to the Tax Tribunal, arguing that the property was his wife’s principal residence; because he and his wife were co-owners, “they were a single owner.” The court rejected that argument, noting that the statute states that a person filing a nonresident MI income tax return isn’t entitled to the PRE, and the taxpayer’s wife had filed a nonresident income tax return in tax years 2014 through 2015. (Dkt. No. 343763)

Michigan: Property’s value should not be measured by its sale price at a public foreclosure auction

July 24, 2019

The Michigan Court of Appeals has rejected a taxpayer’s argument that a property’s value should be measured by its sale price at a public foreclosure auction. Per Michigan state law, the sale price from a forced sale and public auction by government agencies isn’t representative of a property’s true cash value. The court also rejected the taxpayer’s argument that the Tax Tribunal had erred in relying on the sales-comparison approach to valuation of the property. Also, while identifying a singular factor that may have improved the overall property evaluation, the taxpayers failed to establish that the properties used in the sales-comparison approach weren’t comparable. (Dkt. No. 343019)

Michigan Dept. of Treasury issues list of certified community foundations

July 24, 2019

The Michigan Dept. of Treasury has issued a list of community foundations certified by the department for 2019 in accordance with the Michigan Business Tax Act (MBTA). Qualifying business taxpayers that elect to file returns under the MBTA for tax year 2019 instead of under the Income Tax Act are eligible to take a credit for contributions made to endowment funds held by the listed community foundations. Under the MBTA, a taxpayer that makes a contribution to a certified community foundation may claim a nonrefundable credit against the taxpayer’s MBT liability equal to 50% of the contribution, $5,000 or 5% of the tax liability, whichever is less. Read more here: https://bit.ly/32IpirU

Effective date for commercial rehabilitation exemption is amended

July 17, 2019

Michigan state law has amended the Commercial Rehabilitation Act to modify the effective date of a commercial rehabilitation exemption certificate under certain circumstances. The effective date has been retroactive to December 31, 2017. Previously, the effective date of a certificate was the December 31st immediately following its date of issuance.

Michigan state law amends the Land Division Act to require conditions

July 10, 2019

Michigan state law has amended the Land Division Act to now require one or both of the following as a condition for approval of any proposed division of a parcel or tract of land under the act: 1) the payment of all property taxes and special assessments due on the parcel or tract, or 2) the apportionment of unpaid property taxes and special assessments by the assessing officer overseeing the division.

 Michigan State Tax Commission properly denied taxpayer’s IFEC application

July 10, 2019

The Michigan State Tax Commission (STC) properly denied a taxpayer’s industrial facilities exemption certificate (IFEC) application under the Plant Rehabilitation and Industrial Development Districts Act (PRIDDA) because a lessor can’t receive a tax exemption under the PRIDDA when the leased property must qualify as “industrial property.” The taxpayer is an owner of an industrial park that it leases to tenants. For the taxpayer to receive the IFEC it requested, it had to establish that its property would constitute “industrial property.” The STC denied the application for an IFEC because the taxpayer was using the property for real estate development. (Dkt. No. 343386)

Michigan State Tax Commission issues equalization director guide to overseeing a reappraisal

July 3, 2019

Local assessing units may choose to conduct a reappraisal to improve their assessing records. When this occurs, it’s important for the equalization director to be involved in the process and ultimately approve the reappraisal in place of an equalization study. Because the reappraisal will be used for setting true cash value, the equalization director must be confident with the methods and valuation concepts used. The guide was created to assist equalization departments in overseeing a local unit reappraisal, but isn’t meant to be a guide on how to conduct the reappraisal itself.


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