Research on House of worship property tax exemption in Michigan

Author: LegalEase Solutions

QUESTIONS PRESENTED

  1. Are the City of Detroit’s requirements valid under MCL 211.7s (house of worship) or MCL 211.7o (charitable non-profit)?
  2. If they are valid, is publication required? Where would the publication have to occur?
  3. What is the deadline to apply for an exemption under either MCL 211.7s or MCL 7o? Would the July 2013 application be too late for the 2013 tax year?
  4. Are there any procedures that could be used to retroactively apply for the 2013 tax year as of today?
  5. Given that the City of Detroit has not taken any official action, is there a way to compel official action?
  6. Is an appeal to the Michigan Tax Tribunal on the basis of the July 2013 application for exemption possible without official written action either granting or denying an exemption?
  7. If an exemption is granted or denied for the 2014 tax year based on the July 2013 application for exemption, can this denial or grant be appealed to the Michigan Tax Tribunal to seek a 2013 exemption on the basis of the date filed?”

 SHORT ANSWERS

  1. The City has broad responsibilities and discretion to collect Taxes and as such likely has the right to impose certain conditions on tax exemption.
  2. Application for exemption for 2013 tax year should have been made in February 2013. The rules of the Board of Review require the application made in February to be considered by the Board of Review in March.
  3. Michigan case law provides for retroactive application of assessment by a Board of Review.
  4. Every person who makes a request, protest, or application to the Board of Review must be notified in writing of the Board of Review’s action and information regarding the right of further appeal, not later than the first Monday in June. A person who willfully neglects or refuses to perform such duty may be guilty of a misdemeanor.
  1. The Michigan Tax Tribunal has jurisdiction on assessment dispute as to the exemption of property under MCL 205.735a (3) of the Tax Tribunal Act.
  2. The Michigan Tax Tribunal has a duty to adjust erroneous taxable values to bring the current tax rolls into compliance with the GPTA. 

RESEARCH FINDINGS

  1. Validity of the requirements under MCL 211.7s (house of worship) or MCL 211.7o.

The Michigan General Property Tax Act, Act 206 of 1893, Section 211.44 gives a City broad discretion and responsibility in collecting property taxes.  Thus it appears that the City has discretion to provide certain conditions in its collection of property taxes.

  1. Date of application for July 2013 tax year.

Application for exemption for 2013 tax year should have been made in February 2013. In the City of Detroit, an application for exemption is to be made during the February Assessors Review, February 1 through February 15. The appeal would then be considered by the Board of Review in March. (http://www.detroitmi.gov/CityCouncil/LegislativeAgencies/PropertyAssessmentBoardofReview/AppealDates.aspx).

  1. Retroactive application of board of review procedure

The Court in Michigan Properties LLC v Meridian Twp 491 Mich 518, 536 (2012) interpreted MCL 211.29(3) which provides for retroactive application of assessment and held:

A March board of review has the power to review the tax rolls currently before it ‘according to the facts existing on the tax day.’ MCL 211.29(3). Among the facts existing on a current year’s tax day would be the fact that a previous taxable value did not comply with the GPTA, and that fact is within the purview of the duties of the March board of review.

In Michigan Properties, LLC, the question was whether a tax assessor’s failure to adjust the taxable value of a parcel of real property in the year immediately following its transfer precludes a March board of review from adjusting the taxable value in a later year. The court held ‘that the failure to adjust the taxable value in the year immediately following the transfer produced an erroneous taxable value because the taxable value was not in compliance with the GPTA. Id. at 523.

  1. To compel official action:

MCL 211.30(4) provides for a board of review’s action on the request made:

Each person who makes a request, protest, or application to the board of review for the correction of the assessed value or tentative taxable value of the person’s property shall be notified in writing, not later than the first Monday in June, of the board of review’s action on the request, protest, or application, of the state equalized valuation or tentative taxable value of the property, and of information regarding the right of further appeal to the tax tribunal. Information regarding the right of further appeal to the tax tribunal shall include, but is not limited to, a statement of the right to appeal to the tax tribunal, the address of the tax tribunal, and the final date for filing an appeal with the tax tribunal.

Willful neglect of this duty will result in penalty per MCL 211.119:

(1) Except as provided in subsections (2) and (3), a person who wilfully neglects or refuses to perform a duty imposed upon that person by this act, when no other provision is made in this act, is guilty of a misdemeanor, punishable by imprisonment for not more than 6 months, or a fine of not more than $300.00, and is liable to a person injured to the full extent of the injury sustained.

(2) A member of a board or a commission who intentionally violates sections 10c(2), 29(6), 34(1), or 149(2) shall be subject to the penalties prescribed in Act No. 267 of the Public Acts of 1976.

(3) If a board or commission arbitrarily and capriciously violates sections 10c(3) or 146, the board or commission shall be subject to the penalties prescribed in Act No. 442 of the Public Acts of 1976.

  1. Appeal to Michigan Tax Tribunal

Michigan Tax Tribunal has jurisdiction on assessment dispute as to the exemption of property. MCL 205.735a (3) of the Tax Tribunal Act states:

(3) Except as otherwise provided in this section or by law, for an assessment dispute as to the valuation or exemption of property, the assessment must be protested before the board of review before the tribunal acquires jurisdiction of the dispute under subsection (6).

The Tax Tribunal has jurisdiction under MCL 205.731(a) to determine whether a taxpayer is entitled to a property tax exemption because the determination relates to an assessment.” In re Petition of Wayne Co Treasurer for Foreclosure, 286 Mich App 108, 111 (2009). The Court additionally stated, “[T]he Tax Tribunal provides the exclusive forum to determine whether the property is exempt from property tax.” Id., at 113.

A protest filed before board of review is condition precedent for filing an appeal before Tax Tribunal. “The MTT has jurisdiction regarding the ‘exemption of property’ from an assessment as long as a protest has been filed before the Board of Review.” Kasberg v Ypsilanti Tp, 287 Mich App 563, 568 (2010).

  1. Power of Michigan Tax Tribunal to apply grant or denial of exemption in 2014 for 2013 tax year.

“[T]he Tax Tribunal does have the authority to reduce an unconstitutional previous increase in taxable value for purposes of adjusting a taxable value that was timely challenged in a subsequent year.” Michigan Properties, Supra, at 545-46. Moreover, “Once its jurisdiction is properly invoked, the Tax Tribunal possesses the same powers and duties assigned to a March board of review under the GPTA, including the duty to adjust erroneous taxable values to bring the current tax rolls into compliance with the GPTA.” Id. at 546.

CONCLUSIONS

In Michigan, most real property is subject to taxation under the authority of the Michigan

Constitution and the General Property Tax Act (GPTA). GPTA allows several specific exceptions. Two of such exceptions are MCL 211.7s and 211.7o. The general rule is that once a nonprofit is granted a property tax exemption they will be exempt in subsequent years also. Prior to appealing Board of Review, in Detroit, an appeal has to be made before Board of Assessors. December 31 is the tax day in Michigan. The local assessor values the property effective this day. An application for exemption from taxation must be filed in February of the assessment year. But courts have interpreted MCL 211.29(3) to allow for review by board to include errors committed in preceding assessment years also. The dispute in assessment valuation or exemption can be appealed in Michigan Tax Tribunal. However a protest before the board of review is essential before appealing Michigan Tax Tribunal. Michigan courts have held that the Michigan Tax Tribunal can correct errors made in preceding years.