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Personal Property Taxes
A Guide for Businesses
I. PURPOSE
The purpose of this brochure is to familiarize businesses with the State Statutes as they pertain to Personal Property Taxes. This brochure will explain the functions of the Assessors Office, the local unit Treasurers Office and the collection process by the County Treasurers Office.
II. WHAT IS PERSONAL PROPERTY?
A. PERSONAL PROPERTY
Personal Property may include machinery and equipment, furniture and fixtures, computer equipment, leasehold or building improvements not assessed as real property, leased or rental inventory, buildings and improvements located on leased land, and all other personal property, which is not expressly exempted by law. In summary, personal property could be anything that is not assessable as real property and not exempt by law.
In determining what is considered personal property versus real property, the courts have often resolved the issue by applying the following 3-part test:
1. How is the item attached to the real estate? Will its removal destroy or substantially injure the building?
2. What is the purpose of the item? Was it intended to function as part of the building?
3. Was the item intended to become a permanent part of the
real estate when it was installed?
If you question whether the property qualifies as real or personal property, contact your Assessors Office.
B. TAX DAY
Michigan Compiled Laws, Sections 211.13 and 211.14 provide that all personal property will be assessed in the city or township where it is located on Tax Day, even if the owner resides elsewhere. Tax Day of the current year is always December 31 of the previous year.
The status of personal property on December 31 will determine what is assessed and where it is assessed in the following year. According to MCL 211.17, any changes in location or ownership of the personal property after tax day will not affect the assessment. Many taxpayers question whether they are still liable for the current tax bill since they have recently sold equipment or have moved. The answer is yes. For example: The current tax year is 2015, tax day was December 31, 2014. The ABC Co. was assessed for personal property located in Community XYZ on Tax Day. In June 2015, the taxpayer moved its personal property to
Community LMN. Because the personal property was located in Community XYZ on Tax Day, ABC Co. is still liable for all 2015 personal property taxes to Community XYZ. ABC Co. will not be liable for personal property taxes in Community LMN until the 2016 tax year, based on Tax Day December 31, 2015.
III. HOW AM I ASSESSED?
A. PERSONAL PROPERTY ASSESSMENT
All owners of personal property are required by law to prepare and file a Personal Property Statement to each city or township in which they had personal property on December 31 of the previous year. The Personal Property Statement is required to be filed whether or not the taxpayer received a blank form from the assessor. If the taxpayer has property in more than one location (situs), separate statements are required for each city or township reporting only the equipment located in that city or township.
MCL 211.19 provides that the Personal Property Statement shall be completed and delivered to the supervisor or assessor on or before February 20 of each year. The statements are utilized by the Assessor in valuing your personal property. Property is depreciated and assessed at 50% from original cost when filed correctly, and on time. If a Personal Property Statement is not filed, the assessor is required by MCL 211.22 to estimate the current assessment. The Assessor must be notified of any change in location, ownership, or if going out of business. Estimated assessments are valid.
B. NOTICE OF ASSESSMENT
Usually in the last week of February, you are sent a notice of the assessment. This assessment notice will compare your current tentative state equalized value (taxable value) to the prior years state equalized value. The assessment notice also provides you with information regarding the March Board of Review dates and times. A phone number is given for you to call if you wish to make an appointment to appeal your assessment before the March Board of Review.
C. THE MARCH BOARD OF REVIEW
The March Board of Review is your opportunity to appeal the assessment. The first step is to contact your local assessor regarding your assessment. Often, the assessor is able to directly answer your questions or clarify any specific concerns. If the assessor is unable to satisfactorily address your questions or concerns, you may wish to protest your assessment at the March Board of Review. At that point, the assessor can assist in making an appointment to appeal your assessment.
The March Board of Review is only open for the specific times indicated on the assessment notice. Once the Board of Review has closed, your opportunity to appeal is limited. It is important for you to contact your local assessor as soon as possible with any concerns regarding your assessment.
QUESTIONS REGARDING PERSONAL PROPERTY?
This brochure is a general guide to personal property. If you have any questions regarding the assessment of personal property, you may wish to contact your local assessor, or Oakland County Equalization Department at (248) 858-0757. If you have questions regarding the payment or collection of delinquent personal property taxes contact the Oakland County Treasurers Office at (248) 858-0742.
C. SALE OF THE PROPERTY
If unpaid personal property taxes remain seized, the Treasurer may sell the property in accordance with State Law.
D. JEOPARDY ASSESSMENT
When the local jurisdiction becomes aware of a business closing, selling, transferring, or downsizing, or if the previous years personal property tax is delinquent, the Treasurer will levy what is called a Jeopardy Assessment". Under this procedure, both the July and December bills will be issued in advance to insure collection of tax. Non-payment of a jeopardy assessment or prior years bills will result in seizure or lawsuit.
E. COLLECTION
The Oakland County Treasurers Office enforces collection of all delinquent real and personal property taxes. Persons with delinquent Personal Property taxes are sent notices of delinquency and may receive a visit from the County Treasurers Office.
F. CAN I APPEAL THE BOARD OF REVIEWS DECISION?
If you disagree with the decision of the March Board of Review, you may further appeal your assessment to the Michigan Tax Tribunal (MTT). However, to file with the MTT, you must appeal to the local Board of Review during March. To appeal the decision of the Board of Review, you must contact the MTT by June 30 during the year in which you initiated your appeal to the March Board of Review. The address is Michigan Tax Tribunal, PO Box 30232, Lansing, MI 48909; Telephone (517) 334-6521.
IV. HOW MUCH DO I PAY?
In most cities and townships, you will receive two tax bills, each for a portion of the total tax. These are commonly known as the summer tax bill, which is mailed about July 1, and the winter tax bill, which is mailed about December 1. Please note, if you had personal property in the city or township on tax day, you are liable for both the summer and winter tax bills. The amount that you owe is calculated using a millage rate per 1,000 of taxable value. For example: If your assessment was $10,000 and the millage rate collected on the tax bill was 50 mills, the amount of tax owed for the year would be $500 (10,000/1,000 x $50 = $500). This amount is then billed in two parts, summer and winter.
V. OPENING A BUSINESS/MOVING INTO THE CITY
The following are helpful hints for those who are about to embark on:
A. BUYING A BUSINESS
1. Make sure that the seller has paid the personal property taxes.
2. Be aware! If you buy after January 1, the tax bills for the
following July-December may be in the name of the old
business, but the tax lien on the property remains. Therefore,
the property may be seized to pay delinquent personal property taxes even though you may be the new property owner.
3. Call the County Treasurers Office to find out what personal property taxes are outstanding. Call the Local Treasurers Office for the current year summer and winter taxes.
B. OPENING A BUSINESS
Please contact the Local Assessors Office to notify them that you are in business within the jurisdiction and for information concerning personal property.
C. GOING OUT OF BUSINESS
1. Contact Assessor
2. Contact County and Local Treasurer
3. Contact City or Township Clerk
D. LEASING EQUIPMENT
Leased equipment should be reported on the personal property statement in the appropriate place.
VI. DELINQUENT PERSONAL PROPERTY TAXES
If you owe delinquent personal property taxes, PAY THEM. The nonpayment of these taxes may result in the seizure of the property. If you have a dispute, pay the taxes and pursue action to show why reimbursement should be made. But, once the opportunity to appeal with the Board of Review has passed and a bill has been issued, the assessment and the bill are both valid and the tax is not refundable.
F. SEIZURE
The Treasurer is authorized to seize and sell personal property of a business if personal property taxes remain unpaid. Statements serve as formal notice that the tax is outstanding. A jeopardy assessment for future taxes, based on the Tax Day assessment,may be levied if these are not paid.
G. POSTING OF A NOTICE
Once seized, the personal property of the business will fall under the control of the Treasurers Office.
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