Personal Property Tax Reform
 
Property Tax Reform.pdfProperty Tax Reform Pamphlet
 
Basic Principles
 
February 10, 2015: 5076 exemption filing deadline
 
February 20, 2015: PPS filing deadline
 
All appeals of local decisions are further appealed to the state
 
Small Business-Commercial and Industrial
            Under $80,000 TCV will be exempt (if the 5076 is filed)
            Other factors include:
Combinations of entities have to be within one community, leases & trade fixtures 
                        See “Proposal 1 Examples.”
 
Manufacturing
            2016 starts the phase out
            2015-manufacturers need to report expected phase out $-expect a future bulletin
 
Repealed Bills
State Essential Services Special Assessments (ESA)
Control went from the local level to the state level.  A special tax for the exempted manufacturing parcels.
 
Local Community Stabilization Authority Act (LCSA)
Reimbursement for local services from the state use tax.
1.      Bonds and local services (fire, police, etc.) reimbursement
2.      Still waiting for direction from the State
 
Reference Information
State Tax Commission: http://www.michigan.gov/treasury/0,1607,7-121-1751_2228---,00.html            
 
     Proposal 1 Examples
 
1.    Telemarketing Company calculates assessment to be $39,000 AV.  Telemarketing Co also leases a phone system from Avaya and the assessed value of system is $5,000.
    • Telemarketing Co does not qualify for exemption as total assessed is $44,000.
    • Avaya would qualify for exemption provided the total of all leased assets within a community are less than $40,000 AV.
 
2.    Italian Restaurant calculated assessment to be $38,000 AV.  Restaurant leases/rents a variety of equipment:  dumpster, drink dispensers, dishwashing machine, product ordering computer, coffee service, and alarm company.
    • Restaurant does not qualify for exemption after evaluation of leased assets.
    • Waste Management, Pepsi, Ecolab, Meisel/Sysco, Pontiac Coffee Break and ADT may qualify for exemption.
 
3.    Cold Storage Company calculates assessment and is assessed at $30,000.  The main 20,000 square foot cooler is built in but not assessed as part of the real property.  The taxpayer omits the $15,000 AV for the cooler from the calculated value.
    • Cold Storage Company does not qualify for exemption as the total assessed should include the cooler and the total is greater than $40,000.
 
4.    7-11 has three stores in one CVT.  The sum total of the AV’s for all three locations is $42,000.
    • Taxpayer does not qualify based on related entity clause.
 
5.    Son Manufacturing Company purchased the business from the father and owns all but 2 pieces of equipment.  Father and son own 2 pieces of equipment jointly.  Son Manufacturing Company has an assessment of $30,000.  Father and son have an assessment of $15,000.
    • Neither company qualifies for exemption due to the related entity clause.
 
6.    Timely taxpayer files Personal Property statement by February 20, and has an assessed value of $10,000 and receives a tax bill.
    • Exemption is not automatic and will not be granted without filing Form 5076 by February 10th.