Arriving in a mail box near you is your annual property tax Notice of Assessment. Property taxes are a significant business operating expense and they are typically the second highest expense of homeowners after their mortgage. We routinely assist industrial and commercial property tax appeals for our clients. Our experience practicing before the Michigan Tax Tribunal can help you achieve significant tax savings depending on the circumstances.
Deciding whether to challenge an assessment, business and property owners should consider a variety of factors including current market value of their property, valuation methods used, and practices used by local assessing authorities. Once the decision has been made to appeal, the procedures involved are often technical, complex, and time sensitive. The legal requirements for filing an appeal are usually strictly enforced against the property owner. Experienced legal counsel is invaluable in protecting the taxpayer’s rights.
If you disagree with the valuation on the Notice of Assessment, you can reach out to your local assessor to gain either a better understanding of the factors used. In some communities this process is required as an “assessor’s review.” If you can’t reach an understanding or an agreement with the assessor’s office, the next step is to protest to the Board of Review.
For most industrial and commercial property owners, a protest to the local Board of Review is not a requirement. There are, however, certain types of property tax claims that do require a Board of Review protest, even for industrial and commercial property owners. Although it does not happen often, there are instances where a taxpayer protests an assessment and the Board is made aware of something, typically a factual matter, that provides some relief. Other times, the assessor may notice a discrepancy on closer examination that may actually cause the assessment to increase.
If the Board of Review denies your protest, you can always proceed to the Michigan Tax Tribunal. The Michigan Tax Tribunal is an administrative tax court that has authority over assessment disputes relating to both property and non-property tax matters. While most property tax reductions are obtained through the process of negotiation, on occasion, however, formal hearings or court action are necessary to achieve the desired result.
Procedural matters in the Tax Tribunal is perhaps where many property owners go wrong. While the Tax Tribunal is not a court in the formal sense, many taxpayers fail to appreciate that the Tribunal nevertheless has its own procedures, formalities, and timelines. For a number of reasons, the Tax Tribunal is rather strict in the application of its rules and is rather unforgiving regarding its deadlines. Substantial compliance is an argument one never wants to have to make.
Another area where taxpayers tend to go astray is in appreciating how the Tax Tribunal approaches property tax claims and evaluating evidence. Property owners have a sense of what their property is worth, what features, in their subjective knowledge, add and/or detract from its value, and a feel for the local market. A valuation, for property tax purposes, must meet a certain evidentiary threshold, and involves an expert appraiser that comes in and gives an exact value on the property based on a greater number of factors that a property owner in a general sense may not be aware of or able to articulate. The Tax Tribunal looks and evaluates the valuation evidence much the same way.
All of this being said, it is important to consult with professionals, a tax attorney, qualified appraiser and other experts to evaluate if an appeal is in your best interest and to properly guide you through the process. And now is the time to consider this with your Notice of Assessment arriving in the mail soon.
Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or firstname.lastname@example.org.