Five Stories That Matter in Michigan This Week – November 15, 2024

  1. 2025 IRS Benefit Plan Limits: Key Changes Announced

The IRS has released updated benefit plan limits for 2025, including increases to retirement plan contributions. For example, the Section 415 limit will rise from $69,000 to $70,000, while the annual 401(k), 403(b), and 457(b) deferral limit will increase to $23,500.

Why it Matters: Employers must understand and implement these and other new limits to ensure their benefit plans remain compliant and competitive for the upcoming year.

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  1. Michigan Court of Appeals Confirms Commercial Roof Replacement Qualifies as “New Construction” for Property Tax Purposes

In a recent decision that clarifies the scope an “addition” for property tax purposes, the Court of Appeals held that installing a new roof on a commercial building constitutes “new construction” that triggers an increase in the property’s taxable value beyond the standard legislative cap.

Why it Matters: By confirming that even basic building improvements like roof replacements constitute “additions” that can trigger increased tax assessments, the ruling clarifies a power that local tax assessors have long possessed but may not have consistently exercised. Read more.

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  1. Legislation Introduced Requiring License to Sell Tobacco and Vape Products

Legislation introduced this week would require businesses to purchase a three-year license for $1,500 to sell tobacco and vape products, with supporters of the bills citing the continued use of vape products by teens.

Why it Matters: Currently, Michigan is one of ten states that does not have a tobacco retail license. A licensing system would be created and monitored by LARA, which would regularly conduct inspections to ensure no underage sales are taking place. Violations range from misdemeanors, suspended licenses, to forfeiture of license.

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  1. Michigan Legislature Passes Data Center Tax Break Bill

This week, the Michigan House passed a bill that would exempt large data centers from Michigan use tax on equipment.

Why it Matters: With the massive computing needs of artificial intelligence, data center development has exploded across the country. While this bill would likely make Michigan more attractive to data center developers, opponents argue that having more data centers—which consume massive amounts of energy—would undermine Michigan’s clean energy goals.

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  1. Business Education Series: Referral Generation: Avoid Peaks & Valleys in Your Sales Funnel

Every business owner prefers a referral to a cold lead. Referrals have a basis of trust and understanding that makes the sales process simpler to execute and winning easier to achieve. Referrals can’t be generated intentionally however, right? On Tuesday, December 17, Ian Richardson, BBA, CSAP, MCSA, Principal Consultant, Fox & Crow Group LLC & Managing Partner, Richardson & Richardson Consulting, LLC, will discuss how this is incorrect.

Why it Matters: Learn how to structure an intentional referral generation pipeline from existing clients while minimizing the risk of client churn. Three takeaways include preparing conversations with clients, retention efforts for clients who are not ready to refer, and review of how to prepare a referral list for clients. Full information and to register.

Related Practice Groups and Professionals

Employee Benefits
Business & Tax | Paul McCord
Energy, Utilities & Telecommunication | Sean Gallagher

Michigan Court of Appeals Confirms Commercial Roof Replacement is “New Construction” for Property Tax Purposes

In a recent decision that clarifies the scope an “addition” for property tax purposes, the Court of Appeals held that installing a new roof on a commercial building constitutes “new construction” that triggers an increase in the property’s taxable value beyond the standard legislative cap. The case, Knier, Powers, Martin, & Smith, LLC v. City of Bay City, addressed both statutory and constitutional challenges to this interpretation, ultimately affirming the Michigan Tax Tribunal’s ruling that such improvements fall within the meaning of “additions” under both Michigan tax law and the state constitution.

Case Background

In 2021, Knier, Powers, Martin, & Smith, LLC (KPMS) undertook a $70,053 roof replacement project on their commercial office building in Bay City, Michigan. The project involved installing new shingles, a “60 MIL-EPDM” membrane, and replacing the underlying plywood.

Following this improvement, Bay City assessed an increase in the property’s taxable value for the 2022 tax year:

    • 2021 taxable value: $161,262
    • 2022 taxable value: $181,283
    • Increase: $20,021 (12.4152%)
    • Fair market value increase: from $382,400 to $444,600

Under Michigan law, increases in taxable value are generally limited to the lesser of 5% or the inflation rate during an owner’s period of ownership. However, Bay City determined that this “cap” didn’t apply because the increased value resulted from an “addition” to the property.

KPMS contested this assessment before the Bay City Board of Review, which affirmed the city’s position. KPMS then appealed to the Michigan Tax Tribunal, arguing two main points:

    1. The city had increased the taxable value beyond the cap in violation of both state law (MCL 211.27a(2)(a)) and the Michigan Constitution (Const 1963, art 9, § 3).
    2. The city had overstated the property’s cash value.

Before the Tribunal, KPMS moved for summary disposition, while Bay City requested summary disposition in its favor. The Tribunal granted partial summary disposition to Bay City, holding that the roof replacement qualified as “new construction” and therefore constituted an “addition” under Michigan law. While the Tribunal’s order left open the issue of the roof’s true cash value, KPMS appealed the legal determination about whether the improvement qualified as an “addition.”

The Court’s Analysis

The Court of Appeals addressed both statutory and constitutional arguments raised by KPMS, focusing primarily on whether a roof replacement qualifies as “new construction” under the relevant legal framework.

First, the court first addressed KPMS’s argument that the roof replacement did not constitute “new construction” under MCL 211.34d(1)(b)(iii). KPMS presented two main contentions:

  1. The term “property” in the statute refers only to real property, narrowly defined as land and buildings, not components like roofs.
  2. The roof replacement could not be “new construction” because a roof existed both before and after the project.

The court rejected both arguments. On the first point, it found that KPMS’s narrow interpretation conflicted with the General Property Tax Act’s (GPTA) definition of real property, which includes “all buildings and fixtures on the land, and all appurtenances to the land” (MCL 211.2(1)(a)). Moreover, the court noted that throughout the GPTA, the Legislature uses “real property” or “personal property” when intending to single out those categories, but uses the broader term “property” when incorporating both types.

On the second point, the court found that the Legislature intended to broadly define “new construction” for taxation purposes. This conclusion was supported by:

    • The statute’s narrow definition of “replacement construction” (limited to property replaced due to accident or act of God).
    • The specific carve-out for residential property repairs in MCL 211.27(2).
    • The fact that this residential carve-out would be meaningless if such repairs weren’t otherwise considered “new construction.”

KPMS also argued that even if the statute permitted the increased assessment, such an interpretation would conflict with the term “additions” in Article 9, § 3 of the Michigan Constitution. The court rejected this argument as well, relying heavily on the Michigan Supreme Court’s decision in WPW Acquisition Co v City of Troy.

The court explained that when Proposal A was ratified, “additions” was already a technical legal term with a specific meaning in property tax law. At that time, the term included “all increases in value caused by new construction or a physical addition of equipment or furnishings.” Because the current statutory definition of “new construction” tracks this historical meaning, the court found no constitutional conflict.

Importantly, the court distinguished this case from situations where the Legislature had impermissibly expanded the constitutional meaning of “additions.” For example, in WPW Acquisition Co, the Supreme Court had struck down a provision that treated increased occupancy rates as “additions” because such changes fell outside the technical meaning of the term when Proposal A was adopted.

Conclusion

By confirming that even basic building improvements like roof replacements constitute “additions” that can trigger increased tax assessments, the ruling clarifies a power that local tax assessors have long possessed but may not have consistently exercised. While the underlying legal framework isn’t new, the court’s explicit confirmation that such improvements qualify as “new construction” may embolden local authorities to more aggressively reassess commercial properties following renovations. Commercial property owners should therefore carefully consider the potential tax implications of planned improvements, recognizing that even necessary maintenance could trigger assessment increases beyond the standard caps imposed by Proposal A. If you have any questions, please contact Paul McCord or your Fraser Trebilcock attorney.

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.


Headshot of Fraser Trebilcock attorney Paul V. McCordFraser 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 pmccord@fraserlawfirm.com.

Five Stories That Matter in Michigan This Week – November 8, 2024

  1. New Approval Procedures for Large-Scale Renewable Energy Projects to Take Effect on November 29, 2024

The Michigan Public Service Commission and other state regulators have recently finalized procedures for approval processes for large-scale solar and wind projects to implement a 2023 law that transfers decision-making authority, in some cases, from local governments to the state. The new procedures will take effect on November 29, 2024.

Why it Matters: Renewable energy project approval processes will, in most instances, still need to begin at the local level. However, the law allows developers to seek state approval from the Public Service Commission if a project is denied by a local government.

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  1. Business Education Series: Referral Generation: Avoid Peaks & Valleys in Your Sales Funnel

Every business owner prefers a referral to a cold lead. Referrals have a basis of trust and understanding that makes the sales process simpler to execute and winning easier to achieve. Referrals can’t be generated intentionally however, right? On Tuesday, December 17, Ian Richardson, BBA, CSAP, MCSA, Principal Consultant, Fox & Crow Group LLC & Managing Partner, Richardson & Richardson Consulting, LLC, will discuss how this is incorrect.

Why it Matters: Learn how to structure an intentional referral generation pipeline from existing clients while minimizing the risk of client churn. Three takeaways include preparing conversations with clients, retention efforts for clients who are not ready to refer, and review of how to prepare a referral list for clients. Full information and to register.

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  1. Two House Bills Introduced Aimed at Amending Minimum Wage, Earned Sick Time Leave Act

House Bills 6056 and 6057 were introduced into the Michigan House this week, seeking to amend the Earned Sick Time Leave Act, and keep the tipped wage at the current 38%.

Why it Matters: The bipartisan legislation aims to keep the tipped wage at 38%, while slightly accelerating the minimum wage increase, as well as providing a clearer definition of an employee, and how employers can manage benefits. This legislation comes as the state is preparing for the February 21, 2025 deadline, where the minimum wage and paid sick time leave laws will be altered.

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  1. Michigan Court of Appeals Confirms Commercial Roof Replacement Qualifies as “New Construction” for Property Tax Purposes

In a recent decision that clarifies the scope of property tax “additions” under Michigan law, the Court of Appeals held that installing a new roof on a commercial building constitutes “new construction” that can trigger increases in taxable value beyond the standard legislative cap.

Why it Matters: By confirming that even basic building improvements like roof replacements constitute “additions” that can trigger increased tax assessments, the ruling clarifies a power that local tax assessors have long possessed but may not have consistently exercised.

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  1. FTC Overhaul of Hart-Scott-Rodino Act Pre-Merger Notification Rules

On October 10, 2024, the Federal Trade Commission (FTC) unveiled extensive modifications to the Hart-Scott-Rodino Act (HSR) pre-merger notification regulations. These changes, set to take effect in January 2025, significantly expand disclosure requirements for mergers and acquisitions.

Why it Matters: The Act applies to transactions that meet specific size thresholds, which are adjusted annually. Generally, in 2024, transactions where one party has a size of at least $239 million; the other party has a size of at least $23.9 million; and the size of the transaction is at least $119.5 million, must be reported. The Act aims to give regulators the opportunity to review potentially anticompetitive deals before they are consummated.

Related Practice Groups and Professionals 

Energy, Utilities & Telecommunication | Sean Gallagher
Business & Tax
Labor, Employment & Civil Rights | David Houston

Five Stories That Matter in Michigan This Week – November 1, 2024

  1. Michigan Court Rules Conservators Can Choose Lower Purchase Offers Based on Circumstances

In Tomcal v. Beird, a conservator accepted a $300,000 offer (plus $25,000 for personal property) over a potentially higher $305,000-$325,000 offer with contingencies for the sale of an incapacitated person’s real estate, and the Michigan Court of Appeals upheld this decision.

Why it Matters: This ruling establishes that conservators aren’t strictly required to accept the highest monetary offer when selling property, and can consider other factors like timing and certainty of sale when making decisions in the ward’s best interests.

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  1. FTC Overhaul of Hart-Scott-Rodino Act Pre-Merger Notification Rules

On October 10, 2024, the Federal Trade Commission (FTC) unveiled extensive modifications to the Hart-Scott-Rodino Act (HSR) pre-merger notification regulations. These changes, set to take effect in January 2025, significantly expand disclosure requirements for mergers and acquisitions.

Why it Matters: The Act applies to transactions that meet specific size thresholds, which are adjusted annually. Generally, in 2024, transactions where one party has a size of at least $239 million; the other party has a size of at least $23.9 million; and the size of the transaction is at least $119.5 million, must be reported. The Act aims to give regulators the opportunity to review potentially anticompetitive deals before they are consummated.

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  1. Business Education Series: Referral Generation: Avoid Peaks & Valleys in Your Sales Funnel

Every business owner prefers a referral to a cold lead. Referrals have a basis of trust and understanding that makes the sales process simpler to execute and winning easier to achieve. Referrals can’t be generated intentionally however, right? On Tuesday, December 17, Ian Richardson, BBA, CSAP, MCSA, Principal Consultant, Fox & Crow Group LLC & Managing Partner, Richardson & Richardson Consulting, LLC, will discuss how this is incorrect.

Why it Matters: Learn how to structure an intentional referral generation pipeline from existing clients while minimizing the risk of client churn. Three takeaways include preparing conversations with clients, retention efforts for clients who are not ready to refer, and review of how to prepare a referral list for clients. Full information and to register.

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  1. Record Third Quarter Cannabis Sales in Michigan

Michigan has broken another of their own records in the cannabis industry, August through October, adult-use and medical sales totaled $850,039,220.08, topping last quarter’s amount of $836,999,633.86, making this quarter the highest ever total so far in Michigan.

Why it Matters: While the prices of cannabis and cannabis-related products continue to decrease and make consumers happy, growers on the other hand are seeing profits decrease resulting in them seeking ways to halt new licenses to be granted in an effort to steady prices.

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  1. New Law for Siting Renewable Energy and Energy Storage Projects in Takes Effect November 29, 2024

In the fall of last year, HB 5120 (now Public Act 233 of 2023) was enacted. It establishes a new permitting process for large-scale wind, solar, and energy storage projects. The law grants the Michigan Public Service Commission (MPSC) the authority to site such utility-scale renewable energy facilities.

Why it Matters: The law preempts local control over certain aspects zoning and other ordinances for solar energy facilities with a capacity of 50 megawatts or more, wind energy facilities with a capacity of 100 megawatts or more, and energy storage facilities with a capacity of 50 megawatts or more. The law will take effect on November 29, 2024.

Related Practice Groups and Professionals 

Trusts & Estates
Energy, Utilities & Telecommunication | Sean Gallagher
Business & Tax
Cannabis Law | Sean Gallagher

Five Stories That Matter in Michigan This Week – October 25, 2024

  1. FTC Announces Final “Click-to-Cancel” Rule

On October 16, 2024, the Federal Trade Commission (FTC) announced a final “click-to-cancel” that will require sellers to make it as easy for consumers to cancel their subscription/enrollment as it was to sign up. The rule is a result of the FTC’s ongoing review and modernization of its 1973 Negative Option Rule, which meant to combat unfair or deceptive practices related to subscriptions, memberships and other recurring-payment programs.

Why it Matters: According to the FTC, the number of consumer complaints related to negative option marketing programs has been steadily increasing over the past five years and in 2024 the Commission received nearly 70 consumer complaints per day on average, up from 42 per day in 2021.

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  1. Intellectual Property and Rebranding: What Business Leaders Need to Know

Rebranding a business is exciting. It’s often done at a time of growth and transformation, such as a merger or acquisition, when a business is launching an important new product, entering a new geographic market, or trying to appeal to a new customer demographic. Whether you’re updating your logo, changing your company name, or overhauling your entire brand identity, it’s a big step that can lead to great opportunities.

Why it Matters: But before you dive into the creative process, it is crucial to consider the intellectual property (IP) law implications of a rebrand. Your brand is one of your most valuable assets, and rebranding involves important legal considerations that can impact your business’s future. In this article, we’ll walk you through some key IP issues you need to consider when rebranding. These considerations will help you protect your new identity and avoid costly legal pitfalls along the way. Read more.

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  1. Michigan CRA Publishes September ’24 Data: Average Price Decreases

Per data released by the Cannabis Regulatory Agency (CRA), the average retail price for adult-use sale of an ounce of cannabis in September was $78.68, a decrease from $80.14 in August. This is a decrease from September 2023, where the average price was $100.14.

Why it Matters: While the prices of cannabis and cannabis-related products continue to decrease and make consumers happy, growers on the other hand are seeing profits decrease resulting in them seeking ways to halt new licenses to be granted in an effort to steady prices.

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  1. Business Education Series: Avoid the Five Business Dangers

On Wednesday, October 30, Tom Hamp, Hamp Business Coaching, will delve into the critical issues of poor leadership skills and their impact on organizational success, explore strategies to overcome underperforming sales, and discuss the consequences of ineffective marketing. Additionally, we will examine the importance of robust human capital management and the detrimental effects of financial mismanagement. This seminar is designed to provide practical solutions and actionable insights to help you navigate and resolve these common business problems effectively.

Why it Matters: Learn how to understand your business’s financials, understand profit and loss and use it to your advantage. Also, learn how leadership impacts staff and how to manage employees better by increasing leadership skills. Full information and to register.

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  1. 10 Fraser Trebilcock Attorneys Selected for 2024 List of Super Lawyers, Rising Stars in Michigan

Eight Fraser Trebilcock attorneys have been selected for inclusion on the 2024 Michigan Super Lawyers list, with two additional attorneys named “2024 Rising Stars in Michigan.” Those selected include: Michael S. Ashton, Administrative Law; Michael P. Donnelly, Business Litigation; Mark E. Kellogg, Estate & Probate; Danielle Lofton (Rising Star), Personal Injury – General: Plaintiff; Hon. Paula J. Manderfield (Ret.), Alternative Dispute Resolution; Thaddeus E. Morgan, Business Litigation; Melisa M.W. Mysliwiec, Elder Law; Gary C. Rogers, Personal Injury – General: Defense; Elizabeth M. Siefker (Rising Star), Estate & Probate; and Marlaine C. Teahan, Estate & Probate.

Why it Matters: Only 5% of lawyers make the Super Lawyers list, and 2.5% make the “Rising Stars” list. The selection process for Super Lawyers is multi-phased and includes independent research, peer nominations and peer evaluations. In the United States, Super Lawyers Magazine is published in all 50 states and Washington, D.C., reaching more than 13 million readers. Read more.

Related Practice Groups and Professionals 

Business & Tax
Intellectual Property | Andrew Martin
Cannabis Law | Sean Gallagher

Five Stories That Matter in Michigan This Week – October 18, 2024

  1. New Michigan Legislation Requires Dyslexia Screening for Students

Michigan Senate bills 567 and 568 were recently signed into law, which require Michigan schools to screen all kindergarten through 3rd grade students for dyslexia three times a year if they have not been previously screened, as well as students in grades four through 12 who demonstrate behaviors indicating dyslexia.

Why it Matters: The results of the 2024 Michigan Student Test of Educational Progress, released in August, showed that the number of Michigan third-graders who are proficient in reading slid to its lowest point in the 10-year history of the state assessment test.

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  1. 10 Fraser Trebilcock Attorneys Selected for 2024 List of Super Lawyers, Rising Stars in Michigan

Eight Fraser Trebilcock attorneys have been selected for inclusion on the 2024 Michigan Super Lawyers list, with two additional attorneys named “2024 Rising Stars in Michigan.” Those selected include: Michael S. Ashton, Administrative Law; Michael P. Donnelly, Business Litigation; Mark E. Kellogg, Estate & Probate; Danielle Lofton (Rising Star), Personal Injury – General: Plaintiff; Hon. Paula J. Manderfield (Ret.), Alternative Dispute Resolution; Thaddeus E. Morgan, Business Litigation; Melisa M.W. Mysliwiec, Elder Law; Gary C. Rogers, Personal Injury – General: Defense; Elizabeth M. Siefker (Rising Star), Estate & Probate; and Marlaine C. Teahan, Estate & Probate.

Why it Matters: Only 5% of lawyers make the Super Lawyers list, and 2.5% make the “Rising Stars” list. The selection process for Super Lawyers is multi-phased and includes independent research, peer nominations and peer evaluations. In the United States, Super Lawyers Magazine is published in all 50 states and Washington, D.C., reaching more than 13 million readers. Read more.

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  1. Fraser Trebilcock Welcomes Charles L. Lasky to the Firm

Fraser Trebilcock is pleased to announce the hiring of attorney Charles L. Lasky who will work primarily in the firm’s Lansing office. Mr. Lasky has over four decades of experience with a primary focus on real property law: commercial and residential real estate, real estate development, tax incentive financing, tax law, business law: business mergers, sales and acquisitions, business entity formation, corporate law, and financial institution law. His extensive knowledge and experience make him a trusted advisor in complex legal matters.

Why it Matters: His prowess in the legal and business industry should not overshadow his involvement with his community. Mr. Lasky has served on the Board of Directors of various financial institutions in Michigan, Nevada, and Colorado, as well as serving on the Board of Trustees for local organizations such as the Ingham Regional Medical Center, and the Ingham Regional Healthcare Foundation. Learn more.

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  1. Michigan Cannabis Exceeds $266 Million in September ‘24

Cannabis sales surpassed $266 million in September, via the monthly report from the Michigan Cannabis Regulatory Agency. Michigan adult-use sales came in at $265,861,241.15, while medical sales came in at $1,022,653.82, totaling $266,883,894.97.

Why it Matters: While the prices of cannabis and cannabis-related products continue to decrease and make consumers happy, growers on the other hand are seeing profits decrease resulting in them seeking ways to halt new licenses to be granted in an effort to steady prices.

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  1. Business Education Series: Avoid the Five Business Dangers

On Wednesday, October 30, Tom Hamp, Hamp Business Coaching, will delve into the critical issues of poor leadership skills and their impact on organizational success, explore strategies to overcome underperforming sales, and discuss the consequences of ineffective marketing. Additionally, we will examine the importance of robust human capital management and the detrimental effects of financial mismanagement. This seminar is designed to provide practical solutions and actionable insights to help you navigate and resolve these common business problems effectively.

Why it Matters: Learn how to understand your business’s financials, understand profit and loss and use it to your advantage. Also learn how leadership impacts staff and how to manage employees better by increasing leadership skills. Full information and to register.

Related Practice Groups and Professionals 

Charles Lasky
Cannabis Law | Sean Gallagher

Five Stories That Matter in Michigan This Week – October 11, 2024

  1. Michigan Legislature Passes Data Center Tax Break Bill

Last week, the Michigan House passed Senate Bill 237 by a vote of 56 to 41. The bill, if signed into law, would exempt large data centers from Michigan use taxes on equipment through at least 2050.

Why it Matters: With the massive computing needs of artificial intelligence, data center development has exploded across the country. While this bill would likely make Michigan more attractive to data center developers, opponents argue that having more data centers—which consume massive amounts of energy—would undermine Michigan’s clean energy goals.

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  1. Attorney Douglas J. Austin Honored as “Lawyer of the Year” in Real Estate Law in Lansing

Fraser Trebilcock attorney Douglas J. Austin has been named the Best Lawyers in America® 2025 Real Estate Law “Lawyer of the Year” in Lansing. “I am honored to be recognized by Best Lawyers® as a 2025 ‘Lawyer of the Year’ for Real Estate Law in Lansing,” said Mr. Austin.

Why it Matters: This is a high distinction, as only one attorney in each practice area in each community is identified as “Lawyer of the Year.” Mr. Austin has been at the center of real estate law for over 45 years. In addition to being a shareholder at Fraser Trebilcock, he is also the past chair of the firm’s Real Estate Law department. Read more.

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  1. Business Education Series: Avoid the Five Business Dangers

On Wednesday, October 30, Tom Hamp, Hamp Business Coaching, will delve into the critical issues of poor leadership skills and their impact on organizational success, explore strategies to overcome underperforming sales, and discuss the consequences of ineffective marketing. Additionally, we will examine the importance of robust human capital management and the detrimental effects of financial mismanagement. This seminar is designed to provide practical solutions and actionable insights to help you navigate and resolve these common business problems effectively.

Why it Matters: Learn how to understand your business’s financials, understand profit and loss and use it to your advantage. Also learn how leadership impacts staff and how to manage employees better by increasing leadership skills. Full information and to register.

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  1. Fraser Trebilcock Welcomes Charles L. Lasky to the Firm

Fraser Trebilcock is pleased to announce the hiring of attorney Charles L. Lasky who will work primarily in the firm’s Lansing office. Mr. Lasky has over four decades of experience with a primary focus on real property law: commercial and residential real estate, real estate development, tax incentive financing, tax law, business law: business mergers, sales and acquisitions, business entity formation, corporate law, and financial institution law. His extensive knowledge and experience make him a trusted advisor in complex legal matters.

Why it Matters: His prowess in the legal and business industry should not overshadow his involvement with his community. Mr. Lasky has served on the Board of Directors of various financial institutions in Michigan, Nevada, and Colorado, as well as serving on the Board of Trustees for local organizations such as the Ingham Regional Medical Center, and the Ingham Regional Healthcare Foundation. Learn more.

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  1. Michigan Sales Tax Applies to Credit Card Surcharges

Recently, the Michigan Department of Treasury provided guidance on the application of a Michigan sales tax on credit card “surcharges” for businesses. The Michigan Department of Treasury considers the surcharge added to a customer’s bill a “service cost” or “other expense of the seller” under the General Sales Tax Act, making it part of the taxable “sales price” of a transaction.

Why it Matters: Compliance with this guidance is important. Failure to do so may result in underpayment of taxes due to the State of Michigan, potentially subjecting your business to penalties and interest. If you have any questions about how this guidance applies to your specific situation, please contact Paul McCord or your Fraser Trebilcock attorney. Read more.

Related Practice Groups and Professionals 

Real Estate Law | Doug Austin
Charles Lasky
Business & Tax | Paul McCord

Five Stories That Matter in Michigan This Week – October 4, 2024

  1. With Election Looming, it’s Important to be Informed About Michigan’s AI Election Communications Law

A little less than a year ago, in November, 2023, Michigan became the fifth U.S. state to pass a law regulating artificial intelligence use in election communications. The legislation requires a disclaimer on political advertisements created using A.I.-generated content.

Why it Matters: Under the law, a person who knowingly violates this section is guilty of a misdemeanor punishable by a fine of not more than $1,000.00 or imprisonment for not more than 93 days, or both. You can access more information about the law here.

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  1. Michigan Sales Tax Applies to Credit Card Surcharges

Recently, the Michigan Department of Treasury provided guidance on the application of a Michigan sales tax on credit card “surcharges” for businesses. The Michigan Department of Treasury considers the surcharge added to a customer’s bill a “service cost” or “other expense of the seller” under the General Sales Tax Act, making it part of the taxable “sales price” of a transaction.

Why it Matters: Compliance with this guidance is important. Failure to do so may result in underpayment of taxes due to the State of Michigan, potentially subjecting your business to penalties and interest. If you have any questions about how this guidance applies to your specific situation, please contact Paul McCord or your Fraser Trebilcock attorney. Read more.

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  1. Update: Michigan Supreme Court Clarifies its “Adopt and Amend” Minimum Wage and Tipped Worker Ruling

The Michigan Supreme Court recently issued a clarification of its July 31, 2024 ruling on minimum wage and paid sick leave standards. This update, released on September 18, 2024, comes in response to a request from the State of Michigan and its attorney general, addressing several key points of confusion that arose from the original decision.

Why it Matters: Employers should remain vigilant for any further updates or guidance from state authorities. The complex nature of these changes underscores the importance of staying informed and seeking experienced legal counsel to ensure full compliance with Michigan’s evolving wage laws. Read more from your Fraser Trebilcock attorney.

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  1. Business Education Series: Avoid the Five Business Dangers

On Wednesday, October 30, Tom Hamp, Hamp Business Coaching, will delve into the critical issues of poor leadership skills and their impact on organizational success, explore strategies to overcome underperforming sales, and discuss the consequences of ineffective marketing. Additionally, we will examine the importance of robust human capital management and the detrimental effects of financial mismanagement. This seminar is designed to provide practical solutions and actionable insights to help you navigate and resolve these common business problems effectively.

Why it Matters: Learn how to understand your business’s financials, understand profit and loss and use it to your advantage. Also learn how leadership impacts staff and how to manage employees better by increasing leadership skills. Full information and to register.

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  1. Fraser Trebilcock Attorney Secures Victory for Firm Client

Fraser Trebilcock attorney Danielle Lofton was successful in securing a victory for the firm’s client in an insurance matter. A mother of an eight-year-old daughter in Florida had been sued over an accident that occurred in Michigan involving her daughter having caused a serious injury to a cousin while driving an ATV.

Why it Matters: The mother’s insurance company in Florida had gone into insolvency, leaving the mother on her own to defend herself in the civil lawsuit. Although she was initially faced with many roadblocks, Attorney Lofton was successful in convincing the Florida Insurance Bureau to not only settle the underlying claim, but to reimburse the firm’s client for the defense costs she incurred. Read more.

Related Practice Groups and Professionals

Business & Tax | Paul McCord
Labor, Employment & Civil Rights | David Houston
Insurance Law | Danielle Lofton

Michigan Sales Tax Applies to Credit Card Surcharges

For many Michigan businesses, it can be almost impossible to run a business without accepting credit or debit cards. However, the fees from these transactions, the charge merchants pay to their customer’s credit card issuer and credit card network when they accept credit card payments like from Visa, Mastercard and other issuers, can eat into profits. The average credit card processing fee ranges between 1.5% to 3.5%. As a result, a number of Michigan businesses pass this cost back to the purchaser as “surcharge” for the convenience of using a credit card as a means of payment.

Recently, the Michigan Department of Treasury provided guidance on the application of a Michigan sales tax on credit card “surcharges” for businesses. The Michigan Department of Treasury considers the surcharge added to a customer’s bill a “service cost” or “other expense of the seller” under the General Sales Tax Act, making it part of the taxable “sales price” of a transaction.

For example, if a business sells $50 in goods, accepts the customer’s credit card as payment and passes on the $2.99 processing fee as a credit card surcharge to the customer, the business must collect and remit the 6% sales tax on $52.99, not just the original $50 retail price.

According to the Michigan Department of Treasury:

“A payment processor provides a financial service for the seller for which it imposes a fee on the seller. Since that fee represents a cost or expense for which the seller is responsible, the fee is fairly characterized as a ‘service cost’ or an ‘expense of the seller.’ Thus, the fee is part of the sales price and thus part of the tax base. For these reasons, Treasury concludes that the credit-card surcharge is part of the sales price as a ‘service cost’ or ‘any other expense of the seller.’”

Action Steps for Business Owners:

      1. Review current pricing and surcharge practices.
      2. Adjust point-of-sale systems to correctly calculate tax on the total amount, including surcharge add-ons.
      3. Ensure that point-of-sale system accurately marks surcharge on the customer’s bill or receipt as a taxable item.
      4. Update accounting procedures to ensure proper tax remittance.

Compliance with this guidance is important. Failure to do so may result in underpayment of taxes due to the State of Michigan, potentially subjecting your business to penalties and interest. If you have any questions about how this guidance applies to your specific situation, please contact Paul McCord or your Fraser Trebilcock attorney.

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.


Headshot of Fraser Trebilcock attorney Paul V. McCordFraser 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 pmccord@fraserlawfirm.com.

Five Stories That Matter in Michigan This Week – September 27, 2024

  1. New Law for Siting Renewable Energy and Energy Storage Projects in Takes Effect November 29, 2024

In the fall of last year, HB 5120 (now Public Act 233 of 2023) was enacted. It establishes a new permitting process for large-scale wind, solar, and energy storage projects. The law grants the Michigan Public Service Commission (MPSC) the authority to site such utility-scale renewable energy facilities.

Why it Matters: The law preempts local control over certain aspects zoning and other ordinances for solar energy facilities with a capacity of 50 megawatts or more, wind energy facilities with a capacity of 100 megawatts or more, and energy storage facilities with a capacity of 50 megawatts or more. The law will take effect on November 29, 2024.

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  1. Fraser Trebilcock Attorney Secures Victory for Firm Client

Fraser Trebilcock attorney Danielle Lofton was successful in securing a victory for the firm’s client in an insurance matter. A mother of an eight-year-old daughter in Florida had been sued over an accident that occurred in Michigan involving her daughter having caused a serious injury to a cousin while driving an ATV.

Why it Matters: The mother’s insurance company in Florida had gone into insolvency, leaving the mother on her own to defend herself in the civil lawsuit. Although she was initially faced with many roadblocks, Attorney Lofton was successful in convincing the Florida Insurance Bureau to not only settle the underlying claim, but to reimburse the firm’s client for the defense costs she incurred. Read more.

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  1. Update: Michigan Supreme Court Clarifies its “Adopt and Amend” Minimum Wage and Tipped Worker Ruling

The Michigan Supreme Court recently issued a clarification of its July 31, 2024 ruling on minimum wage and paid sick leave standards. This update, released on September 18, 2024, comes in response to a request from the State of Michigan and its attorney general, addressing several key points of confusion that arose from the original decision.

Why it Matters: Employers should remain vigilant for any further updates or guidance from state authorities. The complex nature of these changes underscores the importance of staying informed and seeking experienced legal counsel to ensure full compliance with Michigan’s evolving wage laws. Read more from your Fraser Trebilcock attorney.

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  1. Intellectual Property and Rebranding: What Business Leaders Need to Know

Rebranding a business is exciting. It’s often done at a time of growth and transformation, such as a merger or acquisition, when a business is launching an important new product, entering a new geographic market, or trying to appeal to a new customer demographic. Whether you’re updating your logo, changing your company name, or overhauling your entire brand identity, it’s a big step that can lead to great opportunities.

Why it Matters: But before you dive into the creative process, it is crucial to consider the intellectual property (IP) law implications of a rebrand. Your brand is one of your most valuable assets, and rebranding involves important legal considerations that can impact your business’s future. In this article, we’ll walk you through some key IP issues you need to consider when rebranding. These considerations will help you protect your new identity and avoid costly legal pitfalls along the way. Read more.

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  1. Business Education Series: Avoid the Five Business Dangers

On Wednesday, October 30, Tom Hamp, Hamp Business Coaching, will delve into the critical issues of poor leadership skills and their impact on organizational success, explore strategies to overcome underperforming sales, and discuss the consequences of ineffective marketing. Additionally, we will examine the importance of robust human capital management and the detrimental effects of financial mismanagement. This seminar is designed to provide practical solutions and actionable insights to help you navigate and resolve these common business problems effectively.

Why it Matters: Learn how to understand your business’s financials, understand profit and loss and use it to your advantage. Also learn how leadership impacts staff and how to manage employees better by increasing leadership skills. Full information and to register.

Related Practice Groups and Professionals

Energy, Utilities & Telecommunication | Sean Gallagher
Insurance Law | Danielle Lofton
Labor, Employment & Civil Rights | David Houston
Intellectual Property | Andrew Martin