ESA | Fraser Blog

Five Stories That Matter in Michigan This Week – February 23, 2024

Michigan Awarded Nearly $23 Million for Electric Vehicle Infrastructure

The State of Michigan recently announced that nearly $23 million has been awarded to multiple locations across Michigan for electric vehicle infrastructure. The funds are being allocated via the U.S. Department of Energy’s National Electric Vehicle Infrastructure Formula Program.

Why it Matters: Electric vehicle growth and EV infrastructure is an important clean energy and economic growth priority in Michigan. However, recent reports suggest the market for EVs is slowing, and the issue has become a hot-button topic in this year’s presidential campaign. A New York Times article discussed the contentiousness of the issue in a story this week titled, “For Michigan’s Economy, Electric Vehicles are Promising and Scary.”

———

Increase in the Small Business Property Tax Exemption

Eligibility for the so-called “Small Business Property Tax Exemption” has expanded. Legislation passed last October 2023, expands the exemption by increasing the eligibility limit to from the $80,000 true cash value limit to $180,000.

Why it Matters: The exemption is only for commercial and industrial personal property (residential/individuals are not subject to personal property taxes). Once filed, and if granted, the exemption will remain as long as the small business still qualifies. In other words, there is no need to file an exemption claim every year. Read more.

———

Michigan CRA Publishes January 2024 Data: Average Price Decreases

Per data released by the Cannabis Regulatory Agency (CRA), the average retail price for adult-use sales of an ounce of cannabis in January was $93.20, a decrease from $95.08 in December 2023. This is an increase from January 2023, where the average price was $80.16.

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. Contact our cannabis law attorneys if you have any questions.

———

Michigan’s Repealed “Right-to-Work” Law Takes Effect

On Tuesday, February 13, 2024, Michigan’s repeal of the prior “right-to-work” law governing private-sector workers went into effect.

Why it Matters: The result of the repeal is that private-sector unions may permissibly negotiate to impasse, and enforce, “union security” provisions requiring membership in, or financial support through “Beck Objector” fees, of those unions. Read more.

———

Retroactive PPT Exemption

Some Michigan manufacturers who were not able to claim their 2021 ESA-PPT exemption due to COVID-19, have until March 14 to request approval from the State Tax Commission.

Why it Matters: The ESA is a State specific tax on personal property that is exempt from property taxes at the local level because the property meets certain eligibility requirements, such as being qualified manufacturing or industrial personal property. In order to elect out of local personal property taxes and into the ESA regime, manufacturers must file the required forms with their local assessing office by February 20th of each year. Learn more.

Related Practice Groups and Professionals

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

Five Stories That Matter in Michigan This Week – February 16, 2024

Michigan Eliminates Pharmaceutical Company Immunity

Governor Whitmer recently signed Senate Bill 410 into law, which repeals the provision under Michigan’s Product Liability Act which granted immunity to pharmaceutical companies. A rebuttable presumption of non-liability and caps on non-economic damages remain intact.

Why it Matters: Pharmaceutical companies have had near-total immunity from product liability claims in Michigan for approximately 30 years. The law took effect on February 13, 2024.

———

Retroactive PPT Exemption

Some Michigan manufacturers who were not able to claim their 2021 ESA-PPT exemption due to COVID-19, have until March 14 to request approval from the State Tax Commission.

———

Michigan’s Repealed “Right-to-Work” Law Takes Effect

On Tuesday, February 13, 2024, Michigan’s repeal of the prior “right-to-work” law governing private-sector workers went into effect.

Why it Matters: The result of the repeal is that private-sector unions may permissibly negotiate to impasse, and enforce, “union security” provisions requiring membership in, or financial support through “Beck Objector” fees, of those unions. Read more.

———

Michigan Cannabis Exceeds $242 Million in January ‘24

Cannabis sales surpassed $242 million in January, via the monthly report from the Michigan Cannabis Regulatory Agency. Michigan adult-use sales came in at $240,289,360.60, while medical sales came in at $2,523,333.56, totaling $242,812,694.16.

Why it Matters: Marijuana sales remain strong in Michigan, particularly for recreational use. However, there still are significant concerns about profitability and market oversaturation that the industry is contending with.

———

Client Alert/Reminder: Form W-2 Reporting Due for Employer-Provided Health Care / Disclosure Due to CMS for Medicare Part D

Unless subject to an exemption, employers must report the aggregate cost of employer-sponsored health coverage provided in 2023 on their employees’ Form W-2 (Code DD in Box 12) issued in January 2024. Please see IRS Notice 2012-09. Additionally, group health plans offering prescription drug coverage are required to disclose to all Part D-eligible individuals who are enrolled in or were seeking to enroll in the group health plan coverage whether such coverage was creditable.

Why it Matters: The filing deadline is 60 days following the first day of the plan year. If you operate a calendar year plan, the deadline is the end of February. If you operate a non-calendar year plan, please be sure to keep track of your deadline. Contact your Fraser Trebilcock attorney for any questions.

Related Practice Groups and Professionals

Retroactive PPT Exemption

February is for lovers, and who doesn’t love a tax exemption? Some Michigan manufacturers who were not able to claim their 2021 ESA-PPT exemption due to COVID-19, have until March 14 to request approval from the State Tax Commission.

Eligible Michigan manufacturers can elect out of the personal property taxes and instead pay an Essential Services Assessment (ESA) at the state level. The ESA is a State specific tax on personal property that is exempt from property taxes at the local level because the property meets certain eligibility requirements, such as being qualified manufacturing or industrial personal property. In order to elect out of local personal property taxes and into the ESA regime, manufacturers must file the required forms with their local assessing office by February 20th of each year.

During calendar year 2021, some manufacturing businesses were not able to file the required paperwork by the due date as a result of COVID-19 restrictions.

On November 14, 2023, the Governor signed 211 PA 2023. As the legislation was not given immediate effect, that law went into effect February 13, 2024. The legislation allows manufacturers who did not elect out of local personal property taxes and into ESA due to the COVID-19 pandemic to retroactively claim eligible manufacturing personal property exemption for 2021.

If you have any questions as to whether your business can claim a retroactive 2021 ESA/PPT exemption, please contact your 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.

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 pmccord@fraserlawfirm.com.