Tag: property taxes

Five Stories that Matter in Michigan This Week – July 8, 2022

  1. Michigan Adopts Version of the Uniform Assignment of Rents Act

Michigan recently adopted its version of the Uniform Assignment of Rents Act (the “UARA”), which establishes a comprehensive statutory model for the creation, perfection, and enforcement of security interests in rent. It is the sixth state to adopt the UARA.

Why it Matters: An assignment of rents allows a lender to collect income from rents derived from mortgaged property after the mortgage has been defaulted on. It protects a lender against scenarios in which a borrower (typically a commercial landlord)  is continuing to collect rent from a property but is no longer making mortgage payments. The Michigan UARA codifies rules related to assignments of rents, bringing clarity to both lenders and borrowers.

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  1. Michigan’s November 2022 Ballot to Include Fair Lending Proposal Capping Payday Loan Interest Rates

Supporters of the Payday Loan Interest Rate Cap ballot initiative in Michigan secured sufficient signatures to put the initiative  on the November 2022 ballot.

Why it Matters: Once the petition is validated by Michigan’s Board of State Canvassers, the Michigan legislature will have 40 days to approve the initiative, as submitted.  If the legislature rejects the initiative or fails to act by the deadline, the proposal will be placed on the November 2022 ballot for voters to decide. If passed, payday loan rates will be capped at 36% APR or less.

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  1. Michigan Property Taxes are Set to Jump

Gas, groceries, and now summer property tax bills are spiking in Michigan. The inflation rate adjustment for this year’s property taxes in Michigan is 3.3%.

Why it Matters: Under Proposal A, there is  a maximum 5% inflation rate adjustment allowed. While this year’s increase is less than the cap, it is the highest it has been since 2007. And many expect next year’s increase to hit the 5% cap. In a Detroit Free Press article, Patrick Anderson, CEO of the Anderson Economic Group said: “Basically, we’re baked in at 5% next year.”

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  1. Michigan Leads the Nation in Energy-Sector Job Growth

According to an annual report recently issued by the U.S. Department of Energy, Michigan added 35,463 energy-sector jobs from 2020—more than any other state in 2021, boosted primarily by the automotive industry and its increased focus on hybrid and electric vehicle models.

Why it Matters: With soaring inflation and increased expectations of an economic recession, Michigan’s strength in energy-sector jobs bodes well for Michigan workers and businesses. The energy sector in Michigan represents 9.5 percent of state employment, with 393,207 jobs total.

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  1. Michigan Bill Would Cut Taxes for Small Distillers, Provide Boost to Local Farmers

The Michigan legislature recently approved legislation that would cut the state Liquor Control Commission markup on small distillery alcohol from 65% to 32.5% if more than 40% of the grains and other crops used to distill the liquor are grown in Michigan.

Why it Matters: If signed into law by Governor Whitmer, this tax cut would result in large savings for small Michigan distillers and help them compete with larger national producers. Because the tax savings are tied to the purchase of grains and other crops grown in Michigan, local farmers would also benefit.

Related Practice Groups and Professionals

Business & Tax| Ed Castellani

Real Estate | Jared Roberts

Election Law | Garett Koger

Energy, Utilities & Telecommunication | Michael Ashton

Now is the Time to Consider Appealing Your 2019 Property Taxes

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 pmccord@fraserlawfirm.com.