Tag: tax exemption

Increase in the Small Business Property Tax Exemption

Eligibility for the so-called “Small Business Property Tax Exemption” has expanded. Generally, all personal property used by businesses in Michigan is subject to property taxation. Beginning with calendar year 2014, however, an exemption was created for the personal property owned by businesses if the “True Cash Value” or, in other words, market value of their personal property either owned, leased, or possessed by a related party is less than $80,000 within any city or township. This exemption has become known as the “Small Business” exemption.

The exemption is only for commercial and industrial personal property (residential/individuals are not subject to personal property taxes). 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.

In order to claim the exemption, eligible small businesses must file a Form 507 no later than February 20, 2024, with their local assessor. Late filed claims are not accepted. 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.

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.

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.

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.