The time has once again arrived to focus on cost reductions achievable by appealing your property taxes. You have recently received your 2011 Notice of Assessment. As discussed below, there is a very limited window of opportunity to protest your property tax assessment.
To understand the importance of that Notice of Assessment, a bit of background is necessary. In 1994, the voters of the State of Michigan passed Proposal A, a school finance reform package that increased the sales tax from 4% to 6%, shifted the funding of school districts from primarily local to primarily state level, and introduced the concept of “taxable value,” in addition to the long-standing state equalized value (SEV). In order to determine if an appeal of an assessment would reduce your property taxes, you must determine whether the property’s value is less than twice the taxable value. This is true because in order to reduce your taxes, you need to reduce the SEV to a number less than the taxable value.
There is a one or two-step process in Michigan to challenge a property’s assessment, depending upon the property’s classification. For property classified as residential or agricultural, the first step is an appearance before the Board of Review, which is generally held sometime after the second Monday in March of each year. (There are additional requirements for properties located in several communities, most notably, the City of Detroit). A Board of Review is made up of 3, 6 or 9 members, who are generally appointed by the administration of the City.
If the Board of Review does not reduce the SEV to an amount acceptable to the property owner, the second, and final, step is an appeal to the Michigan Tax Tribunal. The Michigan Tax Tribunal is an administrative agency created by Michigan law.
For properties classified as commercial or industrial, appeals can be filed directly to the Michigan Tax Tribunal, without appearing before the local Board of Review.
For smaller cases, a hearing officer of the Tax Tribunal, who can either hold a telephonic hearing or an in-person hearing, may actually hear your case. These hearings typically last 30 minutes. For larger cases, a Michigan Tax Tribunal Judge in the City of Lansing will hear the case. These hearings may last up to several days.
For residential and agricultural properties, an appeal must be filed before the Michigan Tax Tribunal on or before July 31, 2011. Remember: you must appear before the local Board of Review in March for these properties in order to appeal to the Tax Tribunal.
For commercial and industrial properties, an appearance before the local Board of Review in March is optional. The deadline for filing an appeal before the Michigan Tax Tribunal for properties with these classifications is May 31, 2011.
Because of the declining Michigan real estate economy, the number of appeals has grown exponentially in the past few years. This has led to a significant backlog before the Michigan Tax Tribunal. For smaller cases, which are heard by hearing officers, the waiting period before you receive a hearing may be 1 to 2 years. For larger cases, which are heard by Michigan Tax Tribunal Judges, the waiting period can be anywhere from 2 to 4 years. Of course, it is always possible settle the dispute with the local community prior to a hearing. The likelihood of this occurring depends upon the attitudes of the particular community and assessor regarding the resolution of these appeals.
While an appeal is pending, a property owner should continue paying taxes at the amount billed by the community. When the case is resolved, if a refund is generated based upon the terms of the resolution, that refund will also include interest from the date of payment of the tax to the date of refund.
A property owner who is unsure of whether an appeal is appropriate may receive a free preliminary review of the Notice of Assessment by forwarding it to our firm. We can evaluate the likelihood of success in an appeal. In most cases, our firm will handle property tax appeals on a contingent fee basis, which means that the property owner will pay no attorney fees unless a refund is generated through the appeal. Please contact Dave Nykanen if you have questions about property tax appeals in Michigan.
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