May 28, 2008, Introduced by Senator KAHN and referred to the Committee on Finance.
A bill to amend 1893 PA 206, entitled
"The general property tax act,"
(MCL 211.1 to 211.155) by adding section 7nn.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 7nn. (1) A secondary residence is exempt from the tax
levied by a local school district for school operating purposes to
the extent provided under section 1211 of the revised school code,
1976 PA 451, MCL 380.1211, if an owner of that secondary residence
claims an exemption as provided in this section. Notwithstanding
the tax day provided in section 2, the status of property as a
secondary residence shall be determined on the date an affidavit
claiming an exemption is filed under subsection (2).
(2) An owner of property may claim an exemption under this
section by filing an affidavit on or before May 1 with the local
tax collecting unit in which the property is located. The affidavit
shall state that the property is owned and occupied as a secondary
residence by that owner of the property on the date that the
affidavit is signed. The affidavit shall be on a form prescribed by
the department of treasury. One copy of the affidavit shall be
retained by the owner, 1 copy shall be retained by the local tax
collecting unit until any appeal or audit period under this act has
expired, and 1 copy shall be forwarded to the department of
treasury pursuant to subsection (4), together with all information
submitted under subsection (25) for a cooperative housing
corporation. The affidavit shall require the owner claiming the
exemption to indicate if that owner or that owner's spouse has
claimed another exemption under this section on property in this
state that is not rescinded. If the affidavit requires an owner to
include a social security number, that owner's number is subject to
the disclosure restrictions in 1941 PA 122, MCL 205.1 to 205.31.
(3) A husband and wife who are required to file or who do file
a joint Michigan income tax return are entitled to not more than 1
exemption under this section.
(4) Upon receipt of an affidavit filed under subsection (2)
and unless the claim is denied under this section, the assessor
shall exempt the property from the collection of the tax levied by
a local school district for school operating purposes to the extent
provided under section 1211 of the revised school code, 1976 PA
451, MCL 380.1211, as provided in subsection (1) until December 31
of the year in which the property is transferred or is no longer a
secondary residence. The local tax collecting unit shall forward
copies of affidavits to the department of treasury according to a
schedule prescribed by the department of treasury.
(5) Not more than 90 days after exempted property is no longer
used as a secondary residence by the owner claiming an exemption,
that owner shall rescind the claim of exemption by filing with the
local tax collecting unit a rescission form prescribed by the
department of treasury. An owner who fails to file a rescission as
required by this subsection is subject to a penalty of $5.00 per
day for each separate failure beginning after the 90 days have
elapsed, up to a maximum of $200.00. This penalty shall be
collected under 1941 PA 122, MCL 205.1 to 205.31, and shall be
deposited in the state school aid fund established in section 11 of
article IX of the state constitution of 1963. This penalty may be
waived by the department of treasury.
(6) If the assessor of the local tax collecting unit believes
that the property for which an exemption is claimed is not the
secondary residence of the owner claiming the exemption, the
assessor may deny a new or existing claim by notifying the owner
and the department of treasury in writing of the reason for the
denial and advising the owner that the denial may be appealed to
the residential and small claims division of the Michigan tax
tribunal within 35 days after the date of the notice. The assessor
may deny a claim for exemption for the current year and for the 3
immediately preceding calendar years. If the assessor denies an
existing claim for exemption, the assessor shall remove the
exemption of the property and, if the tax roll is in the local tax
collecting unit's possession, amend the tax roll to reflect the
denial and the local treasurer shall within 30 days of the date of
the denial issue a corrected tax bill for any additional taxes with
interest at the rate of 1.25% per month or fraction of a month and
penalties computed from the date the taxes were last payable
without interest or penalty. If the tax roll is in the county
treasurer's possession, the tax roll shall be amended to reflect
the denial and the county treasurer shall within 30 days of the
date of the denial prepare and submit a supplemental tax bill for
any additional taxes, together with interest at the rate of 1.25%
per month or fraction of a month and penalties computed from the
date the taxes were last payable without interest or penalty.
Interest on any tax set forth in a corrected or supplemental tax
bill shall again begin to accrue 60 days after the date the
corrected or supplemental tax bill is issued at the rate of 1.25%
per month or fraction of a month. Taxes levied in a corrected or
supplemental tax bill shall be returned as delinquent on the March
1 in the year immediately succeeding the year in which the
corrected or supplemental tax bill is issued. If the assessor
denies an existing claim for exemption, the interest due shall be
distributed as provided in subsection (22). However, if the
property has been transferred to a bona fide purchaser before
additional taxes were billed to the seller as a result of the
denial of a claim for exemption, the taxes, interest, and penalties
shall not be a lien on the property and shall not be billed to the
bona fide purchaser, and the local tax collecting unit if the local
tax collecting unit has possession of the tax roll or the county
treasurer if the county has possession of the tax roll shall notify
the department of treasury of the amount of tax due, interest, and
penalties through the date of that notification. The department of
treasury shall then assess the owner who claimed the exemption
under this section for the tax, interest, and penalties accruing as
a result of the denial of the claim for exemption, if any, as for
unpaid taxes provided under 1941 PA 122, MCL 205.1 to 205.31, and
shall deposit any tax or penalty collected into the state school
aid fund and shall distribute any interest collected as provided in
subsection (22). The denial shall be made on a form prescribed by
the department of treasury. If the property for which the assessor
has denied a claim for exemption under this subsection is located
in a county in which the county treasurer or the county
equalization director has elected to audit exemptions under
subsection (10), the assessor shall notify the county treasurer or
the county equalization director of the denial under this
subsection.
(7) If the assessor of the local tax collecting unit believes
that the property for which the exemption is claimed is not the
secondary residence of the owner claiming the exemption and has not
denied the claim, the assessor shall include a recommendation for
denial with any affidavit that is forwarded to the department of
treasury or, for an existing claim, shall send a recommendation for
denial to the department of treasury, stating the reasons for the
recommendation.
(8) The department of treasury shall determine if the property
is the secondary residence of the owner claiming the exemption. The
department of treasury may review the validity of exemptions for
the current calendar year and for the 3 immediately preceding
calendar years. If the department of treasury determines that the
property is not the secondary residence of the owner claiming the
exemption, the department shall send a notice of that determination
to the local tax collecting unit and to the owner of the property
claiming the exemption, indicating that the claim for exemption is
denied, stating the reason for the denial, and advising the owner
claiming the exemption of the right to appeal the determination to
the department of treasury and what those rights of appeal are. The
department of treasury may issue a notice denying a claim if an
owner fails to respond within 30 days of receipt of a request for
information from that department. An owner may appeal the denial of
a claim of exemption to the department of treasury within 35 days
of receipt of the notice of denial. An appeal to the department of
treasury shall be conducted according to the provisions for an
informal conference in section 21 of 1941 PA 122, MCL 205.21.
Within 10 days after acknowledging an appeal of a denial of a claim
of exemption, the department of treasury shall notify the assessor
and the treasurer for the county in which the property is located
that an appeal has been filed. Upon receipt of a notice that the
department of treasury has denied a claim for exemption, the
assessor shall remove the exemption of the property and, if the tax
roll is in the local tax collecting unit's possession, amend the
tax roll to reflect the denial and the local treasurer shall within
30 days of the date of the denial issue a corrected tax bill for
any additional taxes with interest at the rate of 1.25% per month
or fraction of a month and penalties computed from the date the
taxes were last payable without interest and penalty. If the tax
roll is in the county treasurer's possession, the tax roll shall be
amended to reflect the denial and the county treasurer shall within
30 days of the date of the denial prepare and submit a supplemental
tax bill for any additional taxes, together with interest at the
rate of 1.25% per month or fraction of a month and penalties
computed from the date the taxes were last payable without interest
or penalty. Interest on any tax set forth in a corrected or
supplemental tax bill shall again begin to accrue 60 days after the
date the corrected or supplemental tax bill is issued at the rate
of 1.25% per month or fraction of a month. Taxes levied in a
corrected or supplemental tax bill shall be returned as delinquent
on the March 1 in the year immediately succeeding the year in which
the corrected or supplemental tax bill is issued. If the department
of treasury denies an existing claim for exemption, the interest
due shall be distributed as provided in subsection (22). However,
if the property has been transferred to a bona fide purchaser
before additional taxes were billed to the seller as a result of
the denial of a claim for exemption, the taxes, interest, and
penalties shall not be a lien on the property and shall not be
billed to the bona fide purchaser, and the local tax collecting
unit if the local tax collecting unit has possession of the tax
roll or the county treasurer if the county has possession of the
tax roll shall notify the department of treasury of the amount of
tax due and interest through the date of that notification. The
department of treasury shall then assess the owner who claimed the
exemption under this section for the tax and interest plus penalty
accruing as a result of the denial of the claim for exemption, if
any, as for unpaid taxes provided under 1941 PA 122, MCL 205.1 to
205.31, and shall deposit any tax or penalty collected into the
state school aid fund and shall distribute any interest collected
as provided in subsection (22).
(9) The department of treasury may enter into an agreement
regarding the implementation or administration of subsection (8)
with the assessor of any local tax collecting unit in a county that
has not elected to audit exemptions claimed under this section as
provided in subsection (10). The agreement may specify that for a
period of time, not to exceed 120 days, the department of treasury
will not deny an exemption identified by the department of treasury
in the list provided under subsection (11).
(10) A county may elect to audit the exemptions claimed under
this section in all local tax collecting units located in that
county as provided in this subsection. The election to audit
exemptions shall be made by the county treasurer, or by the county
equalization director with the concurrence by resolution of the
county board of commissioners. The initial election to audit
exemptions shall require an audit period of 2 years. Subsequent
elections to audit exemptions shall be made every 2 years and shall
require 2 annual audit periods. An election to audit exemptions
shall be made by submitting an election to audit form to the
assessor of each local tax collecting unit in that county and to
the department of treasury not later than October 1 in the year in
which an election to audit is made. The election to audit form
required under this subsection shall be in a form prescribed by the
department of treasury. If a county elects to audit the exemptions
claimed under this section, the department of treasury may continue
to review the validity of exemptions as provided in subsection (8).
If a county does not elect to audit the exemptions claimed under
this section as provided in this subsection, the department of
treasury shall conduct an audit of exemptions claimed under this
section in the initial 2-year audit period for each local tax
collecting unit in that county unless the department of treasury
has entered into an agreement with the assessor for that local tax
collecting unit under subsection (9).
(11) If a county elects to audit the exemptions claimed under
this section as provided in subsection (10) and the county
treasurer or his or her designee or the county equalization
director or his or her designee believes that the property for
which an exemption is claimed is not the secondary residence of the
owner claiming the exemption, the county treasurer or his or her
designee or the county equalization director or his or her designee
may deny an existing claim by notifying the owner, the assessor of
the local tax collecting unit, and the department of treasury in
writing of the reason for the denial and advising the owner that
the denial may be appealed to the residential and small claims
division of the Michigan tax tribunal within 35 days after the date
of the notice. The county treasurer or his or her designee or the
county equalization director or his or her designee may deny a
claim for exemption for the current year and for the 3 immediately
preceding calendar years. If the county treasurer or his or her
designee or the county equalization director or his or her designee
denies an existing claim for exemption, the county treasurer or his
or her designee or the county equalization director or his or her
designee shall direct the assessor of the local tax collecting unit
in which the property is located to remove the exemption of the
property from the assessment roll and, if the tax roll is in the
local tax collecting unit's possession, direct the assessor of the
local tax collecting unit to amend the tax roll to reflect the
denial, and the treasurer of the local tax collecting unit shall
within 30 days of the date of the denial issue a corrected tax bill
for any additional taxes with interest at the rate of 1.25% per
month or fraction of a month and penalties computed from the date
the taxes were last payable without interest and penalty. If the
tax roll is in the county treasurer's possession, the tax roll
shall be amended to reflect the denial and the county treasurer
shall within 30 days of the date of the denial prepare and submit a
supplemental tax bill for any additional taxes, together with
interest at the rate of 1.25% per month or fraction of a month and
penalties computed from the date the taxes were last payable
without interest or penalty. Interest on any tax set forth in a
corrected or supplemental tax bill shall again begin to accrue 60
days after the date the corrected or supplemental tax bill is
issued at the rate of 1.25% per month or fraction of a month. Taxes
levied in a corrected or supplemental tax bill shall be returned as
delinquent on the March 1 in the year immediately succeeding the
year in which the corrected or supplemental tax bill is issued. If
the county treasurer or his or her designee or the county
equalization director or his or her designee denies an existing
claim for exemption, the interest due shall be distributed as
provided in subsection (22). However, if the property has been
transferred to a bona fide purchaser before additional taxes were
billed to the seller as a result of the denial of a claim for
exemption, the taxes, interest, and penalties shall not be a lien
on the property and shall not be billed to the bona fide purchaser,
and the local tax collecting unit if the local tax collecting unit
has possession of the tax roll or the county treasurer if the
county has possession of the tax roll shall notify the department
of treasury of the amount of tax due and interest through the date
of that notification. The department of treasury shall then assess
the owner who claimed the exemption under this section for the tax
and interest plus penalty accruing as a result of the denial of the
claim for exemption, if any, as for unpaid taxes provided under
1941 PA 122, MCL 205.1 to 205.31, and shall deposit any tax or
penalty collected into the state school aid fund and shall
distribute any interest collected as provided in subsection (22).
The department of treasury shall annually provide to the county
treasurer or his or her designee or the county equalization
director or his or her designee a list of parcels of property
located in that county for which an exemption may be erroneously
claimed. The county treasurer or his or her designee or the county
equalization director or his or her designee shall forward copies
of the list provided by the department of treasury to each assessor
in each local tax collecting unit in that county within 10 days of
receiving the list.
(12) If a county elects to audit exemptions claimed under this
section as provided in subsection (10), the county treasurer or the
county equalization director may enter into an agreement with the
assessor of a local tax collecting unit in that county regarding
the implementation or administration of this section. The agreement
may specify that for a period of time, not to exceed 120 days, the
county will not deny an exemption identified by the department of
treasury in the list provided under subsection (11).
(13) An owner may appeal a denial by the assessor of the local
tax collecting unit under subsection (6), a final decision of the
department of treasury under subsection (8), or a denial by the
county treasurer or his or her designee or the county equalization
director or his or her designee under subsection (11) to the
residential and small claims division of the Michigan tax tribunal
within 35 days of that decision. An owner is not required to pay
the amount of tax in dispute in order to appeal a denial of a claim
of exemption to the department of treasury or to receive a final
determination of the residential and small claims division of the
Michigan tax tribunal. However, interest at the rate of 1.25% per
month or fraction of a month and penalties shall accrue and be
computed from the date the taxes were last payable without interest
and penalty. If the residential and small claims division of the
Michigan tax tribunal grants an owner's appeal of a denial and that
owner has paid the interest due as a result of a denial under
subsection (6), (8), or (11), the interest received after a
distribution was made under subsection (22) shall be refunded.
(14) For taxes levied after the effective date of the
amendatory act that added this section, for each county in which
the county treasurer or the county equalization director does not
elect to audit the exemptions claimed under this section as
provided in subsection (10), the department of treasury shall
conduct an annual audit of exemptions claimed under this section
for the current calendar year.
(15) An affidavit filed by an owner for the exemption under
this section rescinds all previous exemptions filed by that owner
for any other property. The department of treasury shall notify the
assessor of the local tax collecting unit in which the property for
which a previous exemption was claimed is located that the previous
exemption is rescinded by the subsequent affidavit. When an
exemption is rescinded, the assessor of the local tax collecting
unit shall remove the exemption effective December 31 of the year
in which the affidavit was filed that rescinded the exemption. For
any year for which the rescinded exemption has not been removed
from the tax roll, the exemption shall be denied as provided in
this section. However, interest and penalty shall not be imposed
for a year for which a rescission form has been timely filed under
subsection (5).
(16) Except as otherwise provided in subsection (25), if the
secondary residence is part of a unit in a multiple-unit dwelling
or a dwelling unit in a multiple-purpose structure, an owner shall
claim an exemption for only that portion of the total taxable value
of the property used as the secondary residence of that owner in a
manner prescribed by the department of treasury. If a portion of a
parcel for which the owner claims an exemption is used for a
purpose other than as a secondary residence, the owner shall claim
an exemption for only that portion of the taxable value of the
property used as the secondary residence of that owner in a manner
prescribed by the department of treasury.
(17) When a county register of deeds records a transfer of
ownership of a property, he or she shall notify the local tax
collecting unit in which the property is located of the transfer.
(18) The department of treasury shall make available the
affidavit forms and the forms to rescind an exemption under this
section, which may be on the same form, to all city and township
assessors, county equalization officers, county registers of deeds,
and closing agents. A person who prepares a closing statement for
the sale of property shall provide affidavit and rescission forms
to the buyer and seller at the closing and, if requested by the
buyer or seller after execution by the buyer or seller, shall file
the forms with the local tax collecting unit in which the property
is located. If a closing statement preparer fails to provide
exemption affidavit and rescission forms to the buyer and seller,
or fails to file the affidavit and rescission forms with the local
tax collecting unit if requested by the buyer or seller, the buyer
may appeal to the department of treasury within 30 days of notice
to the buyer that an exemption was not recorded. If the department
of treasury determines that the buyer qualifies for the exemption,
the department of treasury shall notify the assessor of the local
tax collecting unit that the exemption is granted and the assessor
of the local tax collecting unit or, if the tax roll is in the
possession of the county treasurer, the county treasurer shall
correct the tax roll to reflect the exemption. This subsection does
not create a cause of action at law or in equity against a closing
statement preparer who fails to provide exemption affidavit and
rescission forms to a buyer and seller or who fails to file the
affidavit and rescission forms with the local tax collecting unit
when requested to do so by the buyer or seller.
(19) An owner who owned and occupied a secondary residence on
May 1 for which the exemption was not on the tax roll may file an
appeal with the July board of review or December board of review in
the year for which the exemption was claimed or the immediately
succeeding 3 years. If an appeal of a claim for exemption that was
not on the tax roll is received not later than 5 days prior to the
date of the December board of review, the local tax collecting unit
shall convene a December board of review and consider the appeal
pursuant to this section and section 53b.
(20) If the assessor or treasurer of the local tax collecting
unit believes that the department of treasury erroneously denied a
claim for exemption, the assessor or treasurer may submit written
information supporting the owner's claim for exemption to the
department of treasury within 35 days of the owner's receipt of the
notice denying the claim for exemption. If, after reviewing the
information provided, the department of treasury determines that
the claim for exemption was erroneously denied, the department of
treasury shall grant the exemption and the tax roll shall be
amended to reflect the exemption.
(21) If granting the exemption under this section results in
an overpayment of the tax, a rebate, including any interest paid,
shall be made to the taxpayer by the local tax collecting unit if
the local tax collecting unit has possession of the tax roll or by
the county treasurer if the county has possession of the tax roll
within 30 days of the date the exemption is granted. The rebate
shall be without interest.
(22) Subject to subsection (23), interest at the rate of 1.25%
per month or fraction of a month collected under subsection (6),
(8), or (11) shall be distributed as follows:
(a) If the assessor of the local tax collecting unit denies
the exemption under this section, as follows:
(i) To the local tax collecting unit, 70%.
(ii) To the department of treasury, 10%.
(iii) To the county in which the property is located, 20%.
(b) If the department of treasury denies the exemption under
this section, as follows:
(i) To the local tax collecting unit, 20%.
(ii) To the department of treasury, 70%.
(iii) To the county in which the property is located, 10%.
(c) If the county treasurer or his or her designee or the
county equalization director or his or her designee denies the
exemption under this section, as follows:
(i) To the local tax collecting unit, 20%.
(ii) To the department of treasury, 10%.
(iii) To the county in which the property is located, 70%.
(23) Interest distributed under subsection (22) is subject to
the following conditions:
(a) Interest distributed to a county shall be deposited into a
restricted fund to be used solely for the administration of
exemptions under this section. Money in that restricted fund shall
lapse to the county general fund on the December 31 in the year 3
years after the first distribution of interest to the county under
subsection (22) and on each succeeding December 31 thereafter.
(b) Interest distributed to the department of treasury shall
be deposited into the secondary residence property tax exemption
audit fund, which is created within the state treasury. The state
treasurer may receive money or other assets from any source for
deposit into the fund. The state treasurer shall direct the
investment of the fund. The state treasurer shall credit to the
fund interest and earnings from fund investments. Money in the fund
shall be considered a work project account and at the close of the
fiscal year shall remain in the fund and shall not lapse to the
general fund. Money from the fund shall be expended, upon
appropriation, only for the purpose of auditing exemption
affidavits.
(24) Interest distributed under subsection (22) is in addition
to and shall not affect the levy or collection of the county
property tax administration fee established under this act.
(25) A cooperative housing corporation is entitled to a full
or partial exemption under this section for the tax year in which
the cooperative housing corporation files all of the following with
the local tax collecting unit in which the cooperative housing
corporation is located if filed on or before May 1:
(a) An affidavit form.
(b) A statement of the total number of units owned by the
cooperative housing corporation and occupied as the secondary
residence of a tenant stockholder as of the date of the filing
under this subsection.
(c) A list that includes the name, address, and social
security number of each tenant stockholder of the cooperative
housing corporation occupying a unit in the cooperative housing
corporation as his or her secondary residence as of the date of the
filing under this subsection.
(d) A statement of the total number of units of the
cooperative housing corporation on which an exemption under this
section was claimed and that were transferred in the tax year
immediately preceding the tax year in which the filing under this
section was made.
(26) As used in this section, "secondary residence" means real
property classified as residential real property under section 34c
that is owned and occupied by an owner as vacation or recreational
property and that is not leased or available for lease.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No. 1360
of the 94th Legislature is enacted into law.