24-000110.pdf
D&E Property Services LLC, Petitioner V Township Of Northfield, Respondent · 24-004250-TT
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STATE OF MICHIGAN GRETCHEN WHITMER GOVERNOR DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS LANSING MARLON I. BROWN, DPA DIRECTOR MICHIGAN TAX TRIBUNAL · 611 W. OTTAWA ST., LANSING, MI 48933 · 517-335-9760 PO BOX 30232, LANSING, MI 48909 · Other Carriers: 2407 N. GRAND RIVER AVE., LANSING, MI 48906 D&E Property Services LLC, MICHIGAN TAX TRIBUNAL Petitioner, SMALL CLAIMS DIVISION MTT Docket No. 24-000110 & 24-004250 v Case Type: Principal Residence Exemption Northfield Township, Presiding Judge Respondent. Joshua M. Wease ORDER SEVERING PETITIONER’S UNCAPPING APPEAL AND ASSIGNING IT TO DOCKET NUMBER 24-004250 FINAL OPINION AND JUDGMENT Location of Hearing: Telephonic Hearing Held on: October 15, 2024 Appearances on Behalf of Petitioner: Daniel Prast Appearances on Behalf of Respondent: Thomas Monchak SUMMARY OF JUDGMENT Petitioner is not liable for the additional taxes, penalties, and interest owing as a result of the delay rescission of the previous owner’s Principal Residence Exemption (PRE) of Parcel No. B-02-05-400-004 for the 2021, 2022, and 2023 tax years pursuant to MCL 211.7cc(6), and (8). PROCEDURAL HISTORY Respondent issued a notice denying the property’s PRE on December 19, 2023. Petitioner filed a petition with the Tribunal on January 19, 2024, and Respondent filed an answer on May 28, 2024. ISSUES AND APPLICABLE LAW The issues in this matter are: (1) whether Petitioner’s property qualifies for a PRE under MCL 211.7cc and (2) whether Petitioner is liable for tax, interest, and penalty where they never claimed the PRE and Respondent improperly processed the PRE Rescission filed by the previous owner.
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MTT Docket No. 24-000110 & 24-004250 Page 2 of 10 A petitioner must prove, by a preponderance of the evidence, that they are entitled to an exemption.1 As for the applicable statutory law: MCL 211.7cc provides that: A principal residence is exempt from the tax levied by a local school district for school operating purposes to the extent provided under . . . MCL 380.1211, if an owner of that principal residence claims an exemption as provided in this section. MCL 211.7cc(6) provides that: Except as otherwise provided in subsections (5), (32), and (33), if the assessor of the local tax collecting unit believes that the property for which an exemption is claimed is not the principal residence of the owner claiming the exemption, the assessor may deny a new or existing claim by notifying the owner and the county treasurer 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 (25). 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 1 ProMed Healthcare v Kalamazoo, 249 Mich App 490; 644 NW2d 47 (2002).
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MTT Docket No. 24-000110 & 24-004250 Page 3 of 10 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 (25). The denial shall be made on a form prescribed by the department of treasury. The assessor shall forward to the department of treasury a copy of a denial upon a request by the department of treasury. MCL 211.7dd provides that: Principal residence means the 1 place where an owner of the property has his or her true, fixed, and permanent home to which, whenever absent, he or she intends to return and that shall continue as a principal residence until another principal residence is established. . . . Principal residence includes only that portion of a dwelling or unit in a multiple-unit dwelling that is subject to ad valorem taxes and that is owned and occupied by an owner of the dwelling or unit. . . . Principal residence also includes all of an owner’s unoccupied property classified as residential that is adjoining or contiguous to the dwelling subject to ad valorem taxes and that is owned and occupied by the owner. Contiguity is not broken by a road, a right-of-way, or property purchased or taken under condemnation proceedings by a public utility for power transmission lines if the 2 parcels separated by the purchased or condemned property were a single parcel prior to the sale or condemnation. . . . Principal residence also includes any portion of a dwelling or unit of an owner that is rented or leased to another person as a residence as long as that portion of the dwelling or unit that is rented or leased is less than 50% of the total square footage of living space in the dwelling or unit. MCL 211.7dd also provides that: Owner means any of the following: (i) A person who owns property or who is purchasing property under a land contract. (ii) A person who is a partial owner of property. (iii) A person who owns property as a result of being a beneficiary of a will or trust or as a result of intestate succession. (iv) A person who owns or is purchasing a dwelling on leased land. (v) A person holding a life lease in property previously sold or transferred to another. (vi) A grantor who has placed the property in a revocable trust. (vii) The
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MTT Docket No. 24-000110 & 24-004250 Page 4 of 10 sole present beneficiary of a trust if the trust purchased or acquired the property as a principal residence for the sole present beneficiary of the trust, and the sole present beneficiary of the trust is totally and permanently disabled. As used in this subparagraph, "totally and permanently disabled" means disability as defined in section 216 of title II of the social security act, 42 USC 416, without regard as to whether the sole present beneficiary of the trust has reached the age of retirement. (viii) A cooperative housing corporation. (ix) A facility as defined by former 1976 PA 440 and registered under the continuing care community disclosure act, 2014 PA 448, MCL 554.901 to 554.993. MCL 211.7dd(b) provides that: “‘Person’ for purposes of defining owner as used in section 7cc means an individual.” Pursuant to R 792.10133, after hearing, the Tribunal must issue a final decision in writing. Additionally, “[a] written final decision shall include separate sections entitled “findings of fact” and “conclusions of law.’” Findings of fact “shall include a concise statement of the underlying supporting facts” that are “based exclusively on the evidence.”2 Consequently, the Tribunal has not addressed every piece of evidence or every inference that might lead to a conflicting conclusion and has rejected evidence contrary to its findings. Furthermore, “[e]ach conclusion of law shall be supported by authority or reasoned opinion.”3 Accordingly, the Tribunal will outline the summary of evidence, findings of facts, and conclusions of law, before ultimately rendering judgment. SUMMARY OF EVIDENCE A. Petitioner’s Evidence The exhibits offered by Petitioner may be viewed on lines 2, 8, and 20 of the docket maintained in this case.4 No exhibits were excluded from evidence. Based on the pleadings, admitted exhibits, and sworn testimony, Petitioner contends that interest was charged because of a delayed uncapping. Petitioner’s Property Transfer Affidavit (PTA) and the previous owners PRE Rescission were not processed at the time they were timely filed on August 30, 2020. Then in 2023, Petitioner received the PRE denial invoice and assessment of late payment interest. Petitioner does not believe they should be liable for interest because Respondent never sent a bill. Petitioner does not disagree with the PRE denial but is protesting the assessment of interest. Second, the property was uncapped in 2022. If the form was submitted in 2020, Petitioner does not understand why it would be uncapped again in 2022. 2 See also MCR 2.517(a). 3 Id. 4 The docket is located on the Tribunal’s website at Tax Docket Lookup Search Page and may be accessed by entering the docket number assigned to this case.
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MTT Docket No. 24-000110 & 24-004250 Page 5 of 10 B. Respondent’s Evidence The exhibits offered by Respondent may be viewed on lines 13 and 21 of the docket maintained in this case.5 No exhibits were excluded from evidence. Based on the pleadings, admitted exhibits, and sworn testimony, Respondent contends that they included a summary of the facts with respect to the property in evidence. During the Covid pandemic, Petitioner filed a PTA and the previous owner filed a PRE Rescission form. The form was improperly processed and was stamped “copy” rather than date received with township office name on it. Then the township performed an audit of their records. They found these forms from Petitioner and the previous owner that were not processed. Respondent’s assessor decided to present the delayed uncapping to the BOR. The assessor denied the PRE and subsequent years in December 2023, which is giving rise to this appeal. Petitioner’s LLC is not entitled to a PRE. Since the property transferred in 2020, it would have uncapped back to 2021. However, Respondent only uncapped back to 2022. Since they were not processed correctly, they are only corrected for the current year and previous year only. Interest was limited to the PRE denial, not the uncapping. In response to Petitioner, Respondent’s assessor stated that the 2022 Tax Due Notice, dated December 20, 2023, is for the uncapping. FINDINGS OF FACT The following facts were found to be proven by a preponderance of the evidence: 1. The subject property is located at 254 East Shore Drive in Washtenaw County. 2. The subject property is classified as residential. 3. Petitioner is a limited liability company. 4. Petitioner purchased the subject property in 2020 and was the owner of the property for the years at issue. 5. Petitioner is a bona fide purchaser of the subject property from the previous owner. 6. Petitioner timely filed a PTA for the subject property in August 2020. 7. Petitioner did not file a PRE Affidavit for the subject property for any of the years at issue. 8. The previous owner, who sold the subject property to Petitioner, timely filed a PRE Rescission form. 9. Respondent discovered Petitioner’s unprocessed PTA in November 2023. 10. Respondent discovered previous owner’s PRE Rescission in November 2023. CONCLUSIONS OF LAW Petitioner admits that they are not eligible for a PRE for the years at issue. The issue is that Petitioner timely filed a PTA in 2020 during the Covid pandemic. 5 The docket is located on the Tribunal’s website at Tax Docket Lookup Search Page and may be accessed by entering the docket number assigned to this case.
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MTT Docket No. 24-000110 & 24-004250 Page 6 of 10 Respondent admits that this PTA was not properly processed until 2023. Once Respondent processed the PTA, Petitioner was issued a bill that included an assessment of interest. While the previous owner filed a PRE Recission, there is no dispute that Petitioner did not file a PRE Affidavit to claim a PRE for the subject property. The PTA is a form that is used by the parties to determine when there has been a transfer that causes the property to “uncap.” The uncapping is not at issue in this case. The Tribunal finds that there are two legal theories under which Petitioner is not liable for the tax, interest, or penalties. First, the persuasive caselaw of Mikelonis v Department of Treasury6 holds that a PRE cannot be denied when someone has not claimed the PRE. Second, MCL 211.7o(6) states that where a previous owner’s PRE claim is denied, it cannot be assessed to a bona fide purchaser. Petitioner did not claim a PRE “A ‘claim’ for a PRE is not properly filed unless the owner submits an affidavit with the taxing unit.”7 Just as in Mikelonis v Department of Treasury, “[i]t is not possible for respondent to determine the validity of, or to deny, an exemption that was never claimed.”8 An important consideration is that Respondent in this case is the township instead of the Department of Treasury. This is relevant because the statutory provision that was considered in Mikelonis was MCL 211.7cc(8), which only applies to the Department of Treasury. The Mikelonis Court found that: by misinterpreting the scope of respondent's authority under MCL 211.7cc(8). MCL 211.7cc(8) clearly limits respondent's authority to review a taxpayer's PRE status to instances where the taxpayer claimed a PRE, and to deny a claim for a PRE if the property is not the residence of the owner claiming the exemption. Respondent cannot broaden the clear statutory language by denying exemptions under § 7cc(8) that were not claimed by the property owner. In this case, petitioner did not claim a PRE and, therefore, there was no claim for respondent to deny.9 However, there is the same “claim” language in Section 6 – which involves instances where the assessor of a local taxing authority denies a claimed PRE -- as there is in Section 8 that the Mikelonis Court considered. 6 Mikelonis v Dep’t of Treasury, unpublished per curiam opinion of the Court of Appeals, issued June 26, 2012 (Docket No. 304054). 7 MCL 211.7cc(2); Mikelonis v Dep’t of Treasury, unpublished per curiam opinion of the Court of Appeals, issued June 26, 2012 (Docket No. 304054) at 3. See also Delger v Dep't of Treasury, unpublished per curiam opinion of the Court of Appeals, issued May 30, 2024 (Docket No. 367878) at 5 (“petitioners did in fact file PRE affidavits that created the confusion from the beginning, distinguishing these cases from Mikelonis”) and Marie De Lamielleure Trust v Dep’t of Treasury, 305 Mich App at 287; 853 NW2d 708 (2014) (distinguishing Mikelonis on the basis that “De Lamielleure claimed a PRE on the property during her lifetime and . . . benefitted from that claim despite an ineffectual attempt to rescind the PRE”). 8 Id. 9 Mikelonis v. Dep't of Treasury, No. 304054, 2012 WL 2402596, at *3 (Mich. Ct. App. June 26, 2012).
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MTT Docket No. 24-000110 & 24-004250 Page 7 of 10 Except as otherwise provided in subsections (5), (32), and (33), if the assessor of the local tax collecting unit believes that the property for which an exemption is claimed is not the principal residence of the owner claiming the exemption, the assessor may deny a new or existing claim by notifying the owner and the county treasurer 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.10 In this case, Petitioner did not file a PRE Affidavit for the subject property and has never claimed the PRE. Just as in Mikelonis, Petitioner merely received the benefit of the PRE. Also, like Mikelonis, Respondent argues that Petitioner is liable for the unclaimed PRE that they received. The Mikelonis Court held that the Petitioner in that case was not liable for the tax, interest, or penalty of a PRE that they never claimed. Although not binding precedent, the facts and reasoning are similar to this case and are persuasive that Petitioner should receive the same result in this case. Petitioner is a bona fide purchaser This case is actually about a PRE Rescission -- that the previous owner filed -- but was not timely processed. Pursuant to MCL 211.7cc(5): Except as otherwise provided in this subsection and subsections (32) and (33), not more than 90 days after exempted property is no longer used as a principal 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.11 10 MCL 211.7cc(6) (emphasis added). 11 Id. (Emphasis added).
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MTT Docket No. 24-000110 & 24-004250 Page 8 of 10 In cases where the assessor of the local taxing authority denies an existing claim, they may assess the owner tax, interest, and penalty for the current year and three years back pursuant to MCL 211.7cc(6). The Tribunal finds that the township actually denied or otherwise removed the previous owner’s PRE claim pursuant to the previous owner’s PRE Rescission. In these instances, Section 6 also states: 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.12 The Tribunal further finds that the subject property was transferred to Petitioner as a bona fide purchaser before the additional taxes were billed to the seller, as a result of the denial of the claim for exemption. MCL 211.7cc(5) specifically states that the rescission is to be filed by the owner claiming the exemption. Respondent cited no legal authority making Petitioner responsible for this filing, and the Tribunal finds no statutory language or case law supporting such a finding. Petitioner has met their burden of proof that they are not liable for the accrued tax, interest, or penalties on the past tax debts due to the late processed PRE Rescission. Uncapping In regard to the uncapping, the subject property’s TV was uncapped for the 2022 and 2023 tax years by the December 2023 Board of Review (BOR). The BOR decision states: “2023-12-12 delayed uncapping for 2021, 2022, & 2023. Date of transfer was 2020-08-30.”13 Petitioner’s amended petition, filed on March 27, 2024, was made on the PRE petition form, but includes statements that question the December BOR uncapping. Further, Petitioner attached the December BOR decision, which gave rise to the appeal. Petitioner’s original petition, although defective, was timely filed on January 19, 2024. Therefore, the Tribunal finds that Petitioner attempted to appeal both the PRE claim and the uncapping claim. The Tribunal further finds that it erred in failing to require petitioner to file a separate petition and filing fee for the uncapping appeal when the petition in this case was processed. The Tribunal has jurisdiction to hear the appeal on uncapping. However, because this issue is not properly pending in this appeal and was not adequately addressed by either party at the hearing, this claim will be severed to determine whether the December 2023 BOR had authority to uncap the subject property’s taxable value after that value was confirmed by the March BOR. 12 Id. (Emphasis added). 13 Petitioner’s Petition, attachments at 7.
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MTT Docket No. 24-000110 & 24-004250 Page 9 of 10 JUDGMENT IT IS ORDERED that Petitioner’s uncapping appeal is SEVERED and assigned Docket No. 24-004250. IT IS FURTHER ORDERED that Petitioner shall file a petition pertaining to the uncapping appeal with the additional $50.00 fee required for the filing of that petition within 21 days of the entry of this Order.14 The petition shall note the docket number assigned by the Tribunal for the uncapping appeal. Unfortunately, the payment may not be made via e-filing.15 IT IS ORDERED that the officer charged with maintaining the assessment rolls for the tax year(s) at issue shall correct or cause the assessment rolls to be corrected to reflect the property’s principal residence exemption for the tax year(s) at issue within 20 days of entry of this Final Opinion and Judgment. IT IS FURTHER ORDERED that the officer charged with collecting or refunding the affected taxes shall collect taxes and any applicable interest or issue a refund within 28 days of the entry of this Final Opinion and Judgment. If a refund is warranted, it shall be without interest, as provided by MCL 211.7cc. It shall, however, include a proportionate share of any property tax administration fees paid and penalty and interest paid on delinquent taxes. The refund shall also separately indicate the amount of the taxes, fees, penalties, and interest being refunded. This Final Opinion and Judgment resolves all pending claims in this matter and closes this case. APPEAL RIGHTS If you disagree with the final decision in this case, you may file a motion for reconsideration with the Tribunal or a claim of appeal with the Michigan Court of Appeals. A motion for reconsideration must be filed with the Tribunal with the required filing fee within 21 days from the date of entry of the final decision. Because the final decision closes the case, the motion cannot be filed through the Tribunal’s web-based e-filing system; it must be filed by mail or personal service. The fee for the filing of such motions is $50.00 in the Entire Tribunal and $25.00 in the Small Claims Division, unless the Small Claims decision relates to the valuation of property and the property had a principal residence exemption of at least 50% at the time the petition was filed or the decision relates to the grant or denial of a poverty or disabled veterans exemption and, 14 Petitioner paid a $100.00 fee for the filing of this appeal and the combined filing fee for the two separate appeals is $150.00. 15 The petition may be downloaded from the Tribunal’s website and mailed to the Tribunal via United States Postal Service at: Michigan Tax Tribunal, PO BOX 30232, Lansing, MI 48909. The petition may also be delivered to the Tribunal via overnight carrier (UPS, FedEx, or DHL) at: Michigan Tax Tribunal, 2nd Floor MTT, 2407 N. Grand River Avenue, Lansing, MI 48933.
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MTT Docket No. 24-000110 & 24-004250 Page 10 of 10 if so, there is no filing fee. You are required to serve a copy of the motion on the opposing party by mail or personal service or by email if the opposing party agrees to electronic service, and proof demonstrating that service must be submitted with the motion. Responses to motions for reconsideration are prohibited and there are no oral arguments unless otherwise ordered by the Tribunal. Alternatively, you may file a claim of appeal with the Michigan Court of Appeals. If the claim is filed within 21 days of the entry of the final decision, it is an “appeal of right.” If the claim is filed more than 21 days after the entry of the final decision, it is an “appeal by leave.” A copy of the claim of appeal must be filed with the Tribunal to certify the record on appeal. There is no certification fee. By _______________________________________ Entered: May 14, 2025 PROOF OF SERVICE I certify that a copy of the foregoing was sent on the entry date indicated above to the parties or their attorneys or authorized representatives, if any, utilizing either the mailing or email addresses on file, as provided by those parties, attorneys, or authorized representatives. By: Tribunal Clerk