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April 20, 2014

The "Window" is Closing on 2013 Property Tax Reduction Opportunities in Michigan

The largest tax levied in the State of Michigan, measured by the amount of tax dollars collected, is the ad valorem property tax levied on tangible real and personal property. Not infrequently, the property taxes levied on a particular property are far higher than permitted by law. However, property tax taxpayers who act timely can potentially accomplish significant tax savings by filing an appeal with the Michigan Tax Tribunal by May 31.

Michigan's property tax, its oldest and most complex tax, is still levied under Act 206 of 1893 (Michigan's General Property Tax Act) and has been amended scores of times throughout its 120-year life; it can now be likened to an old coat which has been altered and patched over 120 years to fit the changing needs and styles of five generations of persons who had to wear it.

Michigan's property tax is independently administered and levied by hundreds of different cities and townships, sometimes by highly trained and knowledgeable assessors, and sometimes by politically elected or appointed persons with little experience and far less training. These assessors are required by statute to use their "best information and judgment" in determining the "true cash value" of the taxable property which Michigan's General Property Tax Act requires be assessed each year. These assessments are the starting point for calculating the "taxable value" against which township, city, village, school district, special education district, county, state and special property taxes are levied. The property tax levied is equal to the aggregate millage levied by all of these tax levying entities, multiplied by each year's "taxable value." (A mill is 1/100 of a dollar.) In some areas of Michigan the tax levy may be based on as few as 30-some mills, while in others, three times as much. (For example, a parcel of improved industrial or commercial property with a $2,000,000 "true cash value" and a $ 1,000,000 "taxable value" would, if the tax levy were 50 mills, pay $50,000 in annual property taxes.)

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© 2014 Schiff Hardin LLP

About the Author

Samuel J. McKim III, Of Counsel, Schiff Hardin Law Firm
Of Counsel

Samuel J. McKim III’s extensive tax practice extends more than 45 years and includes all aspect of state and local taxation. He counsels clients and assists them with tax planning, opinion work, and trial and appellate appeals. Mr. McKim is particularly interested in cases involving state and local tax issues of first impression as well as cases involving complex legal and factual issues.

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