Michigan Supreme Court Schedules Oral Argument in Menard Case
On February 1, 2017, the Michigan Supreme Court issued an Order confirming that the Court is considering the important property tax issues involved in Menard, Inc. v City of Escanaba (published decision of the Court of Appeals, Docket No. 325718). In this case, the Michigan Court of Appeals reversed the Tax Tribunal, which had mostly accepted Petitioner’s sales comparison approach to arrive at the value of Menard’s store in Escanaba, Michigan, which is in Michigan’s Upper Peninsula. The Court of Appeals held that the Tribunal had erroneously rejected the City’s cost approach. This ruling was based on Clark Equipment v Leoni, 113 Mich App 778, 318 NW2d 586 (1982), which had held that in certain cases, the Tribunal should use the cost approach if the lack of demand for a property would lead to values that were low relative to the property’s cost. Also, the Court of Appeals found no evidence of functional obsolescence because the subject was constructed the same way that Menard would construct a new store today. Menard appealed to the Michigan Supreme Court and several business groups filed amicus curiae briefs that supported Menard’s position and argued in particular that the Clark decision was contrary to well established Michigan law.
Under its Order, the Michigan Supreme Court will hear oral arguments on the questions of whether (1) the Court of Appeals exceeded its limited authority to review Tax Tribunal decisions, and (2) whether the Tribunal may utilize the valuation approach approved in Clark.
2017 Filing Deadline for EMPP
The 2017 deadline to claim the exemption for eligible manufacturing personal property (EMPP) is February 21. This is the second year of the exemption and unlike last year, there is not likely be any statutory extensions of the deadline. The exemption must be claimed each year in order to receive it for that year. The importance of filing the claim form (Treasury Form 5278) timely cannot be overstated. If a claim is filed after the deadline the exemption will not be in effect for 2017, and the taxpayer will not have the ability to claim it retroactively.