2016 brought significant changes to personal property tax filing in Michigan. Updates to the General Property Tax Act allowed businesses involved in manufacturing to significantly reduce their personal property tax liability by filing a Form 5278, thus classifying all personal property on a parcel as 'eligible manufacturing personal property' (EMPP). Qualified new EMPP (property purchased 2013-2016) and qualified previously existing EMPP (property purchased in years 2006 and prior) are exempt from personal property tax. Property purchased in years 2007 to 2012 remain subject to ad valorem taxation in 2017, albeit this property will become phased out and exempt from local level tax rates over the next six years. In summary, filing a Form 5278 rather than a traditional personal property tax return will:
- Exempt all qualified new, and previously existing EMPP from personal property taxation. Property will become subject to the essential services assessment (ESA). The ESA is applied at a significantly lower rate than personal property taxation.
- Significantly lower the state equalized value of property purchased between 2007 and 2012, thus lowering the amount of tax assessed.
There are three steps to filing the Form 5278:
1. FILE - File Form 5278 with your local assessor by Feb. 21, 2017
2. CERTIFY - After May 1, 2017, you must go online via the MTO (Michigan Treasury Online) system and "certify" the return
3. PAY - the ESA must be electronically paid through MTO between May 1 - Aug.15, 2017
It is important to note that Form 5278 is not mailed to taxpayers, but can be found here
The Small Business Taxpayer Exemption will still provide a complete exemption from personal property tax for industrial or commercial personal property when the combined true cash value of all industrial personal property and commercial personal property owned by, leased by or in the possession of the owner or a related entity claiming the exemption is less than $80,000 in the local tax collecting unit. Form 5076 must be received at the assessor's office by Feb. 10 and postmarks with Feb. 10 dates are acceptable.
In conclusion, businesses with personal property will have the following options available for 2017:
- If the true cash value of the personal property held in a taxing jurisdiction is less than $80,000 at Dec. 31, 2016, file Form 5076 by Feb. 10, 2017. This will claim an exemption from personal property tax, or
- If you are a manufacturer, and hold EMPP, file Form 5278 by Feb. 21, 2017 (postmarks dated Feb. 21, 2017 are NOT acceptable). You will then be assessed property tax on the non-exempt EMPP and assessed the ESA on the exempt EMPP, or
- If you are a non-manufacturer, file Form 632 (Personal Property Statement) by Feb. 21, 2017 (postmarks dated Feb. 21, 2017 are NOT acceptable). The form may not be mailed to you, a copy may be obtained here.
For more information regarding the personal property tax exemptions, please contact your local UHY LLP professional, or visit us on the web