Bill Text: MI SB0024 | 2015-2016 | 98th Legislature | Engrossed

---

Bill Title: Property tax; principal residence exemption; homestead exemption; continue exemption upon death of homeowner under certain conditions. Amends sec. 7cc of 1893 PA 206 (MCL 211.7cc).

Spectrum: Moderate Partisan Bill (Republican 14-2)

Status: (Engrossed - Dead) 2015-03-19 - Referred To Committee On Tax Policy [SB0024 Detail]

Download: Michigan-2015-SB0024-Engrossed.html

---

SB-0024, As Passed Senate, March 19, 2015

 

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

SENATE BILL NO. 24

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1893 PA 206, entitled

 

"The general property tax act,"

 

by amending section 7cc (MCL 211.7cc), as amended by 2014 PA 40.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 7cc. (1) A principal 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 principal residence

 

claims an exemption as provided in this section. Notwithstanding

 

the tax day provided in section 2, the status of property as a

 

principal residence shall be determined on the date an affidavit

 

claiming an exemption is filed under subsection (2).

 

     (2) Except as otherwise provided in subsection (5), an owner

 

of property may claim 1 exemption under this section by filing an

 

affidavit on or before May 1 for taxes levied before January 1,

 

2012 or, for taxes levied after December 31, 2011, on or before

 

June 1 for the immediately succeeding summer tax levy and all

 

subsequent tax levies or on or before November 1 for the

 

immediately succeeding winter tax levy and all subsequent tax

 

levies 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 principal 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 (28) 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 on property in this state that is not

 

rescinded or a substantially similar exemption, deduction, or

 

credit on property in another 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. If an owner of property filed an

 

affidavit for an exemption under this section before January 1,

 

2004, that affidavit shall be considered the affidavit required

 

under this subsection for a principal residence exemption and that

 

exemption shall remain in effect until rescinded as provided in

 

this section.

 

     (3) Except as otherwise provided in subsection (5), 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. For taxes levied after December 31, 2002, a person is

 

not entitled to an exemption under this section if any of the

 

following conditions occur:

 

     (a) That person has claimed a substantially similar exemption,

 

deduction, or credit on property in another state that is not

 

rescinded.

 

     (b) Subject to subdivision (a), that person or his or her

 

spouse owns property in a state other than this state for which

 

that person or his or her spouse claims an exemption, deduction, or

 

credit substantially similar to the exemption provided under this

 

section, unless that person and his or her spouse file separate

 

income tax returns.

 

     (c) That person has filed a nonresident Michigan income tax

 

return, except active duty military personnel stationed in this

 

state with his or her principal residence in this state.

 

     (d) That person has filed an income tax return in a state

 

other than this state as a resident, except active duty military

 

personnel stationed in this state with his or her principal

 

residence in this state.

 

     (e) That person has previously rescinded an exemption under

 

this section for the same property for which an exemption is now

 

claimed and there has not been a transfer of ownership of that

 

property after the previous exemption was rescinded, if either of

 

the following conditions is satisfied:

 

     (i) That person has claimed an exemption under this section for

 

any other property for that tax year.

 

     (ii) That person has rescinded an exemption under this section

 

on other property, which exemption remains in effect for that tax

 

year, and there has not been a transfer of ownership of that

 

property.

 

     (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, except as

 

otherwise provided in subsection (5), is no longer a principal

 

residence as defined in section 7dd. 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) Except as otherwise provided in this subsection, 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. If an owner is eligible for and claims an exemption for

 

that owner's current principal residence, that owner may retain an

 

exemption for not more than 3 tax years on property previously

 

exempt as his or her principal residence if that property is not

 

occupied, is for sale, is not leased, and is not used for any

 

business or commercial purpose by filing a conditional rescission

 

form prescribed by the department of treasury with the local tax

 

collecting unit within the time period prescribed in subsection

 

(2). Beginning December 31, 2015, if an owner is related to a

 

decedent by blood or affinity to the first degree, that owner may

 

retain an exemption for not more than 2 tax years on property that

 

decedent conveyed to that owner by will or intestate succession if

 

that property was exempt as that decedent's principal residence in

 

the immediately preceding tax year and if that property is not

 

occupied, is for sale, is not leased, and is not used for any

 

business or commercial purpose by filing a conditional rescission

 

form prescribed by the department of treasury with the local tax

 

collecting unit within the time period prescribed in subsection (2)

 

and by filing a property transfer affidavit pursuant to section

 

27a(10). The exemption for property conveyed to an owner by will or

 

intestate succession under the preceding sentence is in addition to

 

an exemption under this section for property for which that owner

 

is eligible for and claims an exemption as that owner's principal

 

residence. Beginning in the 2012 tax year, subject to the payment

 

requirement set forth in this subsection, if a land contract

 

vendor, bank, credit union, or other lending institution owns

 

property as a result of a foreclosure or forfeiture of a recorded

 

instrument under chapter 31, 32, or 57 of the revised judicature

 

act of 1961, 1961 PA 236, MCL 600.3101 to 600.3285 and MCL 600.5701

 

to 600.5759, or through deed or conveyance in lieu of a foreclosure

 

or forfeiture on that property and that property had been exempt

 

under this section immediately preceding the foreclosure, that land

 

contract vendor, bank, credit union, or other lending institution

 

may retain an exemption on that property at the same percentage of

 

exemption that the property previously had under this section if

 

that property is not occupied other than by the person who claimed

 

the exemption under this section immediately preceding the

 

foreclosure or forfeiture, is for sale, is not leased to any person

 

other than the person who claimed the exemption under this section

 

immediately preceding the foreclosure, and is not used for any

 

business or commercial purpose. A land contract vendor, bank,

 

credit union, or other lending institution may claim an exemption

 

under this subsection by filing a conditional rescission form

 

prescribed by the department of treasury with the local tax

 

collecting unit within the time period prescribed in subsection

 

(2). Property is eligible for a conditional rescission if that

 

property is available for lease and all other conditions under this

 

subsection are met. A copy of a conditional rescission form shall

 

be forwarded to the department of treasury according to a schedule

 

prescribed by the department of treasury. An owner or a land

 

contract vendor, bank, credit union, or other lending institution

 

that files a conditional rescission form shall annually verify to

 

the assessor of the local tax collecting unit on or before December

 

31 that the property for which the principal residence exemption is

 

retained is not occupied other than by the person who claimed the

 

exemption under this section immediately preceding the foreclosure

 

or forfeiture, is for sale, is not leased except as otherwise

 

provided in this section, and is not used for any business or

 

commercial purpose. The land contract vendor, bank, credit union,

 

or other lending institution may retain the exemption authorized

 

under this section for not more than 3 tax years. If an owner or a

 

land contract vendor, bank, credit union, or other lending

 

institution does not annually verify by December 31 that the

 

property for which the principal residence exemption is retained is

 

not occupied other than by the person who claimed the exemption

 

under this section immediately preceding the foreclosure or

 

forfeiture, is for sale, is not leased except as otherwise provided

 

in this section, and is not used for any business or commercial

 

purpose, the assessor of the local tax collecting unit shall deny

 

the principal residence exemption on that property. Except as

 

otherwise provided in this section, if property subject to a

 

conditional rescission is leased, the local tax collecting unit

 

shall deny that conditional rescission and that denial is

 

retroactive and is effective on December 31 of the year immediately

 

preceding the year in which the property subject to the conditional

 

rescission is leased. 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. If a land contract vendor,

 

bank, credit union, or other lending institution retains an

 

exemption on property under this subsection, that land contract

 

vendor, bank, credit union, or other lending institution shall pay

 

an amount equal to the additional amount that land contract vendor,

 

bank, credit union, or other lending institution would have paid

 

under section 1211 of the revised school code, 1976 PA 451, MCL

 

380.1211, if an exemption had not been retained on that property,

 

together with an administration fee equal to the property tax

 

administration fee imposed under section 44. The payment required

 

under this subsection shall be collected by the local tax

 

collecting unit at the same time and in the same manner as taxes

 

collected under this act. The administration fee shall be retained

 

by the local tax collecting unit. The amount collected that the

 

land contract vendor, bank, credit union, or other lending

 

institution would have paid under section 1211 of the revised

 

school code, 1976 PA 451, MCL 380.1211, if an exemption had not

 

been retained on that property is an amount that is not captured by

 

any authority as tax increment revenues and shall be distributed to

 

the department of treasury monthly for deposit into the state

 

school aid fund established in section 11 of article IX of the

 

state constitution of 1963. If a land contract vendor, bank, credit

 

union, or other lending institution transfers ownership of property

 

for which an exemption is retained under this subsection, that land

 

contract vendor, bank, credit union, or other lending institution

 

shall rescind the exemption as provided in this section and shall

 

notify the treasurer of the local tax collecting unit of that

 

transfer of ownership. If a land contract vendor, bank, credit

 

union, or other lending institution fails to make the payment

 

required under this subsection for any property within the period

 

for which property taxes are due and payable without penalty, the

 

local tax collecting unit shall deny that conditional rescission

 

and that denial is retroactive and is effective on December 31 of

 

the immediately preceding year. If the local tax collecting unit

 

denies a conditional rescission, the local tax collecting unit

 

shall remove the exemption of the property and the amount due from

 

the land contract vendor, bank, credit union, or other lending

 

institution shall be a tax so that the additional taxes, penalties,

 

and interest shall be collected as provided for in this section. If

 

payment of the tax under this subsection is not made by the March 1

 

following the levy of the tax, the tax shall be turned over to the

 

county treasurer and collected in the same manner as delinquent

 

taxes under this act. A person who previously occupied property as

 

his or her principal residence but now resides in a nursing home or

 

assisted living facility may retain an exemption on that property

 

if the owner manifests an intent to return to that property by

 

satisfying all of the following conditions:

 

     (a) The owner continues to own that property while residing in

 

the nursing home or assisted living facility.

 

     (b) The owner has not established a new principal residence.

 

     (c) The owner maintains or provides for the maintenance of

 

that property while residing in the nursing home or assisted living

 

facility.

 

     (d) That property is not occupied, is not leased, and is not

 

used for any business or commercial purpose.

 

     (6) Except as otherwise provided in subsection (5), 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

 

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 (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

 

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. 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 have 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

 

principal 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 principal residence of the owner claiming the exemption.

 

Except as otherwise provided in subsection (21), the department of

 

treasury may review the validity of exemptions for the current

 

calendar year and for the 3 immediately preceding calendar years.

 

Except as otherwise provided in subsection (5), if the department

 

of treasury determines that the property is not the principal

 

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. The department of

 

treasury may waive interest on any tax set forth in a corrected or

 

supplemental tax bill for the current tax year and the immediately

 

preceding 3 tax years if the assessor of the local tax collecting

 

unit files with the department of treasury a sworn affidavit in a

 

form prescribed by the department of treasury stating that the tax

 

set forth in the corrected or supplemental tax bill is a result of

 

the assessor's classification error or other error or the

 

assessor's failure to rescind the exemption after the owner

 

requested in writing that the exemption be rescinded. 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

 

(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 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 (25).

 

     (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. Before 2009,

 

subsequent elections to audit exemptions shall be made every 2

 

years and shall require 2 annual audit periods. Beginning in 2009,

 

an election to audit exemptions shall be made every 5 years and

 

shall require 5 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 April 1 preceding the

 

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 principal 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, except as otherwise provided in subsection (5), 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 (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 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 (25).

 

The department of treasury shall annually provide 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 (25) shall be refunded.

 

     (14) For taxes levied after December 31, 2005, 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) Except as otherwise provided in subsection (5), 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 if 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 (30), if the

 

principal 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 principal 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 principal residence, the owner shall claim

 

an exemption for only that portion of the taxable value of the

 

property used as the principal 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, 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 principal residence on

 

May 1 for taxes levied before January 1, 2012 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.

 

For taxes levied after December 31, 2011, an owner who owned and

 

occupied a principal residence on June 1 or November 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) An owner who owned and occupied a principal residence

 

within the time period prescribed in subsection (2) in any year

 

before the 3 immediately preceding tax years for which the

 

exemption was not on the tax roll as a result of a qualified error

 

on the part of the local tax collecting unit may file a request for

 

the exemption for those tax years with the department of treasury.

 

The request for the exemption shall be in a form prescribed by the

 

department of treasury and shall include all documentation the

 

department of treasury considers necessary to consider the request

 

and to correct any affected official records if a qualified error

 

on the part of the local tax collecting unit is recognized and an

 

exemption is granted. If the department of treasury denies a

 

request for the exemption under this subsection, the owner is

 

responsible for all costs related to the request as determined by

 

the department of treasury. If the department of treasury grants a

 

request for the exemption under this subsection and the exemption

 

results in an overpayment of the tax in the years under

 

consideration, the department of treasury shall notify the

 

treasurer of the local tax collecting unit, the county treasurer,

 

and other affected officials of the error and the granting of the

 

request for the exemption and all affected official records shall

 

be corrected consistent with guidance provided by the department of

 

treasury. If granting the request for the exemption results in an

 

overpayment, a rebate, including any interest paid by the owner,

 

shall be paid to the owner within 30 days of the receipt of the

 

notice. A rebate shall be without interest. The treasurer in

 

possession of the appropriate tax roll may deduct the rebate from

 

the appropriate tax collecting unit's subsequent distribution of

 

taxes. The treasurer in possession of the appropriate tax roll

 

shall bill to the appropriate tax collecting unit the tax

 

collecting unit's share of taxes rebated. A local tax collecting

 

unit responsible for a qualified error under this subsection shall

 

reimburse each county treasurer and other affected local official

 

required to correct official records under this subsection for the

 

costs incurred in complying with this subsection.

 

     (21) If an owner of property received a principal residence

 

exemption to which that owner was not entitled in any year before

 

the 3 immediately preceding tax years, as a result of a qualified

 

error on the part of the local tax collecting unit, the department

 

of treasury may deny the principal residence exemption as provided

 

in subsection (8). If the department of treasury denies an

 

exemption under this subsection, the owner shall be issued a

 

corrected or supplemental tax bill as provided in subsection (8),

 

except interest shall not accrue until 60 days after the date the

 

corrected or supplemental tax bill is issued. A local tax

 

collecting unit responsible for a qualified error under this

 

subsection shall reimburse each county treasurer and other affected

 

local official required to correct official records under this

 

subsection for the costs incurred in complying with this

 

subsection.

 

     (22) 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.

 

     (23) 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. If an exemption for property classified

 

as timber-cutover real property is granted under this section for

 

the 2008 or 2009 tax year, the tax roll shall be corrected and any

 

delinquent and unpaid penalty, interest, and tax resulting from

 

that property not having been exempt under this section for the

 

2008 or 2009 tax year shall be waived.

 

     (24) If an exemption under this section is erroneously granted

 

for an affidavit filed before October 1, 2003, an owner may request

 

in writing that the department of treasury withdraw the exemption.

 

The request to withdraw the exemption shall be received not later

 

than November 1, 2003. If an owner requests that an exemption be

 

withdrawn, the department of treasury shall issue an order

 

notifying the local assessor that the exemption issued under this

 

section has been denied based on the owner's request. If an

 

exemption is withdrawn, the property that had been subject to that

 

exemption shall be immediately placed on the tax roll 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 as though the exemption had not been

 

granted. A corrected tax bill shall be issued for the tax year

 

being adjusted 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. Unless a

 

denial has been issued prior to July 1, 2003, if an owner requests

 

that an exemption under this section be withdrawn and that owner

 

pays the corrected tax bill issued under this subsection within 30

 

days after the corrected tax bill is issued, that owner is not

 

liable for any penalty or interest on the additional tax. An owner

 

who pays a corrected tax bill issued under this subsection more

 

than 30 days after the corrected tax bill is issued is liable for

 

the penalties and interest that would have accrued if the exemption

 

had not been granted from the date the taxes were originally

 

levied.

 

     (25) Subject to subsection (26), 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%.

 

     (26) Interest distributed under subsection (25) 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 (25) and on each succeeding December 31 thereafter.

 

     (b) Interest distributed to the department of treasury shall

 

be deposited into the principal 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.

 

     (27) Interest distributed under subsection (25) is in addition

 

to and shall not affect the levy or collection of the county

 

property tax administration fee established under this act.

 

     (28) 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 within the time period prescribed

 

in subsection (2):

 

     (a) An affidavit form.

 

     (b) A statement of the total number of units owned by the

 

cooperative housing corporation and occupied as the principal

 

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 principal 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.

 

     (29) Before May 1, 2004 and before May 1, 2005, the treasurer

 

of each county shall forward to the department of education a

 

statement of the taxable value of each school district and fraction

 

of a school district within the county for the preceding 4 calendar

 

years. This requirement is in addition to the requirement set forth

 

in section 151 of the state school aid act of 1979, 1979 PA 94, MCL

 

388.1751.

 

     (30) For a parcel of property open and available for use as a

 

bed and breakfast, the portion of the taxable value of the property

 

used as a principal residence under subsection (16) shall be

 

calculated in the following manner:

 

     (a) Add all of the following:

 

     (i) The square footage of the property used exclusively as that

 

owner's principal residence.

 

     (ii) 50% of the square footage of the property's common area.

 

     (iii) If the property was not open and available for use as a

 

bed and breakfast for 90 or more consecutive days in the

 

immediately preceding 12-month period, the result of the following

 

calculation:

 

     (A) Add the square footage of the property that is open and

 

available regularly and exclusively as a bed and breakfast, and 50%

 

of the square footage of the property's common area.

 

     (B) Multiply the result of the calculation in sub-subparagraph

 

(A) by a fraction, the numerator of which is the number of

 

consecutive days in the immediately preceding 12-month period that

 

the property was not open and available for use as a bed and

 

breakfast and the denominator of which is 365.

 

     (b) Divide the result of the calculation in subdivision (a) by

 

the total square footage of the property.

 

     (31) The owner claiming an exemption under this section for

 

property open and available as a bed and breakfast shall file an

 

affidavit claiming the exemption within the time period prescribed

 

in subsection (2) with the local tax collecting unit in which the

 

property is located. The affidavit shall be in a form prescribed by

 

the department of treasury.

 

     (32) As used in this section:

 

     (a) "Bed and breakfast" means property classified as

 

residential real property under section 34c that meets all of the

 

following criteria:

 

     (i) Has 10 or fewer sleeping rooms, including sleeping rooms

 

occupied by the owner of the property, 1 or more of which are

 

available for rent to transient tenants.

 

     (ii) Serves meals at no extra cost to its transient tenants.

 

     (iii) Has a smoke detector in proper working order in each

 

sleeping room and a fire extinguisher in proper working order on

 

each floor.

 

     (b) "Common area" includes, but is not limited to, a kitchen,

 

dining room, living room, fitness room, porch, hallway, laundry

 

room, or bathroom that is available for use by guests of a bed and

 

breakfast or, unless guests are specifically prohibited from access

 

to the area, an area that is used to provide a service to guests of

 

a bed and breakfast.

 

     (c) "Qualified error" means that term as defined in section

 

53b.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.