August 15: Critical PPT Exemption Deadline
The following article is provided by Mark Hilpert of Honigman Miller Schwartz and Cohn LLP
Michigan’s program to exempt eligible manufacturing personal property (EMPP) included the imposition of a statewide special assessment called the Essential Services Assessment (ESA). The ESA is imposed on the EMPP that became exempt from the property tax, but is usually a small fraction of what the property tax would be without the exemption. However, failure to timely report and pay the ESA could cause the taxpayer to lose the entire property tax exemption for 2016.
If you filed an EMPP affidavit for 2016, you must remember to complete some additional steps to ensure you receive the full benefit from the EMPP exemption. By now, all the 2016 information submitted from taxpayers to local assessors on the Form 5278 has been forwarded to the Michigan Department of Treasury. For each claim that was approved, the Department has created an on-line statement indicating the amount of ESA that is owed.
- Access their statement
- Amend it as necessary
- Certify and submit it as a return
- Pay the full ESA liability by August 15
If a certified statement and full payment (including interest and late fees) is not received by October 15, the taxpayer’s EMPP exemption will be rescinded for that year.
Taxpayers may access their ESA statements through Michigan Treasury Online (MTO). Details regarding how to log into to MTO and create an account can be found at www.michigan.gov/esa.
Governor Signs PPT Filing Extension to May 31
If your business missed out on filing its 2016 Personal Property Tax (PPT) exemption or had it rejected as incomplete, MMA has successfully reopened the window to file! Manufacturers have until Tuesday, 5/31/16, to file their 2016 PPT exemption, thanks to legislation signed Thursday, 5/5/16, by Governor Snyder.
Manufacturers looking to file or re-file before 5/31/16 should:
Public Act 107 of 2016, Public Act 108 of 2016, Public Act 109 of 2016, Public Act 110 of 2016 and the soon-to-be signed House Bill 5176 will briefly re-open the window for manufacturers to file their 2016 PPT exemptions until 5/31/16. The five-bill package also makes some technical changes to clarify the exemption process, including that property deemed to be “construction in progress” would be subject to the essential services assessment at half-value instead of full value.
“This process was new to both companies and local assessors — many businesses missed the filing deadline or had their applications denied because applications were deemed incomplete for very minor reasons,” said Mike Johnston, MMA vice president of government affairs. “We want to make sure every manufacturer is able to claim the exemption created by the Legislature and overwhelmingly supported by Michigan voters.”
Remember, your exemption affidavit must be received by your local assessor no later than 5/31/16. Postmarks are not accepted as meeting the deadline.
For more information, contact MMA’s Mike Johnston at 517-487-8554 or email@example.com with questions on how to file your 2016 PPT exemption before 5/31/16.
MMA Leads Effort to Fix PPT Filing Issues
MMA is pleased to report that we successfully avoided administrative denials in manufacturers filing Form 5278 — the combined statement and affidavit to claim your PPT exemption that was due Saturday, 2/20/16.
Mike Johnston, MMA vice president of government affairs, worked with staff and met with State Treasurer Nick Khouri in an effort to ensure the State Tax Commission (STC) approved the use of an electronic or facsimile signature on the Affidavit and Statement for Eligible Manufacturing Personal Property and Essential Services Assessment, Form 5278.
The Commission also directed assessors to note that failure to indicate the appropriate title of the person certifying the Affidavit and Statement on Form 5278 should not result in a denial of the exemption or non-acceptance of Form 5278.
In response to MMA’s concerns, the State Tax Commission formally adopted notices to assessors that read:
- The State Tax Commission at their meeting on February 9, 2016 approved that the use of an electronic or facsimile signature on the Affidavit and Statement for Eligible Manufacturing
- Personal Property and Essential Services Assessment, Form 5278, be accepted by a local tax collecting unit using the same procedure prescribed by the Commission in Bulletin 19 of 2011.
The memorandum to the State Tax Commission and Bulletin 19 of 2011 are located below:
MMA wants to thank the members who called to alert us of these issues and ensured we could achieve a solution to benefit all manufacturers. Your Association also extends a thanks to Dave Buick at the Department of Treasury, Heather Frick at the State Tax Commission, and State Treasurer Nick Khouri for working through these issues quickly and effectively.
Governor Signs Legislation to Streamline PPT Reform
The successful ballot campaign to reform the Personal Property Tax (PPT) last year locked in a $576 million annual tax cut to begin in 2016 for manufacturers. To clarify how businesses apply for the exemptions, Governor Rick Snyder signed new legislation clarifying parts of the original PPT package.
“We have worked to make sure the process for manufacturers to take advantage of this significant tax reform is a simple and straight forward as possible,” said Mike Johnston, MMA vice president of government affairs. “These clarifications achieve that goal and we applaud Snyder Administration and the Michigan Legislature for providing their stamp of approval on this reform package.”
Public Acts 119-124 of 2015 include clarifications about when and how manufacturers file to become exempt from the local personal property tax starting next year. The legislative bill package includes:
- Allowing personal property to remain exempt during the construction process
- Simplifying the filing process by requiring both the exemption affidavit and PPT statement be due the same date, February 20
- Authorizing the State Tax Commission to write guidelines to allow reductions of the Essential Services Assessment for property that is materially obsolete
- Adjusting the annual payment date for the Essential Services assessment from September 15 to August 15 to allow more opportunity to appeal and correct mistakes
- Requiring the agency to issue refunds for over payment of taxes
"MMA is extremely appreciative of the continued leadership of Governor Snyder, Lt. Governor Brian Calley, Senate Finance Committee Chair Jack Brandenburg and House Tax Policy Committee Chair Jeff Farrington,” said Johnston.“Their willingness to push this legislation through in a timely manner will ensure manufacturers can begin the process of filing their necessary documents.”