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Property is put on the tax rolls by city and township Assessors. Tax day (that is, tax valuation day) in Michigan is December 31. The taxable value on December 31 multiplied by the sum of the millage rates for the jurisdictions within which the property is located, determines the tax bills for the following year.
Assessors generally notify property owners of their Assessed Values and Taxable Values in February. Property owners disagreeing with their assessments can appeal them.
There are two levels of property tax valuation appeals in Michigan, the Board of Review and the Michigan Tax Tribunal. Valuation questions may be argued before these agencies, but, under Michigan’s constitution, cannot be appealed to the court system, except for an error of law or the adoption of wrong principles. Boards of review are appointed for each assessing district. The Tax Tribunal is a State board.
Property taxes are calculated by multiplying the millage rate of the various taxing agencies by the Taxable Value. By statute, Assessed Value is to be equal to one-half of the property’s true cash value. Taxable Value is set equal to a property’s Assessed Value after any “transfer” of the property. While a property owner continues to own a piece of property, annual increases in Taxable Value are limited to the lower of the rate of inflation or 5%.
Assessments are reviewed by the County and State authorities to determine whether a jurisdiction’s assessments, in the aggregate, equal one-half of true cash value. If the review determines that assessments in a jurisdiction do not equal 50% of true cash value, an “equalizing factor” will be generated and applied to the assessed value of all property within the jurisdiction to make its assessments conform to the remainder of the State.
Assessment notices are sent to property owners in February. Property owners may appeal their assessments to the Board of Review, which meets in early March. (Three cities, Detroit, Grand Rapids and Wyoming, require an appeal to the Assessor before allowing an appeal to the Board of Review. These cities issue their assessment notices earlier. Appeals begin earlier because the assessor’s appeals must be completed before the Board of Review.)
Valuation appeals to the Board of Review are a prerequisite to appealing residential property valuation to the Michigan Tax Tribunal. Appeals to the Tax Tribunal must be filed by July 31.
Boards of review do not keep a record of their proceedings. They are meant to be and are more informal than court proceedings. Boards of Review schedule their hearings, and often schedule them to last only 30 minutes. This means that the parties have a very limited time to present their evidence and arguments. It’s a good idea to present evidence to the Board of Review in summary format with supporting documents attached.
Boards of Review are established to certify the work of the Assessor. They work with the Assessor on every case, and develop a close relationship with the Assessor. They do not act as impartial judges. Taxpayers should realize that their “Burden of Proof” is greater than simply showing that their proposed valuation is probably more accurate than the Assessors. The taxpayer must show the Board of Review why the assessor’s work should be changed.
Persons dissatisfied with the action of the Board of Review can appeal to the Michigan Tax Tribunal. Tribunal appeals must be filed by July 31.
The Tax Tribunal consists of seven members appointed by the Governor. Cases are divided into two categories–Entire Tribunal cases and Residential Property and Small Claims Division cases. Entire Tribunal property cases generally relate to industrial and commercial property. Entire Tribunal cases are heard by one or more tribunal members. Hearings may be lengthy. Residential Property and Small Claims cases are heard generally by a single administrative law judges under the direction of the Tax Tribunal. The ALJ might be an attorney, an accountant, or an appraiser. Hearings are extremely short, generally around 30 minutes.
The most persuasive evidence that can be presented to the Tax Tribunal is an appraisal by a well qualified appraiser. The challenging taxpayer will have no success without it. The municipality will have a counter-appraisal or formulas of some kind supporting its position. Additional evidence is very useful, and could include:
Sales of comparable properties,
Listings of comparable properties,
Purchase agreements showing negotiation of the purchase price,
In Residential Property and Small Claims matters, discovery (that is, formal demand for information from the adverse party) is at the discretion of the judge, although assessors will generally cooperate with taxpayers. Tribunal rules require the exchange of valuation information about 23 days prior to the hearing date. If it is not provided in a timely manner, the delinquent party can be found in default by the judge.
Assessors have information that may assist in evaluating the property or in making an appraisal. Taxpayers may request, informally or under the Freedom of Information Act, or as Discovery, if allowed by the judge, the following information:
Property record cards,
Land value maps or grids,
Economic condition factor studies,
Comparable sales in or near the taxing jurisdiction,
Equalization Department sales studies,
Market vacancies and listings,
Photos or diagrams of the property.