HOUSE BILL No. 5560 December 21, 2001, Introduced by Reps. Ehardt, Hummel, Meyer, Pappageorge, Kowall, Koetje, Bisbee and Drolet and referred to the Committee on Tax Policy. A bill to amend 1893 PA 206, entitled "The general property tax act," by amending section 7cc (MCL 211.7cc), as amended by 1996 PA 476. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 7cc. (1) A homestead is exempt from the tax levied by 2 a local school district for school operating purposes to the 3 extent provided under section 1211 of the revised school code, 4Act No. 451 of the Public Acts of 1976, being section 380.12115of the Michigan Compiled Laws1976 PA 451, MCL 380.1211, if an 6 owner of that homestead claims an exemption as provided in this 7 section. Notwithstanding the tax day provided in section 2, the 8 status of property as a homestead shall be determined on the date 9 an affidavit claiming an exemption is filed under subsection 10 (2). 04248'01 FDD 2 1 (2) An owner of property may claim an exemption under this 2 section by filing an affidavit on or before May 1 with the local 3 tax collecting unit in which the property is located. The affi- 4 davit shall state that the property is owned and occupied as a 5 homestead by that owner of the property on the date that the 6 affidavit is signed. The affidavit shall be on a form prescribed 7 by the department of treasury. Beginning in 1995, 1 copy of the 8 affidavit shall be retained by the owner, 1 copy shall be 9 retained by the local tax collecting unit until any appeal or 10 audit period under this act has expired, and 1 copy shall be for- 11 warded to the department of treasury pursuant to subsection (4), 12 together with all information submitted under subsection (22) for 13 a cooperative housing corporation. Beginning in 1995, the affi- 14 davit shall require the owner claiming the exemption to indicate 15 if that owner has claimed another exemption on property in this 16 state that is not rescinded. If the affidavit requires an owner 17 to include a social security number, that owner's number is 18 subject to the disclosure restrictions inAct No. 122 of the19Public Acts of 1941, being sections 205.1 to 205.31 of the20Michigan Compiled Laws1941 PA 122, MCL 205.1 TO 205.31. 21 (3) A husband and wife who are required to file or who do 22 file a joint Michigan income tax return are entitled to not more 23 than 1 homestead exemption. 24 (4) Upon receipt of an affidavit filed under subsection (2) 25 and unless the claim is denied under subsection (6), the assessor 26 shall exempt the property from the collection of the tax levied 27 by a local school district for school operating purposes to the 04248'01 3 1 extent provided under section 1211 ofAct No. 451 of the Public2Acts of 1976THE REVISED SCHOOL CODE, 1976 PA 451, MCL 380.1211, 3 as provided in subsection (1) until December 31 of the year in 4 which the property is transferred or is no longer a homestead as 5 defined in section 7dd. The local tax collecting unit shall for- 6 ward copies of affidavits to the department of treasury according 7 to a schedule prescribed by the department of treasury. 8 (5) Not more than 90 days after exempted property is no 9 longer used as a homestead by the owner claiming an exemption, 10 that owner shall rescind the claim of exemption by filing with 11 the local tax collecting unit a rescission form prescribed by the 12 department of treasury. Beginning October 1, 1994, an owner who 13 fails to file a rescission as required by this subsection is 14 subject to a penalty of $5.00 per day for each separate failure 15 beginning after the 90 days have elapsed, up to a maximum of 16 $200.00. This penalty shall be collected underAct No. 122 of17the Public Acts of 19411941 PA 122, MCL 205.1 TO 205.31, and 18 shall be deposited in the state school aid fund established in 19 section 11 of article IX of the state constitution of 1963. This 20 penalty may be waived by the department of treasury. 21 (6) If the assessor of the local tax collecting unit 22 believes that the property for which an exemption is claimed is 23 not the homestead of the owner claiming the exemption, effective 24 for taxes levied after 1994 the assessor may deny a new or exist- 25 ing claim by notifying the owner and the department of treasury 26 in writing of the reason for the denial and advising the owner 27 that the denial may be appealed to the department of treasury 04248'01 4 1 within 35 days after the date of the notice. The denial shall be 2 made on a form prescribed by the department of treasury. If the 3 assessor of the local tax collecting unit believes that the prop- 4 erty for which the exemption is claimed is not the homestead of 5 the owner claiming the exemption, for taxes levied in 1994 the 6 assessor may send a recommendation for denial for any affidavit 7 that is forwarded to the department of treasury stating the rea- 8 sons for the recommendation. If the assessor of the local tax 9 collecting unit believes that the property for which the exemp- 10 tion is claimed is not the homestead of the owner claiming the 11 exemption and has not denied the claim, for taxes levied after 12 1994 the assessor shall include a recommendation for denial with 13 any affidavit that is forwarded to the department of treasury or, 14 for an existing claim, shall send a recommendation for denial to 15 the department of treasury, stating the reasons for the 16 recommendation. 17 (7) The department of treasury shall determine if the prop- 18 erty is the homestead of the owner claiming the exemption. The 19 department of treasury may review the validity of exemptions for 20 the current calendar year and for the 3 immediately preceding 21 calendar years. If the department of treasury determines that 22 the property is not the homestead of the owner claiming the 23 exemption, the department shall send a notice of that determina- 24 tion to the local tax collecting unit and to the owner of the 25 property claiming the exemption, indicating that the claim for 26 exemption is denied, stating the reason for the denial, and 27 advising the owner claiming the exemption of the right to appeal 04248'01 5 1 the determination to the department of treasury and what those 2 rights of appeal are. The department of treasury may issue a 3 notice denying a claim if an owner fails to respond within 30 4 days of receipt of a request for information from that 5 department. An owner may appeal the denial of a claim of exemp- 6 tion to the department of treasury within 35 days of receipt of 7 the notice of denial. An appeal to the department of treasury 8 shall be conducted according to the provisions for an informal 9 conference in section 21 ofAct No. 122 of the Public Acts of101941, being section 205.21 of the Michigan Compiled Laws1941 PA 11 122, MCL 205.21. Within 10 days after acknowledging an appeal of 12 a denial of a claim of exemption, the department of treasury 13 shall notify the assessor and the treasurer for the county in 14 which the property is located that an appeal has been filed. 15 Upon receipt of a notice that the department of treasury has 16 denied a claim for exemption, the assessor shall remove the 17 exemption of the property and, if the tax roll is in the local 18 tax collecting unit's possession, amend the tax roll to reflect 19 the denial and the local treasurer shall issue a corrected tax 20 bill for previously unpaid taxes with interest and penalties com- 21 puted based on the interest and penalties that would have accrued 22 from the date the taxes were originally levied if there had not 23 been an exemption. If the tax roll is in the county treasurer's 24 possession, the tax roll shall be amended to reflect the denial 25 and the county treasurer shall prepare and submit a supplemental 26 tax bill for any additional taxes, together with any interest and 27 penalties. For taxes levied in 1994 only, the county treasurer 04248'01 6 1 shall waive any interest and penalties due if the owner pays the 2 supplemental tax bill not more than 30 days after the owner 3 receives the supplemental tax bill. Interest and penalties shall 4 not be assessed for any period before February 14, 1995. 5 However, if the property has been transferred to a bona fide pur- 6 chaser before additional taxes were billed to the seller as a 7 result of the denial of a claim for exemption, the taxes, inter- 8 est, and penalties shall not be billed to the bona fide purchas- 9 er, and the local tax collecting unit if the local tax collecting 10 unit has possession of the tax roll or the county treasurer if 11 the county has possession of the tax roll shall notify the 12 department of treasury of the amount of tax due and interest 13 through the date of that notification. The department of trea- 14 sury shall then assess the owner who claimed the homestead prop- 15 erty tax exemption for the tax and interest plus penalty accruing 16 as a result of the denial of the claim for exemption, if any, as 17 for unpaid taxes provided underAct No. 122 of the Public Acts18of 19411941 PA 122, MCL 205.1 TO 205.31, and shall deposit any 19 tax, interest, or penalty collected into the state school aid 20 fund. 21 (8) An owner may appeal a final decision of the department 22 of treasury to the residential and small claims division of the 23 Michigan tax tribunal within 35 days of that decision. An asses- 24 sor may appeal a final decision of the department of treasury to 25 the residential and small claims division of the Michigan tax 26 tribunal within 35 days of that decision if the assessor denied 27 the exemption under subsection (6), or, for taxes levied in 1994 04248'01 7 1 only, the assessor forwarded a recommendation for denial to the 2 department of treasury under subsection (6). An owner is not 3 required to pay the amount of tax in dispute in order to appeal a 4 denial of a claim of exemption to the department of treasury or 5 to receive a final determination of the residential and small 6 claims division of the Michigan tax tribunal. However, interest 7 and penalties except as provided in subsection (7), if any, shall 8 accrue and be computed based on the interest and penalties that 9 would have accrued from the date the taxes were originally levied 10 as if there had not been an exemption. 11 (9) An affidavit filed by an owner for a homestead rescinds 12 all previous exemptions filed by that owner for any other 13 homestead. The department of treasury shall notify the assessor 14 of the local tax collecting unit in which the property for which 15 a previous exemption was claimed is located that the previous 16 exemption is rescinded by the subsequent affidavit. Upon receipt 17 of notice that an exemption is rescinded, the assessor of the 18 local tax collecting unit shall remove the exemption effective 19 December 31 of the year in which the property is transferred or 20 is no longer a homestead as defined in section 7dd. The assessor 21 of the local tax collecting unit in which that property is 22 located shall notify the treasurer in possession of the tax roll 23 for a year for which the exemption is rescinded. If the tax roll 24 is in the local tax collecting unit's possession, the tax roll 25 shall be amended to reflect the rescission and the local trea- 26 surer shall prepare and issue a corrected tax bill for previously 27 unpaid taxes with interest and penalties computed based on the 04248'01 8 1 interest and penalties that would have accrued from the date the 2 taxes were originally levied if there had not been an exemption 3 for that year. If the tax roll is in the county treasurer's pos- 4 session, the tax roll shall be amended to reflect the rescission 5 and the county treasurer shall prepare and submit a supplemental 6 tax bill for any additional taxes, together with any interest and 7 penalties. However, if the property has been transferred to a 8 bona fide purchaser, the taxes, interest, and penalties shall not 9 be billed to the bona fide purchaser, and the local tax collect- 10 ing unit if the local tax collecting unit has possession of the 11 tax roll or the county treasurer if the county has possession of 12 the tax roll shall notify the department of treasury of the 13 amount of tax due and interest through the date of that 14 notification. The department of treasury shall then assess the 15 owner who received the homestead property tax exemption when the 16 property was not a homestead as defined in section 7dd for the 17 tax and interest plus penalty accruing, if any, as for unpaid 18 taxes provided underAct No. 122 of the Public Acts of 194119 1941 PA 122, MCL 205.1 TO 205.31, and shall deposit any tax, 20 interest, or penalty collected into the state school aid fund. 21 (10) An owner of property for which a claim of exemption is 22 rescinded may appeal that rescission with either the July or 23 December board of review in either the year for which the exemp- 24 tion is rescinded or in the immediately succeeding year. If an 25 appeal of a rescission of a claim for exemption is received not 26 later than 5 days prior to the date of the December board of 27 review, the local tax collecting unit shall convene a December 04248'01 9 1 board of review and consider the appeal pursuant to this section 2 and section 53b. An owner of property for which a claim of 3 exemption is rescinded may appeal the decision of the board of 4 review to the residential and small claims division of the 5 Michigan tax tribunal within 35 days of that decision. 6 (11) If the homestead is part of a unit in a multiple-unit 7 dwelling or a dwelling unit in a multiple-purpose structure, an 8 owner shall claim an exemption for only that portion of the total 9 taxable value of the property used as the homestead of that owner 10 in a manner prescribed by the department of treasury. If a por- 11 tion of a parcel for which the owner claims an exemption is used 12 for a purpose other than as a homestead, the owner shall claim an 13 exemption for only that portion of the taxable value of the prop- 14 erty used as the homestead of that owner in a manner prescribed 15 by the department of treasury. 16 (12) When a county register of deeds records a transfer of 17 ownership of a property, he or she shall notify the local tax 18 collecting unit in which the property is located of the 19 transfer. 20 (13) The department of treasury shall make available the 21 affidavit forms and the forms to rescind an exemption, which may 22 be on the same form, to all city and township assessors, county 23 equalization officers, county registers of deeds, and closing 24 agents. A LOCAL UNIT OF GOVERNMENT THAT ISSUES A CERTIFICATE OF 25 OCCUPANCY FOR COMPLETED NEW CONSTRUCTION CLASSIFIED AS RESIDEN- 26 TIAL REAL PROPERTY UNDER SECTION 34C SHALL PROVIDE AFFIDAVIT AND 27 RESCISSION FORMS TO THE PERSON TO WHOM THE CERTIFICATE OF 04248'01 10 1 OCCUPANCY IS ISSUED. A person who prepares a closing statement 2 for the sale of property shall provide affidavit and rescission 3 forms to the buyer and seller at the closing and, if requested by 4 the buyer or seller after execution by the buyer or seller, shall 5 file the forms with the local tax collecting unit in which the 6 property is located. If a closing statement preparer fails to 7 provide homestead exemption affidavit and rescission forms to the 8 buyer and seller, or fails to file the affidavit and rescission 9 forms with the local tax collecting unit if requested by the 10 buyer or seller, the buyer may appeal to the department of trea- 11 sury within 30 days of notice to the buyer that an exemption was 12 not recorded. If the department of treasury determines that the 13 buyer qualifies for the exemption, the department of treasury 14 shall notify the assessor of the local tax collecting unit that 15 the exemption is granted and the assessor of the local tax col- 16 lecting unit or, if the tax roll is in the possession of the 17 county treasurer, the county treasurer shall correct the tax roll 18 to reflect the exemption. This subsection does not create a 19 cause of action at law or in equity against a closing statement 20 preparer who fails to provide homestead exemption affidavit and 21 rescission forms to a buyer and seller or who fails to file the 22 affidavit and rescission forms with the local tax collecting unit 23 when requested to do so by the buyer or seller. 24 (14) An owner who owned and occupied a homestead on May 1 25 for which the exemption was not on the tax roll may file an 26 appeal with the July board of review in the year for which the 27 exemption was claimed or the immediately succeeding year or with 04248'01 11 1 the December board of review in the year for which the exemption 2 was claimed or the immediately succeeding year. If an appeal of 3 a claim for exemption that was not on the tax roll is received 4 not later than 5 days prior to the date of the December board of 5 review, the local tax collecting unit shall convene a December 6 board of review and consider the appeal pursuant to this section 7 and section 53b. 8 (15) In 1994 only, an owner who owns and occupies a home- 9 stead after May 1 and before October 3 for which an affidavit was 10 not filed in 1994 may file an affidavit as provided in subsection 11 (2) not later than October 3, 1994. Upon receipt, the assessor 12 shall exempt the property from 50% of the number of mills levied 13 in 1994 under section 1211 ofAct No. 451 of the Public Acts of141976THE REVISED SCHOOL CODE, 1976 PA 451, MCL 380.1211, from 15 which homesteads are exempt, not to exceed 50% of the total 16 number of mills from which homesteads are exempt in 1994, on the 17 December tax roll. If there is not a December levy of the tax 18 under section 1211 ofAct No. 451 of the Public Acts of 197619 THE REVISED SCHOOL CODE, 1976 PA 451, MCL 380.1211, the owner may 20 appear in person or by mail before the December board of review 21 and obtain a rebate as provided in section 53b of 50% of the 22 number of mills levied in 1994 under section 1211 ofAct No. 45123of the Public Acts of 1976THE REVISED SCHOOL CODE, 1976 PA 451, 24 MCL 380.1211, from which homesteads are exempt, not to exceed 50% 25 of the total number of mills from which homesteads are exempt in 26 1994. If an affidavit is not filed as provided in this 27 subsection, the owner may appear in person or by mail before the 04248'01 12 1 July or December board of review in 1994 or the July or December 2 board of review in 1995 and obtain a rebate of 50% of the number 3 of mills levied in 1994 under section 1211 ofAct No. 451 of the4Public Acts of 1976THE REVISED SCHOOL CODE, 1976 PA 451, MCL 5 380.1211, from which homesteads are exempt, not to exceed 50% of 6 the total number of mills from which homesteads are exempt in 7 1994. This subsection does not apply unless the 1994 assessment 8 of the property is based on the valuation of a homestead or a 9 portion of a structure that has become a homestead. An affidavit 10 filed under this subsection is subject to all the provisions of 11 this section. 12 (16) An owner who owns and occupies a homestead for which 13 the exemption was on the tax roll in 1995 and each year after 14 1995 and for which an exemption was not on the tax roll in 1994 15 may appeal to the department of treasury before December 31, 1997 16 to have an exemption placed on the 1994 tax roll if all of the 17 following conditions are satisfied: 18 (a) The owner owned and occupied that homestead on May 1, 19 1994 or the owner owned and occupied that homestead after May 1, 20 1994 but before October 3, 1994. 21 (b) If a claim of exemption was denied in 1994, the owner 22 did not timely appeal that denial as provided in this section. 23 (c) The owner has owned and occupied that homestead since 24 1994. 25 (17) If the department of treasury grants a claim of exemp- 26 tion for 1994 under subsection (16), the county treasurer with 27 possession of the tax roll being adjusted shall amend the 1994 04248'01 13 1 tax roll to reflect the exemption and shall issue a corrected tax 2 bill as follows: 3 (a) If the owner owned and occupied that homestead on May 1, 4 1994, that homestead is exempt from the tax levied in 1994 for 5 school operating purposes to the extent provided under 6 section 1211 ofAct No. 451 of the Public Acts of 1976THE 7 REVISED SCHOOL CODE, 1976 PA 451, MCL 380.1211, pursuant to 8 subsection (1). 9 (b) If the owner owned and occupied that homestead after May 10 1, 1994 but before October 3, 1994, that homestead is exempt from 11 50% of the number of mills levied in 1994 under section 1211 of 12Act No. 451 of the Public Acts of 1976 pursuant to13subsection (14)THE REVISED SCHOOL CODE, 1976 PA 451, MCL 14 380.1211. 15 (18) If the department of treasury denies a claim of exemp- 16 tion for 1994 under subsection (16), an owner may appeal that 17 denial to the residential and small claims division of the 18 Michigan tax tribunal within 35 days of that denial. 19 (19) If the assessor or treasurer of the local tax collect- 20 ing unit believes that the department of treasury erroneously 21 denied a claim for exemption, the assessor or treasurer may 22 submit written information supporting the owner's claim for 23 exemption to the department of treasury within 35 days of the 24 owner's receipt of the notice denying the claim for exemption. 25 If, after reviewing the information provided, the department of 26 treasury determines that the claim for exemption was erroneously 04248'01 14 1 denied, the department of treasury shall grant the exemption and 2 the tax roll shall be amended to reflect the exemption. 3 (20) If granting the exemption under this section results in 4 an overpayment of the tax, a rebate, including any interest paid, 5 shall be made to the taxpayer by the local tax collecting unit if 6 the local tax collecting unit has possession of the tax roll or 7 by the county treasurer if the county has possession of the tax 8 roll within 30 days of the date the exemption is granted. The 9 rebate shall be without interest. 10 (21) If an exemption under this section is erroneously 11 granted, an owner may request in writing that the department of 12 treasury withdraw the exemption. If an owner requests that an 13 exemption be withdrawn, the department of treasury shall issue an 14 order notifying the local assessor that the exemption issued 15 under this section has been denied based on the owner's request. 16 If an exemption is withdrawn, the property that had been subject 17 to that exemption shall be immediately placed on the tax roll by 18 the local tax collecting unit if the local tax collecting unit 19 has possession of the tax roll or by the county treasurer if the 20 county has possession of the tax roll as though the exemption had 21 not been granted. A corrected tax bill shall be issued for the 22 tax year being adjusted by the local tax collecting unit if the 23 local tax collecting unit has possession of the tax roll or by 24 the county treasurer if the county has possession of the tax 25 roll. If an owner requests that an exemption under this section 26 be withdrawn before that owner is contacted in writing by either 27 the local assessor or the department of treasury regarding that 04248'01 15 1 owner's eligibility for the exemption and that owner pays the 2 corrected tax bill issued under this subsection within 30 days 3 after the corrected tax bill is issued, that owner is not liable 4 for any penalty or interest on the additional tax. An owner who 5 pays a corrected tax bill issued under this subsection more than 6 30 days after the corrected tax bill is issued is liable for the 7 penalties and interest that would have accrued if the exemption 8 had not been granted from the date the taxes were originally 9 levied. 10 (22) For tax years beginning on and after January 1, 1994, a 11 cooperative housing corporation is entitled to a full or partial 12 exemption under this section for the tax year in which the coop- 13 erative housing corporation files all of the following with the 14 local tax collecting unit in which the cooperative housing corpo- 15 ration is located if filed on or before May 1 of the tax year, or 16 for the tax year following the year in which all of the following 17 are filed if filed after May 1 of the tax year: 18 (a) An affidavit form. 19 (b) A statement of the total number of units owned by the 20 cooperative housing corporation and occupied as the principal 21 residence of a tenant stockholder as of the date of the filing 22 under this subsection. 23 (c) A list that includes the name, address, and social 24 security number of each tenant stockholder of the cooperative 25 housing corporation occupying a unit in the cooperative housing 26 corporation as his or her principal residence as of the date of 27 the filing under this subsection. 04248'01 16 1 (d) A statement of the total number of units of the 2 cooperative housing corporation on which an exemption under this 3 section was claimed and that were transferred in the tax year 4 immediately preceding the tax year in which the filing under this 5 section was made. 04248'01 Final page. 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