March 23, 2005, Introduced by Reps. Lemmons, III, Lemmons, Jr., Garfield, Zelenko, Hopgood, Hunter, Leland, Phillips, Williams, Brown, Cushingberry, Tobocman, Virgil Smith and Cheeks and referred to the Committee on Tax Policy.
A bill to amend 1893 PA 206, entitled
"The general property tax act,"
(MCL 211.1 to 211.157) by adding section 70d.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 70d. (1) Property that is the principal residence of a
qualified person and that is otherwise subject to forfeiture under
section 78a shall be excluded from forfeiture as provided in this
section. If property that is the principal residence of a qualified
person is sold at the sale provided for in section 78m, it is not
subject to subsequent proceedings except as provided in this
section.
(2) An owner may apply to the county treasurer to withhold the
property from the forfeiture provided in section 78a. The
application shall be made upon an affidavit verifying that the
applicant is the owner of the property prescribed by the department
of treasury and made available to county treasurers throughout the
state. The affidavit shall require the owner to identify any
mortgagee of the property. Upon receipt of an affidavit, the county
treasurer shall immediately forward the affidavit to the state
treasurer who shall examine it to determine if the owner meets the
requirements of this act and is a qualified person. If the state
treasurer notifies the county treasurer not later than the Tuesday
before the forfeiture that an owner is a qualified person and
delivers the payment required by subsection (4)(e), the county
treasurer shall withhold the property of the qualified person from
forfeiture. The state treasurer shall notify any mortgagee that an
owner is a qualified person under this section.
(3) If property has been sold as provided in section 78m, an
owner may apply to the department of treasury for a determination
that the property is not subject to subsequent proceedings, as
provided in subsection (1). The application shall be made on the
affidavit provided for in subsection (2). Upon a finding that the
owner meets the requirements of this section and is a qualified
person and that the property is not subject to the subsequent
proceedings as provided in subsection (1), the department of
treasury shall notify the county treasurer and any holder of a tax
sale certificate or tax deed of its finding.
(4) Upon a finding that the owner meets the requirements of
this section, the department of treasury shall do the following:
(a) On an annual basis, verify that the qualified person
continues to reside in the property and continues to be a qualified
person.
(b) Secure an assignment to the state of the next homestead
property tax credit and any subsequent credit payable during the
period in which taxes are deferred on the property and necessary to
pay any lien on the property under this section.
(c) Secure an assignment to this state of any income tax
refund payable to the qualified person under the income tax act of
1967, 1967 PA 281, MCL 206.1 to 206.532, during the period in which
taxes are deferred on the property and necessary to pay any lien on
the property under this section.
(d) Secure an assignment to this state of the proceeds of the
qualified person's interest in any property and casualty insurance
on the property sufficient to pay the amount of the lien on the
property. If the qualified person does not pay for sufficient
property and casualty insurance, this state shall pay for it and
add that amount to the lien on the property.
(e) Deliver to the county treasurer in the county in which the
property is located an amount equal to the amount of taxes,
interest, and penalties that would otherwise be collected.
(5) If the department of treasury makes a determination that
an owner meets the requirements of this section and the property of
the owner has been conveyed to the foreclosing governmental unit or
the city, village, or township in which the property is located by
a deed issued under section 78m, the state treasurer shall issue a
certificate canceling the deed and record the certificate with the
register of deeds in the county in which the property is located.
Taxes and special assessments that otherwise would be canceled
under section 78k shall not be canceled and the property shall not
be canceled or omitted from the tax roll. However, if the property
has been removed from a previous tax roll, it may be placed on the
roll in the manner provided in section 154.
(6) Taxes on property that has been withheld from forfeiture
under subsection (2), or taxes on property for which a sale has
occurred and for which a determination is made that the owner is a
qualified person under subsection (3) shall be deferred until the
owner is no longer a qualified person; until 1 year after the
owner's death, subject to further order by the court; or until any
part of the principal residence is conveyed or transferred to
another person or the owner enters into a contract to sell the
homestead. The death of a spouse does not terminate the deferment
of taxes on the principal residence owned by the husband and wife
unless the surviving spouse remarries. Failure to provide the
assignment required by subsection (4)(b) or (c) terminates the
deferment. The deferred taxes may be paid in full before the
termination of the deferment at any time. Taxes are deferred under
this section without further penalty and bear interest at the rate
of 3/4 of 1% per month or fraction of a month. The department of
treasury shall notify each owner whose taxes are deferred that if
legal or equitable title to the principal residence or any part of
the principal residence is conveyed or transferred, or if the owner
enters into a contract to sell the principal residence, the
deferment is terminated and the amount deferred is immediately due
and payable with interest as provided in this section, but without
penalty.
(7) Property shall not be excluded from forfeiture under
section 78a for nonpayment of taxes and a deferment shall not be
granted in a year in which, with the inclusion of additional
deferred taxes, the total amount of taxes deferred exceeds 80% of
the owner's equity in the property. In making this determination,
the department of treasury shall use a market value equal to the
state equalized valuation multiplied by 2.
(8) Taxes deferred in a county for any year shall not exceed
2% of the real property taxes returned as delinquent for that year
by all taxing units in that county.
(9) Upon termination of the deferment of property taxes under
this section, the procedures of this act for the collection and
enforcement of tax liens suspended by the terms of this section
again apply to the deferred taxes in the same manner they would
have applied if a deferment had not been authorized and if all of
the taxes had been levied in the second year preceding the calendar
year in which the deferment was terminated. However, the provisions
of this act with respect to fees, interest, and penalties, except
as provided in this section, do not apply to the period during
which the taxes are deferred.
(10) Taxes deferred under this section are a lien against the
property and take precedence over other liens against the property
to the same extent as if the taxes were not deferred.
(11) A purchase under section 78m is subject to the provisions
of this section and the purchaser is conclusively presumed to know
without notice that such a purchase is made subject to the
provisions of this section. However, if taxes are deferred under
this section the purchaser may redeem the tax sale certificate or
tax deed from the foreclosing governmental unit for the purchase
price.
(12) As used in this section:
(a) "Qualified person" means a senior citizen with a household
income in the immediately preceding calendar year that is less than
187.5% of the federal poverty level for 2 persons or the number of
persons in the household, whichever is greater, or an adult in need
of protective services as that term is defined in section 11 of the
social welfare act, 1939 PA 280, MCL 400.11, who has applied for
and assigned all homestead property tax credits that may be claimed
during the period in which taxes are deferred.
(b) "Senior citizen" means a person who is 65 years of age or
older and includes the unremarried surviving spouse of a person who
was 65 years of age or older at the time of death.
(c) "Homestead property tax credit" means the credit provided
under sections 520 and 522 of the income tax act of 1967, 1967 PA
281, MCL 206.520 and 206.522.
(d) "Household income" means that term as defined in section
508 of the income tax act of 1967, 1967 PA 281, MCL 206.508.
(e) "Principal residence" means that term as defined in
section 7dd.