DIS. VETERAN EXEMPTION; EXT. UNTIL RECISSION†††††††††††††††††††††††† S.B. 176, 330, & 364:

†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† SUMMARY OF INTRODUCED BILL

†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† IN COMMITTEE

 

 

 

 

 

 

Senate Bill 176 (as introduced 3-14-23)

Senate Bill 330 (as introduced 5-11-23)

Senate Bill 364 (as introduced 5-25-23)

Sponsor:† Senator Sylvia Santana (S.B. 176)

†††††††††††††† Senator Mary Cavanagh (S.B. 330)

†††††††††††††† Senator John Damoose (S.B. 364)

Committee:† Finance, Insurance, and Consumer Protection

 

Date Completed:† 6-6-23

 


INTRODUCTION

 

Senate Bills 176 and 330 would amend the General Property Tax Act to require a property tax exemption on real property used and owned as a homestead by a disabled veteran or the veteranís surviving spouse to remain in effect until it was rescinded by the individual granted the exemption or denied by the assessor. The bills also propose a local assessor audit program for purposes of auditing the exemption and allowing an assessor to deny a new claim or rescind an existing claim; however, Senate Bill 176 would require a local assessing unit to implement the audit program, while Senate Bill 330 would allow the local assessing unit to do so. Senate bill 176 also would modify the timeline for filing an exemption to specify that an application for such would have to be filed within the year the exemption was claimed.

 

Senate Bill 364 would amend the Act to include, for tax year 2023 only, a denial of an exemption described above by the board of review as a "qualified error" that could be corrected upon appeal to a board of review.

 

Senate Bills 330 and 364 are tie-barred to Senate Bill 176.

 

BRIEF FISCAL IMPACT

 

The bills would have an unknown and likely minimal fiscal impact on State and local property tax revenue, as well as local expenditure.

 

MCL 211.7b (S.B. 176)††††††††††††††††††††††††††††††††††††††††††††††††† Legislative Analyst:† Eleni Lionas

Proposed MCL 211.7c (S.B. 330)††††††††††††††††††††††††††††††††††††††††††††††† Fiscal Analyst: David Zin

MCL 211.53b (S.B. 364)

 

 


 

CONTENT

 

Senate Bill 176 would amend the General Property Tax Act to do the following:

 

--   Specify that a property tax exemption on real property used and owned as a homestead by a disabled veteranís surviving spouse would apply to any property used and owned as a homestead by the surviving spouse, including property acquired after the disabled veteranís death.

--   Require a property tax exemption on real property used and owned as a homestead by a disabled veteran or the veteranís surviving spouse to remain in effect until it was rescinded by the individual granted the exemption or denied by the assessor.

--    Require a local assessing unit to implement an audit program that included the audit of all information filed pertaining to an exemption described above and allow an assessor to deny a new claim, or an existing claim, following an audit.

--    Require a local or county treasurer to remove an exemption from the tax rolls if rescinded or denied and issue a corrected or supplemental (new) tax bill.

--   Prescribe a 1.0% interest on any tax set forth in a new tax bill.

 

Senate Bill 330 would amend the General Property Tax Act to do the following:

 

--   Require a property tax exemption on real property used and owned as a homestead by a disabled veteran or the veteranís surviving spouse to remain in effect until it was rescinded by the individual granted the exemption or denied by the assessor.

--    Allow a local assessing unit to implement an audit program that included the audit of all information filed pertaining to an exemption described above and allow an assessor to deny a new claim, or an existing claim, following an audit.

--    Require a local or county treasurer to remove an exemption from the tax rolls if rescinded or denied and issue a new tax bill.

--   Prescribe a 1.0% interest on any tax set forth in a new tax bill.

 

Senate Bill 364 would amend the General Property Tax Act to include, for tax year 2023 only, a denial by the board of review of an exemption described above as a "qualified error" which could be corrected upon appeal to a board of review.

 

Senate Bill 176

 

The General Property Tax Act exempts from taxation under the Act real property used and owned as a homestead by a disabled veteran who was discharged honorably from the United States Armed Forces. The Act also extends this exemption to a surviving spouse of a disabled veteran if the veteran is eligible for the exemption immediately before death. The surviving spouse qualifies for the exemption if the surviving spouse does not remarry. Under the bill, the surviving spouseís exemption would apply to any property that the surviving spouse used and owned as a homestead, including property acquired after the decedentís death.

 

Currently, to obtain the exemption, the property owner must file with the supervisor or other assessing officer an affidavit during the period beginning with the tax day for each year and ending at the time of the final adjournment of the local board of review. Instead, under the bill, an individual eligible for the exemption would have to file an application for the exemption in a form and manner prescribed by the State Tax Commission (Commission) with the assessing officer for the local assessing unit within the year the exemption was claimed. The county treasurer would have to cancel taxes subject to the Actís collection for any year in which the disabled veteran or surviving spouse was eligible for the exemption.

Under the bill, the exemption would remain in effect without subsequent reapplication until it was rescinded by the individual who was granted it or was denied by the assessor. An individual could rescind the exemption by filing a form rescinding the exemption with the local assessing unit within 45 days after the individual ceased to own or occupy the exempted property or the individual no longer met the qualifications under the Act for the exemption.

 

The bill would require a local assessing unit to develop and implement an audit program that included the audit of all information filed pertaining to an exemption. If property were determined to be ineligible for exemption because of an audit, the individual who was granted the exemption would be subject to repayment of additional taxes including interest to be paid as provided below.

 

The bill would allow an assessor to deny a new claim, or an existing claim following an audit. The assessor would have to notify the individual of the denial of the new or existing claim, the reason for the denial, and that the denial could be appealed to the Residential and Small Claims Division of the Tax Tribunal within 35 days of the notice. The assessor could deny a claim for exemption for the current year and for the three immediately preceding calendar tears.

 

If the tax roll were in the local tax collecting unitís possession, it would have to amend the tax roll to reflect the removal of the exemption. Within 30 days of the discovery date, the local treasurer would have to issue a corrected tax bill for any additional taxes with interest at the rate of 1.0% per month or fraction of a month computed from the date the taxes were last payable without interest.

 

If the tax roll were in the county treasurerís possession, it would have to amend the tax roll to reflect the removal of the exemption. Within 30 days of the discovery date, the county treasurer would have to issue a supplemental tax bill for any additional taxes with interest at the rate of 1.0% per month or fraction of a month computed from the date the taxes were last payable without interest.

 

Interest on any tax set forth in a corrected or supplemental tax bill would be issued at the rate of 1.0% per month or fraction of a month. Taxes levied in a corrected or supplemental tax bill would have to be returned as delinquent on March 1 in the year immediately succeeding the year in which the tax bill was issued.

 

Senate Bill 330

 

Under the bill, the exemption described above would remain in effect without subsequent reapplication until it was rescinded by the individual who was granted the exemption or was denied by the assessor. An individual could rescind the exemption by filing a form rescinding the exemption with the local assessing unit within 45 days after the individual ceased to own or occupy the exempted property or the individual no longer met the qualifications under the Act for the exemption.

 

The bill would allow a local assessing unit to develop and implement an audit program that included the audit of all information filed pertaining to an exemption not more than once every three years. If property were determined to be ineligible for exemption because of an audit, the individual who was granted the exemption would be subject to repayment of additional taxes including interest to be paid as provided below.

 

The bill would allow an assessor to deny a new claim, or an existing claim following an audit. The assessor would have to notify the individual of the denial of the new or existing claim, the reason for the denial, and that the denial could be appealed to the Residential and Small Claims Division of the Tax Tribunal within 35 days of the notice. The assessor could deny a claim for exemption for the current year and for the three immediately preceding calendar tears.

 

If the tax roll were in the local tax collecting unitís possession, it would have to amend the tax roll to reflect the removal of the exemption. Within 30 days of the discovery date, the local treasurer would have to issue a corrected tax bill for any additional taxes with interest at the rate of 1.0% per month or fraction of a month computed from the date the taxes were last payable without interest.

 

If the tax roll were in the county treasurerís possession, it would have to amend the tax roll to reflect the removal of the exemption. Within 30 days of the discovery date, the county treasurer would have to issue a supplemental tax bill for any additional taxes with interest at the rate of 1.0% per month or fraction of a month computed from the date the taxes were last payable without interest.

 

Interest on any tax set forth in a corrected or supplemental tax bill would be issued at the rate of 1.0% per month or fraction of a month. Taxes levied in a corrected or supplemental tax bill would have to be returned as delinquent on March 1 in the year immediately succeeding the year in which the tax bill was issued.

 

Senate Bill 364

 

Section 53b of the Act sets forth procedures under which qualified errors can be corrected upon appeal to a board of review, which must meet in July and December for this purpose. (As a rule, qualified errors are clerical mistakes affecting property assessments.)†

 

The Act includes in the definition of "qualified error" an issue beyond the control of a disabled veteran or his or her unremarried surviving spouse that causes a denial of an exemption for real property used and owned as a homestead by that disabled veteran or the veteranís surviving spouse. The Act specifies that an issue beyond control means an error made by the local tax collecting unit in the processing of a timely filed exemption affidavit or a delay in the determination by the United States Department of Veterans Affairs that a veteran is permanently and totally disabled because of military service and entitled to veteransí benefits at the rate of 100%.

 

The bill would include among the list of issues beyond the control of a disabled veteran or his or her unmarried surviving spouse a denial by the board of review of an exemption described above, for tax year 2023 only.

 

FISCAL IMPACT

 

Senate Bill 176 would make several changes to the exemption process. First, the bill would change the authority for approving and denying exceptions from the interpretation of current law. The Commission interprets the current language in Section 7b(1) as making the board of review responsible for approving and denying exemptions under the Section. Senate Bill 176 would eliminate the option to file an exemption claim with the supervisor of a local unit and would delegate the authority for approving and denying exemptions with the assessing officer. This shift in authority is not anticipated to have any fiscal impact.

 

Senate Bill 176 also would require local units to implement an audit program for the exemptions. These provisions would minimally increase local unit expenditures. However, to the extent that audits discovered improper exemption claims, the change would increase both


State and local property tax revenue by an unknown amount that would depend on the specific characteristics of any affected property and local millage rates.

 

Senate Bill 330 would create a new section in statute that would largely duplicate the audit program provisions in Senate Bill 176; however, the audit program under Senate Bill 330 would be optional, rather than mandatory. Similarly, the bill would specify that audits could not occur more frequently than every three years. The language effectively would permit a local unit to never conduct audits. For example, if a local unit opted to audit exemptions once every 100 years, the audit program would still meet the requirement that audits not occur more frequently than every three years. As a result, any fiscal impact associated with the audit provisions of Senate Bill 330 would be less than under the audit provision impacts of Senate Bill 176 because local units could opt not to establish an audit program and fewer audits would likely be performed.

 

If Senate Bills 176 and 330 were to be enacted as currently written, local units would be required to establish audit programs (the requirement under Senate Bill 176, although the conflict with the optional wording in Senate Bill 330 could create confusion) but any audits would be limited to occur no more frequently than every three years (the provisions of Senate Bill 330).

 

Senate Bill 364 would reduce State and local property tax revenue by a likely minimal amount. The bill would only allow a board of review to reconsider previous exemption denials made for the 2023 tax year and would eliminate any limitations on what aspects of the exemption request could be reconsidered. The bill would only have a fiscal impact if a previously denied exemption were to be approved upon reconsideration. The reconsidered exemption, if approved, would decrease State and local property tax revenue by an unknown amount that would depend on the specific characteristics of any affected property and local millage rates.

 

This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.