Sixarp, LLC v Byron Township: Victory for Taxpayers
The Tax Tribunal Will Decide a Manufacturing Exemption Appeal Despite No Board of Review Appearance
A taxpayer’s appeal to the Tax Tribunal was proper, although the taxpayer did not appear before the March Board of Review (the board), according to a published Michigan Court of Appeals opinion issued August 22, 2023.
Jackie Cook, Partner and Tax Group Lead at Novara Law, and attorney Kim Cloud represented the taxpayer in this matter involving a legal issue of first impression. They were pleased that the opinion was published, making the holding binding for other Michigan taxpayers.
In Sixarp, LLC v Byron Township, the taxpayer submitted an application for the eligible manufacturing personal property tax (EMPP) exemption. When the Township denied the exemption, representatives of the taxpayer reached out to the assessor for more information about how to protest the denial to the board. The assessor did not provide a hearing date, a deadline for filing the appeal, or the board’s meeting schedule. He also failed to advise the taxpayer that they must refile the exemption application with the board. Although the Township published in the newspaper that the board would accept appointments through March 10, the board closed its meetings on March 9. The Township rejected the taxpayer’s board appeal received on March 10. Despite not appearing before the board, the taxpayer appealed to the Tax Tribunal. The Tax Tribunal dismissed the taxpayer’s appeal, holding it did not have jurisdiction as the taxpayer did not first protest to the board. The taxpayer appealed to the Michigan Court of Appeals.
When an assessor denies an EMPP exemption, the assessor must notify “the person that filed the form in writing of the reason for the denial and advising the person that the denial, shall be appealed to the board of review under section 30 by filing” the exemption application. MCL 211.9m and 211.9n. If the taxpayer protests to the board, and the board denies the exemption, then the taxpayer may appeal the board’s denial to the Tax Tribunal. MCL 211.9m(2)(c).
The Court of Appeals held that the Township’s published board meeting dates were confusing and contradictory. The Township’s assessor also failed to advise the taxpayer about how and when to appear before the board. Because the Township failed to comply with its statutory obligations, the Court of Appeals held that the taxpayer may bypass the requirement that it first protest to the board before appealing to the Tax Tribunal. The denial notice did not “adequately inform [the taxpayer] of the time or manner for appealing the denial.” The Township’s actions “effectively prevented [the taxpayer] from complying with the requirements for perfecting its appeal before the [board].”
The Praxis opinion is published, so it puts to rest an issue that may arise in other manufacturing exemption cases: “In instances of inadequate notice, this Court may waive the protest requirement before the Board of Review and allow the case to proceed before the MTT.”
The Court noted that its holding preserves the taxpayer’s constitutional right to due process, protecting a taxpayer’s right to have a day in court. The taxpayer had a property interest at stake, deserving of due process protection. And because the Township’s violation of the statutory notice requirement impacted the taxpayer’s right to due process, the Tax Tribunal is vested with jurisdiction to remedy the due process violation despite the taxpayer not protesting to the board first.
Taxpayers in Michigan should remain vigilant in reviewing all tax assessments to ensure they comply with any requirements for protesting the assessments. However, if a taxpayer fails to protest an assessment on time because the notice from the taxing authority was defective, they should consult an attorney to discuss appealing options.
If you have any questions on this matter, please contact us.