Michigan Attorney General Sends Notice to Assessors and Business Property Owners Claiming Commercial Property Is Wrongly Classified as Industrial Property

The Michigan Attorney General’s Office filed over 10,000 classification appeals before the Michigan Tax Tribunal in late 2009 and is now in the process of serving notice of those claims against local assessors and business property owners.

The State of Michigan is claiming that local assessors have improperly assessed industrial property as commercial and is challenging all industrial classifications before the Michigan Tax Tribunal. Once served, the taxpayer has a limited time to respond.

The tax rate for commercial and industrial property is usually close to being the same so assessors have not made a significant effort in differentiating between the two. Michigan now offers a credit on the Michigan Business Tax (“MBT”) return for taxes assessed for industrial personal property. The local assessing district gets no benefit or burden from the MBT credit but there may be other allocation factors that persuade an assessor to classify property as industrial rather then commercial. As a result of these discrepancies in classification, the State is making the assumption that all industrial classified property is in fact commercial in order to stave off a loss in tax revenue.

If you are served with a notice from the Attorney General’s office please contact one of our Michigan tax attorneys at (313) 496-1200 for a consultation on how we can assist you.