Does my property qualify for the Eligible Manufacturing Personal Property (EMPP) exemption as “Industrial Processing” or “Direct Integrated Support”?

Without physically visiting a property and reviewing financial information, the Department cannot comment on whether a specific parcel qualifies for the exemption. 

Taxpayers and assessors are reminded that personal property meets the definition of EMPP if “all personal property located on occupied real property if that personal property is predominantly used in industrial processing or direct integrated support.” 

Therefore:

1. The personal property must be located on “occupied real property” or, in the case of construction in progress, be part of a new facility that is not yet in operation,
2. The predominant use of all of the personal property located on the occupied real property must be:
   1. Industrial processing and/or
   2. Direct integrated support

If the property meets this definition, it is EMPP. Beginning in 2023, all EMPP is exempt regardless of the year in which it was acquired by the first owner. 

How do I report Idle, Obsolete, and Surplus Equipment that is also EMPP?

The definition of Eligible Manufacturing Personal Property includes all personal property on occupied real property. Idle, obsolete, and surplus equipment would therefore be reported along with all other personal property on the parcel when both calculating the predominant use of the personal property and reporting the acquisition costs on Form 5278. Note that if the majority of equipment is idle, obsolete, and surplus property, it may affect eligibility for the exemption as the predominant use must be industrial processing or direct integrated support.

When reporting the acquisition costs on the Combined Document (Form 5278), the true cash value at the time of acquisition by the first owner needs to be reported in Part 2. There is no reduction of acquisition cost for property that is idle, obsolete, or surplus.

How do I report leasehold improvements that are also EMPP?

The state Tax Commission is responsible for issuing guidance on whether leasehold improvements shall be reported as personal property or real property. Eligible claimants should ask the assessor in the local unit in which the property is located to determine how leasehold improvements are to be reported.  If leasehold improvements are to be reported as personal property, the true cash value at the time of acquisition by the first owner should be reported in the appropriate year in part 2 of Form 5278.

If leasehold improvements are to be reported as real property, they do not qualify for the exemption.

I did not file Form 5278 to claim the EMPP exemption prior to the deadline of 2/20/24 (on a new or previously unclaimed parcel), what can I do to receive the exemption for this parcel in 2024?

Statute is clear to receive the Eligible Manufacturing Personal Property (EMPP) exemption, the exemption must be properly claimed. This means that the claim must be made by filing the Combined Document (Form 5278) with the assessor of the local unit in which the property is located by February 20 or to the March Board of Review prior to its adjournment. There is no provision for either the local unit or Department of Treasury to grant the exemption if the Combined Document (Form 5278) was not delivered by these dates. 

If the exemption was not granted in 2024, the exemption may be claimed in 2025 (or in future years) by timely filing the Combined Document (Form 5278) with the local unit in which the property is located.

Because of Covid- 19, I did not file the Combined Document (Form 5278) for 2021, can I claim the exemption now?

PA 211 of 2023 allows for taxpayers that, due to the Covid-19 pandemic, were not able to properly file a Combined Document (Form 5278) to claim the exemption. It does not allow taxpayers to make a correction to a claim that was previously filed.

Filing will entail sending a 2021 Combined Document (Form 5278) and an affidavit of qualification to the STC.  Treasury and the State Tax Commission are still working on procedures and guidance and will post it and the forms to the ESA and STC websites closer to the February 13 effective date of the act.

I heard that you only have to claim the exemption one time and it then carries on year to year, is that true?

Public Acts 153 through 156 of 2021 made changes to the way that the EMPP exemption is claimed and ESA Statements are generated. As a result of those acts, it will be necessary to file the Combined Document (Form 5278) in 2022 and 2023 if you wish to claim the exemption in those years. However, beginning in 2024 a Combined Document (Form 5278) will not be necessary if the exemption was claimed in 2023. A Combined Document (Form 5278) will only be required if a taxpayer wishes to claim the exemption on a new or previously unclaimed parcel. The exemption will remain on the parcel until it is rescinded by the taxpayer, local unit of government, or Treasury.

I received the EMPP exemption in 2023, what do I need to do in 2024 with the new changes that were made?

If the EMPP exemption was granted in 2023, no Combined Document (Form 5278) is required to receive the exemption in 2024 or later years. 

If you want to add a parcel that was not certified on the 2023 Statement (a new parcel or a parcel that did not receive the EMPP exemption in 2023), file a Combined Document (Form 5278) for that parcel with the local unit by February 20.  If the assessor grants the exemption for that parcel, they will report the information to Treasury.  Treasury will add the parcel information as reported by the assessor on the ESA Statement.

Statements will be available in Michigan Treasury Online (MTO) by May 1.  In MTO, Construction in Progress (CIP) and 2023 acquisition costs will be blank.  You will need to report these values in MTO before certifying.  Any additions or reductions in value will be made by the taxpayer in MTO.  You will not need to file a Form 5278 with the local unit for any changes.  The local unit will be notified of any additions or reductions in value.

If I do not have to file a Combined Document (Form 5278) with the assessor in 2024, why do I have to certify my statement in MTO?

In certifying via Michigan Treasury Online (MTO), it will be necessary to annually review each parcel on the ESA Statement.  Beginning in 2024, Construction in Progress (CIP) and the most recent year will be blank and require entry of a value before the return can be submitted.  MTO will prompt the removal of parcels with $0 acquisition costs reported.

I have a parcel that no longer exists or no longer qualifies, what do I do?

File an Affidavit to Rescind Eligible Manufacturing Personal Property Exemption (Form 5277) with the assessor of the local unit in which the personal property is located by February 20.  A Personal Property Statement (L-4175/632) must be included with Form 5277.  The assessor will report the information to Treasury.  Treasury will remove the parcel from the ESA Statement prior to May 1.

I have a new parcel or a parcel that did not receive the EMPP exemption in 2023, what do I file in 2024?

File a Combined Document (Form 5278) with the assessor of the local unit in which the personal property is located by February 20.  The assessor will report the information to Treasury and Treasury will add the parcel information as reported by the assessor on the ESA statement.