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State Tax Commission Communications
Critical Software Update
It has been brought to the State Tax Commission’s attention, that the assessing software pop-ups on Form 5278, Part 3 misstate the reporting requirements. It is our understanding this issue is being addressed by BS&A and will be fixed in the February 15th software update. Assessors are advised that they should follow the instructions on Form 5278, Affidavit and Statement for Eligible Manufacturing Personal Property and Essential Services Assessment, when inputting information in their BS&A software. Assessors should review the reporting of personal property subject to an extended Industrial Facilities Exemption Certificate (P.A. 198 of 1974, Section 11a, MCL 207.561a) on Form 5278 and make sure the costs are reported and inputted in their software in Part 2 and in Part 3, Section 2. Failure to install this software update and enter the required information in Part 2 may cause a loss in revenue to the local unit. Please ensure you have followed the Form 5278 instructions when inputting information in your software.
Electronic Filing of Form 5278
The State Tax Commission at their meeting on February 9, 2016 approved that the use of an electronic or facsimile signature on the Affidavit and Statement for Eligible Manufacturing Personal Property and Essential Services Assessment, Form 5278, be accepted by a local tax collecting unit using the same procedure prescribed by the Commission in Bulletin 19 of 2011.
Additionally, for the 2016 tax year, the Commission has directed assessors that the failure to indicate the appropriate title of the person certifying the Affidavit and Statement on Form 5278 should not result in a denial of the exemption or non-acceptance of Form 5278. The memorandum to the State Tax Commission and Bulletin 19 of 2011 are attached.
• Electronic Filing of Form 5278.pdf
Filing Deadline of February 22 for Form 632 and Form 5278
The State Tax Commission has indicated that for the 2016 tax year that the Personal Property Tax Statement (Form 632) and the Affidavit and Statement for Eligible Manufacturing Personal Property and Essential Services Assessment (Form 5278) must be filed and received with the local unit assessor no later than Monday, February 22, 2016 due to the fact February 20th falls on the weekend. Postmarks are not acceptable. Assessors are reminded they will need to transmit the information contained in Form 5278 to the Michigan Department of Treasury no later than April 1st pursuant to Bulletin 21 of 2015.
IFT Extended and Non-Extended
Assessors are advised to review the guidance issued by the Department of Treasury in the attached ESA topic on extended and non-extended IFT (PA 198) and PA 328 exemptions.
For more information about Essential Services Assessment (ESA), visit the ESA website at www.michigan.gov/esa.
• ESA Topic of the Week Extended or Non-Extended IFT and PA 328.pdf
Inputting From 5278
Assessors are advised that they should follow the instructions on Form 5278, Affidavit and Statement for Eligible Manufacturing Personal Property and Essential Services Assessment, when inputting information in their BS&A software. If a taxpayer has checked “yes” on Part 3, questions 1-7 on Form 5278, you will toggle the box on your assessing software next to questions 1-7. Failure to check “yes” or “no” in Part 3 is an incomplete filing and the form should not be accepted. Form 5278 must be filled out in its entirety. In its entirety means filling out all of Part 1 and any sections of Part 2 and Part 3 that are applicable to claiming the exemption. Any section not applicable may be left blank. Part 2 of the form is filled out and entered in your software in the same manner as the Personal Property Tax Statement, Form 632. Please read the attached ESA Topic “Form 5278 Filing Checklist” that the Department has issued. All Eligible Manufacturing Personal Property (EMPP) and Essential Services Assessment (ESA) questions can be sent directly to firstname.lastname@example.org. More information is also available at www.michigan.gov/esa.
Leased Equipment EMPP Reporting
Personal Property and the Essential Services Assessment, Form 5278:
"Leasing companies are not eligible to receive the EMP P exemption and may not use this form. Leased equipment is reported by the lessor on Form 632 Personal Property Statement, until such time as the personal property becomes exempt and is reported as EMPP in Part 3 of this Affidavit and Statement by the lessee."
Practically, this means that, for the 2016 year, EMPP placed in service during the years 2006 through 2012 will be listed, for information purposes only, by the Lessee on Form 5278, Part 2 under Section J and K and reported for in-service years 2005 and prior and 2013 and later on Part 3 for ESA purposes. The Lessee will pay the ESA on that leased equipment it reports on Form 5278 Part 3. The Lessor will report the equipment on Form 632 for the equipment placed in service during 2006 through 2012 and pay the Ad Valorem tax for those specific years.
Additional information is provided in the attached ESA Topic: Leased Equipment and is also available on the ESA website at www.michigan.gov/esa.
• ESA Topic Leased Equipment.pdf
Personal Property Forms 5277 and 5278
The State Tax Commission at their meeting on September 22, 2015 approved Form 5278, Affidavit and Statement for Eligible Manufacturing Personal Property and Essential Services Assessment, and Form 5277, Affidavit to Rescind Exemption of Eligible Manufacturing Personal Property Defined in MCL 211.9(m) and 211.9(n). Copies of these forms are attached below.
Beginning December 31, 2015 (for the 2016 assessment year) qualified new personal property and qualified previously existing personal property located on occupied real property is exempt from ad valorem taxation and is instead subject to the State Essential Services Assessment. Additionally, certain P.A. 198 (IFT) Property and New Personal Property (P.A. 328) are subject to the State Essential Services Assessment. To claim this exemption, a fully completed Form 5278 must be received by the Assessor of the local unit of government where the qualified personal property is located no later than February 20, 2016. Taxpayers should not complete this affidavit and statement unless the personal property meets the definition of eligible manufacturing personal property.
Property that was placed in service in 2006 through 2012 will still be reported as ad valorem personal property in Part 2 on Form 5278, the Affidavit and Statement for Eligible Manufacturing Personal Property and Essential Services Assessment. Property meeting the definitions of qualified new personal property and qualified previously existing personal property placed in service after 2012 and prior to 2006 will be exempt from ad valorem taxes and will instead pay the State Specific Essential Services Assessment.
Assessors are reminded that they are not required to mail Form 5278 to taxpayers. Taxpayers can obtain a copy from our website, www.michigan.gov/statetaxcommission, or www.michigan.gov/PPT. Assessors should ensure that Form 5278 is timely filed and fully completed by the property owner. Forms that are not fully completed should result in denial of the exemption. The Assessor should carefully evaluate the business activities of the claimant to ensure that they meet the statutory requirements of the Eligible Manufacturing Personal Property Exemption.
Assessors will have to enter all the Form 5278 information into the assessing software. BS&A is working on an update to their software to accommodate Form 5278. Assessors that do not have BS&A software and that have taxpayers claiming the personal property exemption will be provided with instructions at a later date. All data from Form 5278 must be entered and uploaded to BS&A for submission to the Department of Treasury no later than April 1st.
More information and training videos are being developed and will be available soon at www.michigan.gov/PPT. Specific questions and information regarding the Essential Services Assessment (ESA) can be found at www.michigan.gov/ESA. Additional questions should be sent via email to ESAQuestions@michigan.gov.
• Form 5278.pdf
• Form 5277.pdf
Personal Property Tax Information for 2016
This notice is being resent to correct any issues users may have experienced when opening the attached documents.
The State Tax Commission at their meeting on December 16, 2015 approved Bulletin 21 of 2015 regarding Key Points for Assessors Administering MCL 211.9m and MCL 211.9n Exemptions for the 2016 Tax Year and the Assessor Denial of Request for Exemption as Eligible Manufacturing Personal Property Defined in MCL 211.9m and MCL 211.9n Sample Form. Assessors are encouraged to sign up for the ESA ListServ at www.michigan.gov/esa for automated e-mail delivery of future ESA Topics or other ESA information released by the Michigan Department of Treasury.
The Commission also issued additional personal property tax guidance to assessors and approved a new Personal Property FAQ’s and Memorandum Regarding Calculating Taxable Value for Personal Property. All of these documents are attachments and will be available on our website tomorrow.
- Assessor Denial of Request for Exemption as EMPP Sample Form.pdf
- Personal Property Frequently Asked Questions December 2015.pdf
- Bulletin 21 - EMPP & ESA Information.pdf
- Memorandum Regarding Calculation Taxable Value for Personal Property.pdf
4 hr. Assessor Continuing Education Opportunities:
Staff from the Michigan Department of Treasury will be presenting Understanding Small Taxpayer and Eligible Manufacturing Personal Property Exemption and Essential Services Assessment Procedures to assessors at regional locations throughout the state starting in December. This four hour assessor continuing education course will provide assessors with information required to administer changes in the taxation of personal property. Included in the course will be an overview of the small business taxpayer exemption, the eligible manufacturing personal property (EMPP) exemption, and the Essential Services Assessment (ESA) and a detailed review of assessor’s responsibilities for these exemptions and the ESA assessment. These sessions are open to all assessors in the region.
- 13: Central Michigan, Mid-Michigan Association of Assessing Officers, Crowne Plaza, Lansing, Michigan, 12:30 pm EST -4:30 pm EST.
- 15: Northwest Lower Peninsula, Northwest Michigan Assessors Association, Fox Hill Event Center, 7640 Mackinaw Trail, Cadillac, Michigan, 10:00 am EST – 2:00 pm EST. Register for this session by emailing Molly Whetsone at email@example.com or calling 231-468-2977.
- 19: Southeast Lower Peninsula, Oakland County Association of Assessing Officers, Oakland County Commissioners Auditorium, 1200 North Telegraph Road, Pontiac, Michigan, 1:00 pm EST – 5:00 pm EST
- 21: Northeast Lower Peninsula, NorthEast Michigan Assessors Association, Arenac County, 1:00 pm EST – 5:00 pm EST. Register for this session by emailing Jessica Williams at firstname.lastname@example.org. Space is limited to 75 attendees.
- 25: Western Central Lower Peninsula, Kent County Association of Assessing Officers, Wisner Center, 2870 Jacksmith Ave. SE, Grand Rapids, Michigan, time 12:30 pm EST – 4:30 pm EST. Register for this session by emailing email@example.com or calling Jeff Miller at 616-726-8882 for further information. The registration deadline is Thursday January 21, 2016.
- 26: Southwest Lower Peninsula, Kalamazoo, St. Joseph, Berrien, Cass, Allegan, and Van Buren Counties, Van Buren Conference Center, 490 South Paw Paw Street, Lawrence, Michigan, 9:00 am EST -1:00 pm EST.
- 2: Eastern Lower Peninsula, Genesee County, MTA Administration and Training Facility, 1401 South Dort Highway, Flint, Michigan, 9:00 am EST -1:00 pm EST. Register for this session by firstname.lastname@example.org or calling Tony Oritz at (810)257-3053 for further information. Space is limited to 75 attendees.
The State Tax Commission and the Department of Treasury wish to thank the sponsoring organizations for their assistance in hosting these sessions.
Reporting of Idle & Obsolete Property Placed in Service Prior to 2006
Several questions have arisen regarding where idle and obsolete equipment reported on Form 2698 in the year 2005 or prior should be reported on the Form 5278. Idle and obsolete equipment placed in service in 2005 & prior is considered Qualified Previously Existing Personal Property under MCL 211.9n. Property placed in service prior to 2006 and after 2012 would be reported in Part 3 in the appropriate section (depending on if there is an IFT or PA 328 exemption) at the acquisition cost as defined in PA 92. Acquisition cost means the fair market value of the personal property at the time of acquisition by the first owner, including the cost of freight, sales tax, and installation, and other capitalized costs, except for capitalized interest.
Mandatory ESA Reporting Deadline Friday, April 1st
Beginning in 2016, Michigan law requires that assessors transmit all data from Form 5278, Affidavit and Statement for Eligible Manufacturing Personal Property and Essential Services Assessment, to the Department of Treasury no later than this Friday, April 1, 2016. Failure to submit the required report of ESA costs to the Department of Treasury by the April 1 deadline will impede the timely assessment of the ESA specific tax. Assessors should review the attached detailed reporting instructions in order to meet this statutory obligation. For additional ESA information, please visit www.michigan.gov/esa. If assessors have issues exporting or uploading the Form 5278 data through BS&A .Net software, please contact BS&A directly at (517)641-8900 or by email at Assessing@BSASoftware.com. Additionally, assessors are reminded that you can request a phone call from BS&A customer support. Within the BS&A .NET software program go to Help, Contact Customer Support, Request Support Phone Call. Please fill out the BS&A technical support request completely and BS&A will contact you as soon as possible.
The State Tax Commission has recently received a number of questions regarding how to handle instances where an assessor should have extended one or more personal property IFTs of a taxpayer because the personal property qualified as Eligible Manufacturing Personal Property (EMPP), but were instead mistakenly allowed to expire. Personal property subject to an IFT Certificate which was in effect on or after December 31, 2012 ( in effect for the 2013 assessment year) should have been extended under the provisions of MCL 207.561a if the property was EMPP.
In these situations, the assessor should file two MCL 211.154 petitions, one to place the personal property back on the IFT Roll and the 2nd to remove the personal property from the Ad Valorem Roll. If more than one IFT was mistakenly allowed to expire, separate petitions are required for each IFT but only one petition should be filed for correction of the ad valorem assessment. This will allow the property to be correctly assessed under the Essential Services Assessment. More information regarding the treatment of IFT Personal Property can be found on the ESA website at www.michigan.gov/esa. MCL 211.154 petitions and FAQ's can be found here: https://www.michigan.gov/taxes/property/ppt/esa