ESA Topic: Claiming the EMPP Exemption

On December 23, 2021, Governor Whitmer signed into law Public Acts 153 through 156, amending the General Property Tax Act of 1893, the State Essential Services Act of 2014 and the Alternate State Essential Services Act of 2014.

These Acts amend the requirement for taxpayers to claim the exemption of eligible manufacturing personal property (EMPP) on an annual basis and instead allow taxpayers to claim the exemption only in the first year that the property is eligible. The amendatory acts allow the Department of Treasury to annually generate Essential Services Assessment (ESA) statements utilizing information from the immediately preceding year's ESA Statement.

Carryover of EMPP Exemption from the Previous Year

Beginning in 2024, parcels that received the EMPP exemption in the immediately preceding year carry forward the exemption in each subsequent year until the property becomes ineligible for the exemption. If the EMPP was exempt in the previous assessment year, a Combined Document (Form 5278) does not need to be filed for the EMPP to be exempt for the current assessment year.

Any parcel that received the EMPP exemption in 2025 is exempt in 2026. No Combined Document (Form 5278) should be filed in 2026 for a parcel that received the exemption in 2025.

A Combined Document (Form 5278) should not be filed to report additions or disposals on an EMPP parcel. Taxpayers will report the addition or removal of property from each of their EMPP parcels on their ESA Statement filed electronically with the Department of Treasury through the Michigan Treasury Online (MTO) system or via approved eFile provider.

Taxpayers are required to report any parcel that no longer qualifies for the EMPP exemption. A parcel may cease to qualify because the property no longer meets the definition of “eligible manufacturing personal property” or because the parcel has no value (e.g. all equipment has been removed, the parcel is subject to an expired IFT certificate, etc.).  To report a parcel that no longer qualifies for the exemption, Form 5277 must be filed with the assessor in which the parcel is reported by February 20, 2026. Assessors must report receipt of any Form 5277 in their CAMA software.

The assessor will be required to remove the exemption from that parcel from the assessment roll for that year and inform Treasury of the action no later than April 1.

First Year Exemption Claims

To receive the EMPP exemption on a parcel that was not exempt as EMPP in the immediately preceding assessment year (e.g. for 2026, it was not exempt as EMPP in 2025), it is necessary to file the Combined Document (Form 5278) with the assessor of the local unit in which the property is located. The deadline to file is February 20, 2026. The exemption claim is considered filed timely if it is postmarked on or before February 20. If the deadline to file with the assessor is missed, the Combined Document (Form 5278) may be filed directly with the March Board of Review prior to its adjournment.

Because the EMPP exemption is parcel specific, it is necessary to file a Combined Document (Form 5278) for any new parcel on which the EMPP exemption is claimed that did not previously receive it. This is true even if a taxpayer already receives the EMPP exemption on parcels in the same local unit or elsewhere. If a parcel is not properly claimed, it is not entitled to the EMPP exemption and should be assessed on the ad valorem roll.

If a parcel was not exempt in 2025 and no Combined Document (Form 5278) is timely filed with either the assessor or March Board of Review, the parcel is ineligible for the exemption in 2026 and must be assessed on the local roll.

Essential Services Assessment

Changes made to Section 7 of the State Essential Services Assessment Act allow Treasury, beginning in 2026, to generate current year ESA Statements utilizing acquisition costs reported on the eligible claimant's previous year ESA Statement.

Treasury is required to generate ESA statements by May 1 each year and will be utilizing account and parcel information from the previous year to do so. Assessors will be required to submit information from any Combined Document (Form 5278) received for new parcels or Affidavit for Rescission (5277) filed to remove parcels that no longer qualify for the exemption. This information must be submitted by April 1. Treasury will add new parcels to and remove rescinded parcels from the ESA Statement for taxpayers to review and certify.

All additions or disposals of equipment must be reported on the ESA Statement when it is certified. If certifying via MTO, it will be necessary for eligible claimants to enter acquisition costs in the construction in progress and most recent year fields for each parcel.  The ESA statement cannot be certified and submitted if any field is left blank.

There are no changes to dates pertaining to certification of ESA Statements and payment of ESA liability. Eligible Claimants will have from May 1 through August 15 to review and certify their ESA Statements and electronically pay ESA in full without incurring late payment penalty. Late Payment Penalty remains 3% per month or part of a month in which ESA liability is not paid in full. Failure to pay ESA liability in full by April 15 of the year immediately following the assessment year will result in an order of recission of the EMPP exemption being issued for any affected parcel(s).

For additional ESA information, links to statutes, forms, and to sign up for the ESA List Serv, please visit www.michigan.gov/esa.

This information constitutes an interpretation of one or more statutes administered by the Bureau of Local Government and School Services and not legal advice.  As the interpretation reached in these examples are limited to the facts provided, any variation in those facts might result in a different interpretation being reached.   Therefore, a taxpayer may wish to consult counsel before proceeding in this matter.