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Numbered Letter 1994-10 (Revised)

Numbered Letter 1994-10 (Revised)

Effective Date: July 8, 1994 (Revised Date March 1, 2024)

Summary

For your information and guidance, following is a copy of information mailed to County, City, and Township Treasurers.

State Education Tax (SET) Collection and Reporting Procedures

Pursuant to 1993 PA 331, being Michigan Compiled Laws (MCL) 211.903(1), Beginning in 1994, except as otherwise provided in subsections (2) and (3), there is levied a state education tax on all property not exempt by law from ad valorem property taxes or not subject to a tax under 1905 PA 282, MCL 207.1 to 207.21, at a rate of 6 mills.

The adoption of Proposal A by the electorate on March 15, 1994, resulted in a State Education Tax (SET) of six mills for school operating purposes on all property not exempt by law from ad valorem property taxes.

  1. MCL 211.905 (2) states that beginning in 2003, the tax levied under this act shall be collected under the provisions of the general property tax act in a summer levy and shall be distributed as provided in this act. Except as otherwise provided in subsection (3) and section 5b, the tax levied under this act shall be collected by each city and township.
  2. City and township treasurers will distribute the SET in accordance with current distribution agreements or the required statutory provisions of MCL 211.43(3), whichever distribution dates occur first.  A city or township shall retain the interest earned on the deposits of SET collections while in the possession of the city or township treasurer.  (See section 211.43c added by Enrolled HB 5345)
  3. Local units will deposit with the county treasurer, the 1% per month interest collected on the late payment of the summer levy of the SET as provided by local charter, ordinance or sections 1611(4) and 1612(2) of the School Code.  [MCL 380.1611(4) and 380.1612(2)]
  4. City and township treasurers will deposit the SET collections with the county treasurer.  See MCL 211.42.  Enrolled HB 5018 provides that the county treasurer will remit, to the State Treasurer, the SET collections and the 1% per month interest levied on the late summer tax collections.  Distributions shall be by the fifteenth of the month for the collections on hand on or before the last day of the preceding month and by the first of the month for the collections on hand on or before the fifteenth day of the immediately preceding month.  The county (credit to the general fund) will retain the interest earned on the deposit of SET collections while in the possession of the county treasurer.
  5. Delinquent SET will be returned to the county treasurer the same as all other taxes.  [General Property Tax Act (MCL 211.87b)] Counties will pay the State Treasurer the SET from the delinquent tax revolving fund.  Local units that by City Charter collect all delinquent property taxes are required (provision added by MCL 211.89a) (PA 189 of 1994--Enrolled SB 882) to return the delinquent SET to the county treasurer.  The county will pay the delinquent SET from the delinquent tax revolving fund to the State Treasurer in the same manner as other delinquent real property taxes.
  6. If the SET becomes uncollectible after the county treasurer has paid the State from the county delinquent tax revolving fund, the county treasurer may offset uncollectible delinquent taxes against collections of the State Education Tax received by the county and owed to the state.  (See MCL 211.87b as amended by PA 189 of 1994--Enrolled SB 882)
  7. City and Township treasurers must have a surety bond for the collection of SET as required by section 43(1) of the General Property Tax Act.  Surety bond coverage may consist of:
    1. A surety bond purchased by the city or township, payable to the county, for the total amount of the tax levy, including the SET; or
    2. The township treasurer's surety bond recorded by the township clerk and on file with the township supervisor, when the supervisor and county treasurer determine that this surety bond is adequate and sufficient to safeguard the proper accounting of the state, county and school taxes; or
    3. A corporate surety bond approved and purchased by the county treasurer from a surety company authorized to transact business under the laws of this state.  This bond is sufficient when the coverage equals 40% of the state, county, and school taxes to be collected.  The premium for this bond is paid by the county treasurer from the general fund of the county.  The county has the option of billing each district school board afforded protection by the bond.  This statue does not authorize charging a portion of the premium to the township or state for protection of the township or state taxes.
  8. County treasurers may mail or use a method of electronic transfer for remitting SET to the State Treasurer.  County treasurers shall use account number 228.01 titled "Due State of Michigan--State Education Tax" to account for the collection and remittance of SET.
  9. Sections MCL 211.7cc, 211.7dd and 211.7ee are added to the General Property Tax Act by Enrolled HB 5345.  These sections specify the eligibility for and procedures for filing a homestead or qualified agricultural property affidavit, defines various words and phrases, and the denial and appeal procedures. 

If we may be of further assistance, call (517) 335-7469 or write our office at Michigan Department of Treasury, LAFD, P.O. Box 30728, Lansing, Michigan 48909-8228 or email our office at TreasLocalGov@michigan.gov.