Bulletin 10 - Changes to Certain Exemptions as Required by PA 140 of 2003

Public Act (PA) 140 of 2003 was signed by Governor Granholm on July 31, 2003 with an effective date of January 1, 2004.

PA 140 of 2003 makes changes to certain already-existing exemptions and provides a new exemption for certain aircraft and their spare parts.

This bulletin will address these changes under the following headings:

1. The Exemption of Household Furnishings of a Fraternity, Sorority or Student Cooperative As Provided by MCL 211.9(g).

1. The Exemption of the Working Tools of a Mechanic As Provided by MCL 211.9(h).
2. The Exemption of the Personal Property Used by a Householder in the Operation of a Business in the Householder’s Dwelling or at One Other Location in the Unit Where the Householder Resides As Provided by MCL 211.9(k).
3. The Exemption of Certain Aircraft and Their Spare Parts As Provided by MCL 211.9(t).

PA 140 of 2003 changes the limit of the exemption for the working tools of a mechanic from $500 of State Equalized Value to $500 of Taxable Value. However, this change in the exemption occurs for the first time ON THE 2005 ASSESSMENT ROLL, not on the 2004 Assessment Roll. Most of PA 140 of 2003, including this change to the law, takes effect on January 1, 2004 which is too late for the change to be effective for the 2004 Assessment Roll.

PA 140 of 2003 changes the limit of the exemption for the personal property used by a householder in the operation of a business in the householder’s dwelling or at one other location in the unit in which the householder resides. This new law changes the limit from $500 of State Equalized Value to $500 of Taxable Value. However, this change in the exemption occurs for the first time ON THE 2005 ASSESSMENT ROLL, not on the 2004 Assessment Roll. Most of PA 140 of 2003, including this change to the law, takes effect on January 1, 2004 which is too late for the change to be effective for the 2004 Assessment Roll.

1. The Exemption of Household Furnishings of a Fraternity, Sorority or Student Cooperative As Provided by MCL 211.9(g).

   PA 140 of 2003 changes the limit of the exemption for the household furnishings, provisions, and fuel of certain fraternities, sororities, and student cooperative houses. This new law changes the limit from $5,000 of State Equalized Value to $5,000 of Taxable Value. However, this change in the exemption occurs for the first time ON THE 2005 ASSESSMENT ROLL, not on the 2004 Assessment Roll. Most of PA 140 of 2003, including this change to the law, takes effect on January 1, 2004 which is too late for the change to be effective for the 2004 assessment roll.

2. Exemption of the Working Tools of a Mechanic As Provided by MCL 211.9(h).
3. The Exemption of Personal Property Used by a Householder in the Operation of a Business in the Householder’s Dwelling or at One Other Location in the Unit Where the Householder Resides As Provided by MCL 211.9(k).
4. The Exemption of Certain Aircraft and Their Spare Parts As Provided by MCL 211.9(t).

In the past, aircraft have been exempt from property taxation provided that the aircraft were subject to the registration fee provided by MCL 259.77. This meant that certain aircraft which were not permitted to be registered were not exempt.

PA 140 of 2003 provides that the following aircraft are exempt from property taxation regardless of whether they are subject to the registration fee or not:

1. 1. Aircraft exempted from the registration provisions of the Aeronautics Code of the
      State of Michigan. The following aircraft fit this category:

a) An aircraft engaged in scheduled passenger service flying in interstate or foreign commerce or in that part of interstate or foreign commerce which is intrastate in character, and operating exclusively under the provisions of a federal certificate issued under 14 CFR Part 121.

b) An aircraft owned by the United States government.

c) An aircraft of a resident of another state or an aircraft of a resident of this state that is tied down, moored, hangared, or based within another state, having complied with the registration requirements of that state, and operating within this state for a period of not more than 90 days in a calendar year. This aircraft shall not engage in intrastate commercial activity within this state.

d) Aircraft owned by or registered to the United States, aircraft of the civil air patrol, or aircraft licensed by a foreign country with which the United States has reciprocal relations. This aircraft shall not engage in commercial activity within this state.

e) An aircraft which, in the opinion of the Michigan Aeronautics Commission, is in a condition that would reasonably preclude its operation during the registration period.

1. 1. Aircraft operating under the provisions of a certificate issued under 14 C.F.R.
      Part 121. These are primarily commercial aircraft used for scheduled passenger and freight service.

PA 140 of 2003 also exempts the spare parts for the aircraft named in paragraphs 1 and 2 above.

The new exemption discussed in paragraph D applies to taxes levied after December 31, 2000.