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A Better Partnership
May 21, 2014

COA finds assessor’s error in rescinding principal residence exemption does not prevent collection of taxes

The Court of Appeals, in Marie De Lamielleure Trust v. Department of Treasury, determined the taxpayer’s property was not exempt under principal residence exemption (“PRE”) due to a local assessor’s failure to rescind the exemption.  The original property owner Marie De Lamielluere had claimed a PRE and quitclaimed the property in question to herself as trustee.  After her death, the trustee filed a request with the local assessor to rescind the PRE as required under MCL 211.7cc(5).  Although he received the recession request, the assessor incorrectly concluded that the PRE did not have to be removed until the property was sold.  Subsequently the assessor audited the taxpayer and determined the property was not eligible for the PRE for tax years 2005-2007.  The Michigan Tax Tribunal agreed with the taxpayer, finding the taxpayer could claim the exemption for the years in which the assessor had erred.
The Court of Appeals, reversing the Michigan Tax Tribunal, found that the plain language of the applicable sections of the General Property Tax Act, MCL 211.1 et seq. provided the procedures and remedies for when an assessor fails to rescind a PRE.  Under MCL 211.7cc(8) and (15) the assessor must remove the exemption in the year in which the taxpayer files the request, and if the assessor fails to remove the exemption, the Department of Treasury may waive interest or penalties.  The Court disagreed with the taxpayer that Mikelonis v. Department of Treasury (an unpublished Court of Appeals opinion), which indicated MCL 211.7cc(8) only applies when a taxpayer has “claimed” a PRE, was controlling.  Instead, the Court reasoned, unlike the taxpayer in Mikelonis, De Lamielleure had claimed the PRE during her lifetime.  Finally, the Court stated that equitable principles would not apply to estop the Department of Treasury from assessing taxes, even though the failure to assess taxes was due to the assessor’s errors. MCL 211.7cc, the Court indicated, sets forth the sole procedures for rescinding a PRE and further the Michigan Tax Tribunal does not have equitable powers.  Accordingly, the assessor properly corrected the error under MCL 211.7cc and the exemption did not apply during the years in question.

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