A plan to prevent big box stores from paying less in property taxes may be gaining steam in the Legislature after the House approved the measure, which supporters say will lead to fairer tax evaluations. Supporters say the measure is supposed to ensure property taxes are assessed more equitably for large retail stores. It passed the House by a wide margin despite opposition from big business interests such as the Michigan Chamber of Commerce and the Michigan Retailers Association. Opponents say the legislation would complicate the tax appeal process, increase the cost of appeals and violate a state constitutional requirement that property be valued uniformly.
Major changes in Michigan Business Personal Property law provide an opportunity for manufacturers to significantly reduce their property taxes. The Michigan Department of Treasury indicates that many manufacturers failed to qualify for the new Eligible Manufacturing Personal Property (EMPP) Exemption due to the complexity of filing.
If you have Industrial Facility Exemption (IFT) returns that have been rejected, the IFT will be revoked if not corrected by the May 31, 2016 deadline. There is still time to file the required forms, but you must act quickly. If you are a manufacturer and are unsure of your exemption status, please contact us today to see how we can assist.
The hotel building boom continues in the U.S., as a total of 103,230 rooms within 865 hotels are currently under construction and scheduled to open through the course of 2016, according to hotel research firm STR. The industry continues to break records on both the demand and revenue side, and developers are boosting investments to keep up with the surging demand. The 1.5% uptick in rooms opening this year is still below the long-term annual average of 1.9%, says Jan Freitag, STR’s senior vice president of lodging insights. But building activity has dramatically increased, with 21% more rooms under construction than a year ago.
Today the Michigan House Tax Policy committee advanced legislation that would provide large tax breaks to cloud-computing data center companies. The tax exemptions were requested by Nevada-based company Switch, who announced it will convert the former Steelcase pyramid into a data center that will result in a $5 billion investment and 1,000 new jobs over the next 10 years if the series of bills are approved. Three competing bill packages have been introduced in the House and Senate, and each would exempt "data centers" from sales, use and personal property taxes. It also would exempt "co-located businesses," or clients of the data centers, from those taxes. Some of Switch's clients include companies like Amazon, eBay and Intel.
Michigan lawmakers from both parties introduced bills this week aimed at stopping a common valuation method they say gives “unfair property tax breaks” to big box stores. According to the Detroit Free Press, local governments across the state say they are losing millions of dollars in taxes because big box stores are unfairly getting their assessments slashed by using the "dark store" theory in appeals. However, big box store owners uphold this is an appropriate valuation method, arguing that since they wouldn't sell their stores to other retailers, assessors should look at sales of stores that have gone out of business and are vacant, since that's the only way they would ever come on the market. The 'dark store' approach to determining value has been upheld by the Michigan Tax Tribunal and state courts.
Once the worst performing major market in the country, Detroit's office market is finally gaining momentum. Amazon and Lear Corp. both announced plans to expand in the city’s Central Business District, and will bring with them an influx of high-tech workers. According to the National Real Estate Investor, Southfield, Mich.-based automotive supplier Lear Corp. has purchased a historic 50,000-sq.-ft. building at 119 State St., and Amazon is adding multiple floors to its existing leased space at 150 W. Jefferson. Michigan is a rapidly growing technology corridor, and Detroit is enjoying the same movement that’s happening in most major U.S. markets, with Millennials wanting to live, work and shop in a major urban area.
A bipartisan group of Michigan lawmakers say they’ll make a major push in the fall to end special 'property tax discounts' given to big box stores. State Rep. John Kivela (D-Marquette) says when big box stores appeal their property tax assessments, the Michigan Tax Tribunal will treat the buildings as if they’re vacant in order to give the stores a big discount. Kivela says a lot of the stores are able to reduce their taxable value from from 60 to 70 dollars a square foot to 25, but the same rules aren't being applied to locally-owned businesses.
Despite Michigan voters overwhelmingly approving Proposal 1 last month, which phases out the business personal property tax, business lobbyists are pushing for further business tax reform. While Prop 1 was a major accomplishment for the state, many people don't realize that large non-manufacturing companies, including major retailers such as Meijer Inc., big legal and accounting firms and utilities, were not covered by Proposal 1 and will continue paying the tax on their office equipment. That will generate roughly $400 million a year for local governments, according to an estimate from the state House Fiscal Agency. The new legislation opens the door to further reform, as those business not included in Prop 1 will eventually want relief from the tax as well.