Personal Property Tax Deadline

Posted by Lake Superior Community Partnership on February 5, 2015

As you may recall, I wrote a column back in July regarding proposal 1.  We are excited that this proposal passed in August! The adopted Legislature will:

• Reduce the state use tax and replace with a local community stabilization share of the tax for the purpose of modernizing the tax system to help small business grow and create jobs in Michigan.
• Require Local Community Stabilization Authority to provide revenue to local governments dedicated for local purposes, including police safety, fire protection, and ambulance emergency services.
• Increase portion of state use tax dedicated for aid to local school districts.
• Prohibit Authority from increasing taxes.
• Prohibit total use tax rate from exceeding constitutional 6% limitation.

Prior to the passage on proposal 1, all Michigan businesses had to pay property tax on every piece of equipment they owned.  The reality of the issue was that all businesses paid not only the 6% sales tax at the time of purchase, but an extra personal property tax for EVERY YEAR they owned the equipment.  The passage of proposal 1 immediately eliminated personal property taxes on most small businesses and phases out the tax for larger businesses over the next nine years.

One of the most important parts of this landmark change is the protection of community funding.  Previously, many communities relied on personal property tax revenue to help fund essential services such as school and emergency services, despite the unreliability of the funding source.  The referendum replaces that funding with the far more stable State Use Tax.

The LSCP board of directors spent many hours researching this issue before ultimately determining that it was the best decision for businesses in Marquette County and took a formal stance in supporting proposal 1.  We believe that the elimination of the personal property tax removes the unfair double tax for local small businesses and creates a stable, reliable funding system to assist our communities in paying for essential services.  This reform reduces compliance and administrative costs for businesses and especially helps manufacturers who rely on expensive tools and equipment.

Now that this proposal has passed, we want to ensure that Marquette County businesses are aware of the deadlines and what they’ll need to do to benefit.  On our website, www.marquette.org, you’ll find a memo from the Michigan Manufacturers Association (MMA), a fact sheet from the Michigan Economic Developers Association (MEDA) and the State Tax Commission’s recently adopted form 5201 and the Department of Treasury’s Affidavit form 5076 that will help you navigate this new reform.

Last year was the first year for taxpayers to obtain a Michigan property tax exemption if the value of their personal property in a jurisdiction was less than $80,000 (taking into account property owned by related entities). This year’s exemption must be claimed by providing the assessor with the affidavit Form 5076 by February 10, 2015.

Legislation exempting Eligible Manufacturing Personal Property (EMPP) from property taxation also requires action in February 2015 – even though the exemption is phased in beginning in 2016.  On their 2015 personal property statements, taxpayers should disclose their intent to utilize the EMPP.

This is a great time to contact your financial planner or accountant and ask them to assist you in making the most of this tax elimination.  Again, visit our website for more information on this reform or contact the LSCP if you need assistance (lscp@marquette.org, 906.226.6591 or www.marquette.org).

Amy Clickner, LSCP CEO, writes a bi-weekly column for the Mining Journal.