Winning Back-Office Strategies to Boost Your Business Agility
VIEWpoint Issue 1 | 2023
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Taking effect this year is a set of new personal property tax (PPT) amendments stemming from the reform movement Michigan voters put into motion in 2014. The reform includes two major provisions shifting small taxpayer exemption measurements and updating the definition of eligible manufacturing personal property. Beginning the phase-in period in 2014, the provisions will be fully implemented on this year’s PPT returns due on Feb. 20.
Small business exemption began for the 2014 tax year and allowed businesses that have industrial and personal property with a true cash value of less than $80,000 as of Dec. 31 of the preceding year in a particular assessing unit to be exempt from PPT. In order to claim the exemption, the business must file an affidavit for exemption on an annual basis by Feb. 10 with local taxing agencies.
The PPT on industrial and commercial property originally acted as an annual business tax imposed by municipalities on property that was not part of a structure, including machinery, equipment and furniture. The reform’s seven-year phase-out of taxable property includes two segments:
Manufacturers are not the only ones that can benefit from this exemption. Construction contractors can qualify if they have greater than 50 percent industrial processing components (crushers, recycling equipment, etc.) in their operations.
To claim the exemption the owner must file a Form 5278, Affidavit and Statement for Eligible Manufacturing Personal Property and Essential Services Assessment, on an annual basis by Feb. 20 with local taxing agencies.
As the February filing deadlines quickly approach, it’s important to talk with your CPA to provide appropriate information needed to file your PPT return and determine what, if any, exemptions your business qualifies for.
Not filing your PPT return or affidavit on a timely basis, can result in unwanted consequences, such as:
Contact Doeren Mayhew’s tax advisors to help you navigate Michigan’s PPT requirements and provide a timely, accurate property assessment to help minimize your tax liability this year.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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