Action Required to Claim Michigan Property Tax Exemption

| 2/11/2016

Michigan businesses need to file Form 5278, “Affidavit and Statement for Eligible Manufacturing Personal Property and Essential Services Assessment,” by Feb. 22, 2016, to qualify for Michigan’s new property tax exemption for eligible manufacturing personal property (EMPP). For 2016, if 50 percent or more of the personal property located on a contiguous set of parcels is EMPP, then all of the personal property placed in service before Jan. 1, 2006, and after Dec. 31, 2012, will be exempt from property tax. In 2016, businesses will continue to pay property tax on EMPP placed in service between Jan. 1, 2006, and Dec. 31, 2012.

EMPP encompasses all personal property located on occupied real property if that personal property is used predominantly in industrial processing or direct integrated support. Direct integrated support includes research and development, testing and quality control, engineering, receiving or storing equipment and materials, storing finished goods inventory, and sorting, distributing, or sequencing functions.

Taxpayers that qualify for this new exemption must report on Form 5278 all personal property assets, including those that don’t qualify for the exemption because they were installed between Jan. 1, 2006, and Dec. 31, 2012. Form 5278 must be filed for each personal property parcel that qualifies for exemption. In addition, taxpayers will not need to file Michigan Form 632, “Michigan Personal Property Tax Return,” for property reported on Form 5278.

Any EMPP that is exempt from the personal property tax will be subject to an essential services assessment (ESA) imposed by Michigan. The rate of the ESA will be lower than the current property tax rates. The Michigan Department of Treasury will provide by May 1 an electronic statement for calculating the assessment. Taxpayers will have until Aug. 15 to electronically file the statement and submit payment.

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