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Personal Property Appeals

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Steven H. Lasher
Foster Swift Municipal Law News: MTA Edition
January 2010

The Michigan Tax Tribunal recently addressed the issue of whether it was proper for an appraiser to use Internet sources to determine the value of personal property. In Ferndale Laboratories, Inc v City of Ferndale, Docket No. 315338 & 329408, 16 MTT 680 (2009), petitioner argued that the city overvalued his personal property, which included furniture, fixtures, machinery and equipment, and computer equipment, when the city used the STC Manual and multiplier methodology to determine the personal property’s market value instead of determining the specific assets’ true cash value from market sources.

Petitioner’s appraiser testified that he only used the cost less depreciation method to value special purpose properties, defined as "new properties that don’t have a market value because people hold onto them and use new items so they are not traded actively." To value most of the personal property, the appraiser used the market data approach. Specifically, the appraiser visited e-commerce sites or called the manufacturer, seller or dealer and asked for a price to determine the value of the personal property. He then made any necessary adjustments for differences in the condition between the petitioner’s personal property and comparable personal property. The appraiser explained that the use of the Internet allows an appraiser to quickly and efficiently gather a large amount of reliable data. He also stressed that "the ability to print out the tangible documentation adds to the credibility." Respondent argued that appraisers should only visit auction sites, such as E-bay, if that method has become commonplace in the assessment jurisdiction.

The Tribunal held that the use of e-commerce sites to determine market value is an updated and reliable valuation method. The Tribunal emphasized that this method is especially appropriate given the common definition of "value" as "the monetary worth of a property, good, or service to buyers and sellers at a given time."

The Tribunal concluded that petitioner presented a good market approach to value for the personal property because petitioner’s appraiser did not "randomly select depreciation for an entire classification of equipment." Instead, the appraiser analyzed the unique qualities of each asset and selected a comparable counterpart to determine the asset’s value. In contrast, the Tribunal explained that the STC Multiplier method is "better employed as a mass appraisal technique for its uniformity of result and ease of administration."

The lesson from this case is simply that the Tax Tribunal will not automatically accept the STC multipliers as the best evidence in a personal property tax appeal, whether a small claim or full tribunal case. Where petitioners present market evidence of the value of personal property, even bid and asked information from E-bay, assessors should be prepared to perform their own research and submit valuation evidence beyond the STC multipliers in defense of their assessments.