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Superior Hotels, LLV v Mackinaw Township

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Steven H. Lasher
Foster Swift Property Tax Update
March 2009

The property owner constructed a motel over a two year period. For the first year of construction, the assessor determined the improvement to be 50% complete and determined the assessed value and taxable value of the property on that basis. For the second year of construction, the assessor correctly increased the percent complete to 100% and increased the assessed value accordingly. However, the assessor failed to increase the taxable value for the “addition” represented by the additional 50% completion of the improvement; instead, the assessor only increased the prior year taxable value by the inflation rate to determine the subsequent years taxable value.

Some years later the township recognized the error in calculating taxable value in the second year of construction and filed a “section 154” application to the State Tax Commission to “correct” the error made by the assessor in calculating taxable value.  Petitioner argued at the Tax Tribunal that MCL 211.154 does not grant jurisdiction to the State Tax Commission to correct an error in calculating taxable value. Specifically, Petitioner cited the statutory language that allows the State Tax Commission to place the “corrected assessment value” on the roll where the assessment has been “incorrectly reported or omitted”. Because the assessor had correctly calculated/determined the assessment for the property by adding the value of the final 50% completion of the improvement, Petitioner argued that the State Tax Commission was being asked to correct only taxable value and such correction was outside the scope of the STC’s authority. The Tax Tribunal agreed with Petitioner that the STC lacked jurisdiction to simply correct an error in calculating taxable value since the assessment was correct.

The Court of Appeal has reversed the Tax Tribunal, concluding that the term “assessment” as used in MCL 211.154 includes “both ‘taxable value’ and 50% of true cash value”. Thus, assessors should be aware that where new construction was omitted in the calculation of taxable value only, Section 154 applications can be made to the State Tax Commission for correction.