Issues: Denial of a principal residence exemption (PRE); The General Property Tax Act (MCL 211.1 et seq.); MCL 211.7cc and 211.7dd; Review of a Michigan Tax Tribunal (MTT) decision; Klooster v. City of Charlevoix; Burden of proving entitlement to an exemption; Elias Bros. Rests., Inc. v. Treasury Dep't; Deference to the MTT's interpretation of a statute that it is charged with enforcing and administering; Twentieth Century Fox Home Entm't, Inc. v. Department of Treasury; Superior Hotels, LLC v. Mackinaw Twp.; In re Rovas Complaint Against SBC MI; Enlarging a tax exemption by construction inconsistent with the express terms used by the Legislature; Stege v. Department of Treasury; An "owner" (MCL 211.7dd(a)(i)); A "principal residence" (MCL 211.7dd(c)); MCL 380.1211(1); Whether the Illinois homestead exemption is "substantially similar" to Michigan's PRE
Court: Michigan Court of Appeals (Unpublished)
Case Name: Levenfeld v. County of Berrien
e-Journal Number: 50641
Judge(s): Per Curiam – Murphy, Fitzgerald, and Meter
While the Illinois homestead exemption operates differently than Michigan's PRE, the court held that the Illinois exemption was "substantially similar" and that there were no "cogent reasons" for overruling the MTT's construction of MCL 211.7cc(3)(b). Thus, the court affirmed the MTT's decision denying the petitioner a PRE. Petitioner, a married woman, solely acquired the fee simple interest in the property at issue in 2005. She executed a homeowner's PRE affidavit, which indicated that there was no co-owner of the property, the property was her principal residence, she had not claimed any other PRE, and that she and her spouse (S) did not claim an exemption in another state. S owned a house in Illinois that was titled solely in his name and for which he enjoyed an Illinois homestead exemption. Petitioner was granted a PRE on the property for tax years 2005, 2006, and 2007. In 8/08, the county treasurer sent her a letter indicating that "[b]ased on information received," the treasurer was reversing the PRE on petitioner's property for the 2006 and 2007 tax years. Accompanying the letter was a Michigan Department of Treasury form declaring notice of a PRE denial and stating that petitioner's PRE was being denied/adjusted because "[t]he property claimed is not the owner's principal residence." Petitioner later learned that her PRE was revoked because she failed to file a state individual income tax return. For the tax years at issue, petitioner's Michigan driver's license, voter registration card, and vehicle certificate of title listed her address as the property previously covered by the PRE. A hearing referee found that petitioner and S had a prenuptial agreement to maintain separate properties and that neither had an ownership interest in the other's real estate. The referee found that petitioner was entitled to a PRE, but rejected the part of her argument that asserted the Illinois exemption enjoyed by S was not substantially similar to Michigan's PRE. The MTT found that petitioner was not entitled to the PRE. The court agreed with petitioner that the MTT erred in applying § 7cc(3)(d) because all the evidence indicated that she was a Michigan resident in 2006 and 2007. Petitioner argued that the MTT also erred in applying § 7cc(3)(b) because the Illinois exemption was not substantially similar to Michigan's PRE. The court noted that there was a "dramatic difference in tax savings" when comparing application of Michigan's PRE to the Illinois homestead exemption results due to "the fairly high taxable value" of petitioner's Michigan house. However, the issue was "whether the statutes are substantially similar, not whether application of the statutes results in tax savings that are substantially similar." The court concluded that "the different underlying methodologies used in calculating the tax benefit" did not mean that the exemptions were not substantially similar. The court agreed with the MTT "that the Legislature was concerned with the ‘type' of exemption, as in a ‘homestead' exemption, when mandating a comparison of statutory schemes for purposes of §§ 7cc(3)(b)." The language of the Illinois statute was comparable to the language and definitions in §§ 7cc and 7dd, "making the exemptions substantially similar."
© 2012 State Bar of Michigan