Online Tax & Assessment Information
Home Improvements and How They Affect Your Property Tax
Business Personal Property- Who, What, When & How?
Assessment Appeal Process
Assessing Staff Directory
Just the Facts….
The City of Menominee’s 2011 State Equalized Value is $223,061,724 which indicates a True Cash Value of $446,123,448 – the highest in Menominee County. The City’s 2011 Taxable Value is $189,959,708, or 85.1% of the SEV. This indicates that the property owners in the City of Menominee are, on average, paying on taxable values that are 14.9 % less than they would be had Proposal A of 1994 not been implemented. This has occurred because Taxable Values have been capped at the annual IRM (Inflation Rate Multiplier) or 5% since 1994. Prior to 1994, we paid our taxes based on the State Equalized Value of property.
The City of Menominee’s property tax base consists of:
- 60.8% Residential
- 20.4% Commercial
- 6.8% Industrial
- 12.0% Personal Property
The various taxing jurisdictions determine the rate at which you are taxed. In 2010, the percentage breakdown using the Non-Principal Residence rate of 60.3698 was as follows:
- State Education Tax = 9.94%
- Menominee School Operating Tax = 28.75%
- Menominee School Debt Tax = 4.30%
- Menominee County ISD Tax = 3.72%
- Menominee County Tax = 14.51%
- City of Menominee Tax = 38.78%
The City Assessor determines the property values and the City Treasurer collects the taxes.
How Purchasing a Property Affects Your Property’s
Assessment and Taxable Value
Without a doubt, the most common question of the assessor’s office since the passage of Proposal A of 1994 is “What will the property taxes be on a property in the year following the purchase?” In most states, this is a question easily answered, but in Michigan this is a question that is seldom answered before the beginning of the new tax year.
In 1994, the voters of Michigan passed a referendum commonly known as Proposal A. Proposal A originated as a reformation of K-12 education funding but is becoming more renown for the provision in the enacted law that allows for the “uncapping” of a property’s taxable value in the year following a transfer. Hopefully, the following information will explain this particular provision and its impact on the new property owner.
Every property in the State of Michigan has three values calculated for it. The first is the Assessed Value, which is the value calculated by the assessor and then through the equalization process transforms into what is commonly referred to as the SEV (State Equalized Value); the second is the Capped Value and the third is the Taxable Value. The two values that will be focused on here are the assessed and taxable values.
The assessed is a value equal to 50% of the property’s true cash value as determined on December 31st of the previous tax year. An example of this is if a property’s true cash value calculation is $70,000 based on its December 31st 2009 status, the assessed value for 2010 would be $35,000 (50% of true cash value). That calculation formula is easy because it is the same for all parcels and there is no “cap in value” to deal with for the assessed value.
The taxable value calculation has variables that do not make it the same for all properties. In cases where a property has not experienced a transfer of ownership in the previous year, the taxable value will be determined by:
- taking the previous year’s taxable value;
- subtracting any property loss that may have occurred (demolition);
- multiplying the result of 1-2 (above) by the Inflation Rate Multiplier (IRM) as established annually by the Michigan State Tax Commission; and finally,
- adding any new value (new construction) that may have occurred in the previous year.
That sounds complicated and in some instances can be, but the majority of properties will calculate using the simple formula that does not have any new value or less of value.
The following is an example of a typical annual taxable value calculation:
$ 35,000 = 2010 Taxable Value
No property loss
No new construction
$ 35,595 = 2011 Taxable Value
This capped taxable value formula is a guaranteed protection the voters of Michigan gave themselves to ensure that their taxable values from one year to the next could not increase by more than the IRM, or 5%, whichever was less, as long as they were the owners of the property (and nothing had changed in the physical status of their property such as new construction). The taxpayers in Michigan need look no further than across the border to their neighbors in Wisconsin, whose tax system does not include this “capped” formula protection, to realize how fortunate they truly are.
How Michigan compares …
In Wisconsin, if the true cash value of a property is $80,000, the owner pays the taxes on $80,000. If the value of the property increases by 3% (in this example, $2,400) then the next year the owner begins paying taxes on a property worth $82,400. That same value scenario for a property located in Michigan would have resulted in the same 3% increase on the assessed value but given the previously mentioned capped formula and the 2011 IRM of 1.7, the taxable value would only increase by 1.7% or $36,200.
Be an Informed Buyer
Knowing these basic principles concerning the property tax formulas will help you understand what happens to the property’s taxable value after a transfer of ownership. The “capped taxable value” formula that was demonstrated earlier relates to properties that have not experienced a transfer of ownership in the previous year. The “uncapped taxable value” is the term used to describe the taxable value calculation in the year following a transfer of ownership. This calculation is very simple.
In the year following a transfer, the uncapped taxable value will be the same value calculated as the SEV. In other words, the taxable value will be equal to 50% of true cash value. An illustration of this using the values from the previous example would show that if the true cash value of the property was determined to be $80,000 on December 31, 2010, the 2011 state equalized AND taxable values would be $40,000 (50% of the true cash value).
It is easy to see that the difference the transfer of ownership has made for the taxable value is the difference between what would have been the capped value of $35,595 and the now uncapped value of $40,000. Fortunately for Michigan taxpayers, it is only in the first year following the transfer that the calculation is done in this manner. In the 2nd year following the transfer of ownership, the property will once again enjoy the protection of the “cap” until the property experiences its next transfer.
One of the frustrations for potential buyers who are trying to determine what the uncapped taxable value will be on the property they buy is that the assessing cycle that most assessor work under does not allow for a calculation of an exact assessed and taxable value for the following tax year until all sales studies have been completed and analyzed by both the local assessor and the Equalization Department. The results of those studies are typically not integrated into the value calculations until late in the year. So, while most property owners can estimate their next year’s taxable value by multiplying the new IRM by the previous year’s taxable value, property owners whose properties experienced a transfer of ownership must wait until the assessor has determined the assessed value to know for sure what the taxable value will be.
Michigan’s property tax laws are complicated and contain many provisions that can affect the taxes paid on a property. Although not specifically addressed here, there are different types of transfers of ownership that can occur that will “uncap” a property’s taxable value. Property owners should be aware that many of these transfers do not involve an actual sale, but come about as a result of estate planning, family sales, etc.
Property owners should inform themselves of the consequences that an instrument of transfer may have on their property taxes. This information can be found by accessing the State of Michigan - Treasury website. “Transfer of Ownership and Taxable Value Uncapping Guidelines” is the name of the link.
Property owners without Internet capability can contact their local assessor’s office to obtain a copy of the guidelines.
We’re Here For You
As a taxpayer in the City of Menominee, you are concerned about the amount of taxes you are paying for services provided and received. Here at City Hall, we understand and appreciate those concerns and although our responsibility in the assessor’s office is to value the properties for the purposes of taxation, as part of the Property Services Department, we will do our best to assist you with any property-related issues you may have.
The Assessor and staff is available during normal business hours, 8:00AM – 5:00PM, Monday through Friday. Please feel free to contact the Assessor’s Office during these times if you need assistance or have questions about your property tax assessment.
Home Improvements and How They Affect Your
Property owners need to be aware that there are many home improvements that can be done that do not increase your property taxes. Although there may be some improvements that mean higher taxes those that include replacement of existing parts or are maintenance items will not increase your property taxes In 1976, the State Legislature enacted Public Act 293 which protects the homeowner from an increased tax assessment because of repair or replacement of portions of his or her home. The homeowner must complete Form L-4293 and file it with the local assessor to receive the benefit of this law.
The following normal repair and maintenance expenditures will NOT be
included in your assessment until the property is sold:
- Repair or replacement of siding (including the installation of vinyl or aluminum siding)
- Repair or replacements of roofs, porches, gutters and downspouts, steps, sidewalks and drives
- Repainting, repair or replacement of existing masonry
- Repair of replacement of foundations
- Installation, repair or replacement of awnings
- Installation, repair or replacement of doors, windows, storms or screens
- Installation or replacement of weather stripping or insulation
- Repair or replacement of plumbing fixtures, light fixtures, furnaces and hot water heaters
- Repair or replacement of interior decoration, including walls, woodwork, ceilings and floor coverings
- Removal or replacement of partitions
- Repair or replacement of chimney
Typical Improvements that would be considered in your annual assessment:
The following improvements would be assessed since they are ADDITIONS to the basic structure of the house:
- Construction of a dormer or addition of a room or rooms to the house, including adding a bathroom to the existing structure
- Construction of a breezeway
- Construction or substantial reconstruction of a garage or other out building
- Finishing previously unfinished spaces
- Construction of an in-ground swimming pool
Is there any required paperwork I need to complete?
Most major structural repairs require a building permit. You should obtain this permit from the City Building Inspector’s Office at 2511 10th Street, Menominee, Mi 49858. You can contact the Building Department with any home improvement questions during normal working hours (Monday thru Friday, 8am – 5pm) at 906-863-2656. For the routine repair and maintenance items listed previously, Form L-4293 must be completed by December 31st
Is this a guarantee that my taxes won’t go up if I improve my property?
By completing and submitting Form L-4293 to the assessor’s office before December 31st of each year will guarantee that property value gained from the improvements will not be considered when the assessor calculates the value for the next tax year. An example of how it works is as follows: In 2010, you had your home go through a complete remodel with new exterior and interior items like those contained on the list mentioned previously. By December 31st, you would submit to the assessor's office Form L-4293 which is a request that the assessor not consider the additional value the property has experienced because of the qualified improvements made to it. When the assessor receives this form, the assessor will begin the process of determining the value of the home following the remodeling process. Once that value is determined, the assessor will subtract the value of the home following the remodeling process. Once that value is determined, the assessor will subtract the value that had been calculated for the home before it has been remodeled. Then value difference is documented and set aside; any future assessment calculation for the improved properyy will always have this "added value due to qualified improvements" subtracted from the final building calculation. As long as the property continues to be owned by the same person who filed the "Request for Non-Consideration" form, the assessment will be calculated in this manner. Once the property is transferred, the "added value due to qualified improvements" is no longer subtracted from the value calculation of the building, beginning in the year following the transfer of ownership.
Please remember that the property taxes you are charged depend on the millage rate assessed by various units of government and the taxable value of your home. Millage rates will vary from year to year and your assessment will be factored up or down to account for the changes in the real estate market. Likewise, your taxable value will increase by the IRM, or 5% whichever is less, as promised by Proposal A of 1994.
P.A. 415 of 1994 amended Section 211.27 of Michigan Compiled Laws:
(2) The assessor shall not consider the increase in true cash value that is a result of expenditures for normal repairs, replacement, and maintenance in determining the true cash value of property for assessment purposes until the property is sold. For the purpose of implementing this subsection, the assessor shall not increase the construction quality classification or reduce the effective age for depreciation purposes, except if the appraisal of the property was erroneous before non-consideration of the normal repair, replacement, or maintenance, and shall not assign an economic condition factor to the property that differs from the economic condition factor assigned to similar properties as defined by subdivisions (a) to (o) [see below] that is known to the assessor and excluded from true cash value shall be indicated on the assessment roll. This subsection applies only to residential properties.
The following repairs shall be considered normal maintenance if they are not part of a structural addition or completion:
- Outside painting
- Repair or replace siding or roofing with like materials
- Repair deteriorated steps and decking
- Repair or replace private sidewalks
- Repair existing masonry
- Adding or replacing awnings
- Adding or replacing gutters and downspouts
- Replacing storm windows or storm doors
- Weather stripping
- Replacing old plumbing fixtures or light fixtures without changing drainage waste or water lines
- Replacing furnace with comparable unit and without duct work modifications
- Minor interior repair of plaster, painting, other decorating
- Replace ceiling, wall, floor finishes
- Replace outdated interior woodwork
- Replace water heater
A copy of form L-4293 and the instructions can be obtained by clicking on the following link: http://www.michigan.gov/documents/865f_2712_7.pdf
Business Personal Property- Who, What, When & How?
If you own a business in the State of Michigan, you are responsible for filing an annual personal property statement on or before February 20th of each year. Most large operations have an accountant prepare their return. This bit of information is designed to help smaller businesses understand how to report their personal property.
Who needs to file?
Businesses in the City of Menominee need to file a return annually, similar to IRS regulations. If your business is being operated in your home, you also need to file.
Who does not need to file?
Charitable, educational, and scientific institutions; libraries; and farms not operating a retail facility. You may need to provide proof of exempt status.
What to report?
All property should be reported unless exempt. Examples are business machines, postage meters, machinery, equipment, furniture, fixtures, coin-operated devices, tools, burglar alarms, signs and other advertising devices, consigned equipment not held for resale, etc. Freight, installation charges and sales tax are to be included in the cost of all items.
Property and equipment that are exempt are inventory (unless intended for lease), vehicles with license plates, and special tools. Special tools are defined as those manufacturing requisites, such as dies, jigs, fixtures, molds, patterns, gauges, or other tools that are held for use and not for sale in the ordinary course of business. Computer software is exempt unless it is a permanent component of a computer and is not commonly available separately or the cost of the software is included as part of the cost of the computer.
Assessing personal property is different from real property in that the taxpayer is responsible for reporting, and reporting is mandatory. The assessor is responsible for calculating the assessment based on the information reported. This is performed using a depreciation schedule provided by the State Tax Commission, which was revised this year. All assessors throughout the State of Michigan use the same guidelines. Most assessors’ offices have computer programs that actually calculate the assessed value based on the information entered on the form. The assessment is based on the purchase price paid, including sales tax, freight and installation costs, and the year the property was acquired.
Of course, there are many exceptions to the rules. Some of those are leased equipment, location of property on tax day, exemptions such as inventory, and a few others.
When to file?
File on or before February 1. If you do not file by February 20, your assessment will be estimated and/or penalties will be added to your tax bill. MCL 211.18, Section 19, states that all personal property statements shall be filed on or before February 20 of each year. It is, however, still beneficial to file late.
Where can I get a form?
The assessor's office typically will mail a personal property statement to all businesses, however, it is the responsibility of the business owner to file a personal property statement whether or not they receive a form from the assessor. The State Tax Commission approves an updated form each year that is usually available by January 1st. The link for the standard personal property statements and all other personal property forms that may be required to be filed by your specific type of business are available at Personal Property Statement Forms by Year.
How to complete the form?
The form has 9 pages and consists of a cover page requesting your company name and location of records as well as a summary of the information you are providing and a certification of the preparer, instructions (pages 5-9), and Sections A through O (pages 2-4) where all of the personal property is listed. You should provide a copy of the work papers, or a Fixed Asset Report, from which you prepared the form to explain and support how you categorized your equipment, as a supplement to the form.
Page 1 is self-explanatory.
Section A through Section F is a summary by year of equipment owned by the business and located in the City on December 31 of the previous year (e.g. 2010 for year 2011 personal property statements). It may be helpful for you to submit a list of what equipment is listed in each category as supporting evidence of your final figures.
PLEASE NOTE: The categories for the classification of equipment have changed since last year. There are more categories, and computerized portions of machinery are no longer separated out, but reported with the machinery. See Instructions for more detail as to how the categories of equipment are broken down.
You may be required to provide evidence of the following:
Section I – Qualified Personal Property. See instructions on page 8. This section is for equipment in your possession that you have leased from a leasing company. The leasing company would also report the items they have leased to you when your business is responsible for the tax and reporting. This allows a checks and balance system for the Assessor. If filed correctly, each piece of equipment leased would be reported by the Lessee and the Lessor.
Section J – Leased Property in Your Possession. This is normally property under lease. Please review lease to see who is responsible for reporting. Most leases dated after December 31, 1993 will require the leasing company to report and then collect from the user. A copy of the lease would be beneficial.
Section K - Property in Your Possession Owned by Others. These are items left with you by vendors such as display racks, coolers or other items that have been loaned to you for use. You must provide the actual, or an estimated, cost new for each piece of equipment, as well as who the owner of the equipment is and how that owner can be contacted.
Cost Grand Total is self-explanatory.
Section L – Only to be completed if you own equipment and have leased it to another party. Leased equipment, which you own, is to be reported at selling price new. This Section is actually a summary of Sections A through F; therefore all of the equipment listed here should also be listed in A – F.
Section M – is Leasehold Improvements (Real and Personal). An example would be chairs in a rented beauty shop. This Section is to be completed by tenants, and should include all improvements made to the property with as much detail as possible so that a reasonable determination can be made as to whether the improvement is assessable.
Section N – is Buildings and Other Structures of Leased or Public Land. This includes communications towers and billboards.
Section O – Rental Information. This section is to be completed by both the landlord and the tenant, and includes lease arrangements to which they are a party. See instructions to Line 5, Page 1.
Who to contact?
Jill Schwanz, City Assessor 906-863-1758 or 906-863-2656
Assessment Appeal Process
The first level of appeal is to the Board of Review. The Board of Review is comprised of three members who are City of Menominee residents. Dates, times, and locations for meetings are printed on the change of assessment notice. Applicants appearing before the Board of Review are advised to bring information that helps to substantiate claims of over-assessment, such as photographs, appraisals, and listings of comparable sales. Meetings are informal and are held in the Committee Room at City Hall. The Board begins appeal meetings during the second week of March of every year. Notification of the Board's decision is provided by mail no later than the first Monday in June. The next level of appeal must be made by June 30 to the Michigan Tax Tribunal. The MTT is a quasi-judicial body that provides a structured, semi-formal court setting in front of a hearing referee. In rare instances, appeals may proceed to the Michigan Court of Appeals.
BASIC STEPS IN MAKING AN ASSESSMENT APPEAL
There are two requirements that must be followed in making an assessment appeal. These are:
- PROTEST THE ASSESSMENT TO THE LOCAL BOARD OF REVIEW.
- FILE WITH THE TAX TRIBUNAL WITHIN THE PROPER TIME LIMIT.
(By June 30 of the tax year involved for Residential property and by May 31 of the tax year involved for properties classified as Commercial, Industrial or Personal)
It should be noted that the Tax Tribunal has exclusive jurisdiction in assessment appeals.
REQUIREMENT OF APPEALING TO THE LOCAL BOARD OF REVIEW
Assessments are made on an annual basis. Each year the City Assessor places an assessment on every parcel of property. The property is divided into two classes, real and personal.
These assessments are based on the value of the property on "tax day" which is December 31 prior to the tax year. For example, December 31, 2009 is "tax day" for the 2010 tax year.
This gives uniformity to the time for determining the values of the property. It does not mean that the assessor must assess each property on December 31. There are too many parcels to accomplish this.
Regardless of what day the actual appraisal or assessment of the property is made, it is valued as of December 31.
This rule is especially important in regards to partially-constructed buildings. If a house is only 25% complete on December 31, then the following year assessment must be based on its value as of that day.
THE LOCAL BOARD OF REVIEW
It is very important that each year the taxpayer find out what the assessment is on his property. If he is not satisfied, then it must be protested to the local Board of Review.
The local Board of Review is a board of local residents that meets each year to review the assessments set by the assessor.
There are two ways a taxpayer's assessment may be raised:
- The assessor may raise the assessment. If so, the taxpayer must appear at the local Board of Review to appeal the assessment.
- The Board of Review may raise the assessment. If so, the taxpayer must be given an opportunity to
raise his objections.
The Board of Review is in session to hear valuation appeals beginning on the second Monday in March of each year. Appeals are heard by appointment.
PURPOSE OF ATTENDING THE LOCAL BOARD OF REVIEW
The reason for requiring the taxpayer to raise objections to his/her assessment at the local Board of Review is so that disputes can be worked out at the local level. If the taxpayer is not satisfied with the Board of Review's decision (the assessment can be raised, lowered, or affirmed) then he/she can appeal to the Tax Tribunal before June 30. Without the Board of Review appearance, the Tax Tribunal would lack jurisdiction to hear the matter and the taxpayer would have no other remedy.
WAYS OF APPEARING AT THE BOARD OF REVIEW
(By Letter or Personal Appearance)
In the City of Menominee, any taxpayer may appeal his assessment to the local Board of Review by letter. The letter must be timely to constitute an appearance. The deadline for filing written appeals is the second Tuesday of March.
MICHIGAN TAX TRIBUNAL
After appearing at the local Board of Review, the taxpayer can then appeal to the Michigan Tax Tribunal.
The deadline for filing is June 30 of the tax year involved.
There are two main divisions at the Tax Tribunal. They are 1) the Small Claims Division and 2) the Entire Tribunal.
In the Small Claims Division, a letter of appeal from the taxpayer must be received by the Tribunal by June 30 for property classed as Residential, and in the Entire Tribunal the petition must be sent by May 31 for property classed as Commercial, Industrial or Personal, or for value disputes greater than $200,000.
It should be noted that the Tax Tribunal is an impartial body that handles these assessment disputes. It is an agency of the state and the state does not receive any of the proceeds from the property taxes (it is divided between the county, cities, townships, and schools).
ASSESSING STAFF DIRECTORY