Businesses claiming the eligible manufacturing Personal Property Tax (PPT) exemption will be subject to a statewide special assessment to fund essential services levied by local governments. The assessment will be levied on all exempt Eligible Manufacturing Personal Property (EMPP) starting in 2016.

The tax base is the fair market value of EMPP at the time of acquisition. For property acquired 1-5 years before the tax year, the tax rate will be 2.4 mills. Property acquired 6-10 years before the tax year will be levied 1.25 mills. Property acquired more than 10 years before the tax year will be levied 0.9 mills.

Taxpayers are required to submit electronically to the Treasury Department a completed statement and full payment by September 15. If the assessment is not paid, Treasury will send notice by October 15 and impose up to a 15 percent penalty. If the statement and payment are not received by November 1, the EMPP exemptions are rescinded for that tax year. Taxpayers must submit a personal property statement by November 10; the exempted summer tax will be added to the winter bill. For taxpayers making a minimum of $25 million in additional EMPP investment, the Michigan Strategic Fund Board may provide a 50 percent or 100 percent exemption from the SESA for the new investment.

Reimbursements for essential services loss will be made with the authority’s share of use tax revenue. Loss includes personnel pension costs and future revenue exemptions that would have expired. To calculate the amount of essential services loss, the FY 2014 Comprehensive Annual Financing Report (CAFR) must include the percentage of FY 2012 General Fund revenue that was used by the local unit of government to fund essential services.

Please contact your accounting or tax professional with specific questions. You may also call the Michigan Department of Treasury at (517) 335-2167.

Source: MEDC Pure Michigan