Manufacturer's Equipment Properly Valued by Personal Property Appraiser
In Spartech Polycom, Inc. v. City of St. Clair, Michigan Court of Appeals, No. 295334, March 8, 2011, the Court of Appeals ruled that the Michigan Tax Tribunal properly held that a manufacturer's personal property should be valued for property tax purposes at the lower true cash value that was proposed by the manufacturer's personal property appraiser, the Michigan Court of Appeals has held. The manufacturer's equipment was appraised using a market comparison approach that compared the appraised property to the prices paid for similar items in the current market. The appraiser generally relied on large websites like eBay or a conglomeration of market sellers. When using eBay, the appraiser looked at the Buy It Now price, rather than the auction price.
The city argued on appeal that the method used by the appraiser did not meet the statutory requirements in determining true cash value. Under the applicable statutory provision, auction prices could only be used to determine the true cash value if auction sales had become a common method of acquisition for that type of property in Michigan. The city also asserted that there was no evidence that the manufacturer or any other company ever bought any machinery through eBay and that the appraiser's valuation failed to account for freight, taxes, and installation on the value of the property.
The Michigan Court of Appeals noted that the appraiser identified the Buy It Now price as the price for which the seller would be willing to immediately part with the item. The Buy It Now price was a fixed price set by the seller, not a price offered by prospective buyers participating in an auction. As for the city's assertion that a valuation based on the market approach must be supported by evidence of verified sales, the city failed to identify any statute, case law, or administrative rule or regulation that required such a showing.
The court also previously held that installation, freight, and sales tax were appropriately included in true cash value unless there was evidence that these costs were not part of the market. In this case, the tribunal specifically found evidence that freight, installation, and taxes were not included in the market price of the goods at issue, and under those conditions, the tribunal was permitted to exclude the additional charges.