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Edward S. Kisscorni, CPA
290 Suncrest Court, SW
Grandville, MI 49418

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 Blog 
Friday, April 22 2011

Michigan Statute References the Federal Social Security Act for Property Tax Exemption

In Wellness Plan v. City of Oak Park, Michigan Court of Appeals, No. 294988, April 14, 2011 a federally-qualified health center (FQHC) look-alike was exempt from local Michigan property taxes because, under the Health Resources and Services Administration's (HRSA) interpretation, a FQHC look-alike met the definition of a FQHC.  Under the applicable Michigan statutory provision, a FQHC was explicitly awarded an exemption from real and personal property taxes.

The Michigan statutory provision provided that a "federally-qualified health center " meant that term as defined in section 1396d(l)(2)(B) of the social security act, 42 USC 1396d.  The reference to 42 USC 1396d plainly signaled that the federal statute controlled which entity qualified for the FQHC exemption.

The terminology comprising 42 USC 1396d(l)(2)(B)(iii) expressly recognized, or at a minimum strongly suggested, that Congress delegated or entrusted to the HRSA the authority to ascertain which entities qualified as FQHCs.  The HRSA declared that both FQHCs and look-alikes were indistinguishable with respect to the requirements they must satisfy, and the FQHCs and look-alikes were distinguishable only to the extent of the federal benefits they actually received.

Under the principles set forth in Chevron, USA, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), when Congress explicitly left a gap for a federal agency to fill, the agency was expressly delegated the authority to elucidate a specific provision of the statute by regulation. In this case, 42 USC 1396d and the social security act in general remained silent concerning the specific question whether look-alikes could be considered FQHCs. Therefore, under the principles in Chevron, the Michigan Court of Appeals deferred to the HRSA's interpretation of FQHC requirements.

Posted by: Ed Kisscorni AT 02:37 pm   |  Permalink   |  0 Comments  |  Email
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