Review of Taxable Values Limited to Tax Years Under Appeal
In MJC/Lotus Group v. Township of Brownstown, Michigan Court of Appeals, Nos. 295732, 296499, and 301043, May 31, 2011, the Court of Appeals ruled the Michigan Tax Tribunal lacked jurisdiction to indirectly review the accuracy of properties' taxable values in years not under appeal that contained unconstitutional additions for public improvements even if the values were used as a starting point to calculate the properties' taxable values in property tax years that were properly under appeal. The court disagreed with the taxpayers' argument that the Tax Tribunal must correct the constitutional errors, use the corrected taxable values to recalculate the taxable values in the first year under appeal, and similarly adjust the taxable values in subsequent years under appeal. A determination that a statute was unconstitutional did not nullify the limitation on the Tax Tribunal's jurisdictional authority, that the Tax Tribunal could only review the accuracy of taxable values in years properly under appeal.
The court also rejected the argument that the statutory provision that set forth the mathematical formula used to determine a property's taxable value somehow conferred jurisdiction on the Tax Tribunal to review the prior year's taxable value. Merely using a property's taxable value in the immediately preceding year to perform a calculation was quite different than reviewing the accuracy of the taxable value. Although the provision called for use of the immediately preceding year's taxable value, it did not extend the jurisdiction of the Tax Tribunal to permit a taxpayer to contest the taxable value from tax years that were not timely appealed.
Furthermore, the court held that public improvements could not be deducted as a loss because there was no loss within the meaning of the statutory provision in these cases. Rather, in years not properly under appeal, the properties' taxable values included unconstitutional additions for public improvements, but the tribunal lacked jurisdiction to reach back into years not under appeal to correct those constitutional errors.