Taxpayer Must First Appeal to the Department of Treasury
In Garratt v. Township of Oakland, Michigan Court of Appeals, No. 300136, January 26, 2012, the Court of Appeals ruled a taxpayer was not entitled to a local principal residence property tax exemption for the 2004 tax year because he failed to appeal to the Department of Treasury before appealing to the Michigan Tax Tribunal, and, therefore, the tribunal did not have jurisdiction over the 2004 principal residence exemption. The taxpayer received notice from the county that his principal residence exemption for several tax years had been rescinded.
The taxpayer's appeal of the rescission of his principal residence exemption ended up before the December Board of Review. This was the correct next step in the process of appealing the loss of a principal residence exemption that was not present on the tax roll. After the December Board of Review affirmed the rescission, the next step should have been to appeal the board's decision to the Department of Treasury. The taxpayer did not receive notice of the board's decision until February of the following year, when the county treasurer's office sent him a letter stating that he owed additional taxes because his principal residence exemption had been denied. The taxpayer appealed this to the tribunal, but he was statutorily required to appeal to the department before appealing to the tribunal.
The tribunal erred in concluding that it did not have jurisdiction over the taxpayer's 2005, 2006, and 2007 tax years. The tribunal stated that an April 18, 2008, denial of the principal residence exemption by the county only provided the tribunal with jurisdiction over 2008 because the county did not have authority to grant a principal residence exemption for 2005, 2006, and 2007. The statutes governing this issue, however, consistently stated that the three preceding years may be included in a decision or appeal. The Michigan Court of Appeals noted that the preceding three years tend to be included, and the tribunal considered the April 18, 2008, denial valid for 2008. Therefore, the tribunal had jurisdiction over 2005, 2006, and 2007.
The tribunal also incorrectly concluded that it did not have jurisdiction over the taxpayer's 2009 tax year because a principal residence exemption for 2009 had not yet been denied and the applicable statutory provision required that a principal residence exemption be denied for a subsequent year in order for the tribunal to add it on to an appeal. However, at the time the taxpayer was appealing to the tribunal, the 2010 principal residence exemption had not been reinstated and so it was reasonable to assume that the board's finding that the taxpayer was not entitled to exempt status in one year would not be reversed in a subsequent year, particularly when the previous year's dispute was pending. Therefore, the court concluded that it would have been futile to apply for a principal residence exemption for 2009 and, therefore, the taxpayer was excused from this requirement.