QUALIFIED ERROR IN DETERMINING DISABLED VETERAN PROPERTY TAX EXEMPTION

House Bill 4851 (H-1) as referred to second committee

Sponsor:  Rep. Michele Hoitenga

1st Committee:  Local Government and Municipal Finance

2nd Committee:  Ways and Means

Complete to 10-22-19

BRIEF SUMMARY:  House Bill 4851 would amend the General Property Tax Act to change the definition of a “qualified error” to include issues that cause a disabled veteran or their spouse to be denied their exemption for issues beyond their control.

FISCAL IMPACT:  As written, the bill would have no impact on state or local revenue but could potentially reduce local administrative costs by a small amount.

THE APPARENT PROBLEM:

Currently, if a disabled veteran erroneously loses their status as one, they have little reprieve to fix the error in time to regain their tax exemption. Whether or not it was their fault or the fault of state or local tax officials, disabled veterans could instantly lose their status and thus be forced into a lengthy and costly process to get it back, while doing so on a fairly short timetable. Legislation has been proposed to address the issue.

THE CONTENT OF THE BILL:

House Bill 4851 would also amend the act’s definition of qualified error to include issues beyond the control of a disabled veteran or his or her unmarried surviving spouse that resulted in the denial of their disabled veteran property tax exemption.

A qualified error is an error made in the assessment of a real property’s taxable value that may be appealed by the property owner before the relevant deadline.

An issue would be considered “beyond the control of a disabled veteran” if it was made by the local tax collecting unit in the processing of a timely filed exemption affidavit or if it was a delay in the determination by the US Department of Veterans Affairs that a veteran was permanently and totally disabled as a result of military service and entitled to veterans’ benefits at the 100% rate.

MCL 211.7b and 211.53b

BRIEF DISCUSSION:

Concerns were raised that the introduced bill, as written, held local governments liable instead of the state. The one-time filing nature of the reprieve for disabled veterans that was proposed by the introduced bill would have put localities on the line to repay taxes that could already be spent at a time when many counties and other local governmental units operate under increasingly tight budgets. Opponents to the introduced bill indicated that they were not opposed to providing disabled veterans with such a reprieve, but hoped to have their concerns addressed before the bill was enacted. The House Local Government and Municipal Finance Committee adopted an H-1 substitute to address these concerns.

POSITIONS:

The Michigan Department of Treasury indicated support for the bill. (10-16-19)

Representatives of the following organizations testified in opposition to the bill (10-2-19):

            Michigan Municipal League

            Michigan Township Association

The Michigan Association of Counties indicated opposition to the bill as introduced.         (10-2-19)

                                                                                        Legislative Analyst:   Nick Kelly

                                                                                                Fiscal Analyst:   Jim Stansell

This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their deliberations and does not constitute an official statement of legislative intent.