Michigan property tax guidance: Eligible manufacturing personal property tax exemption

The Michigan personal property tax exemption for eligible manufacturing personal property (EMPP) is now fully phased in for the 2024 property tax year. Qualified new personal property and qualified previously existing personal property located on occupied real property as of the Dec. 31, 2023, assessment date is fully exempt from ad valorem taxation and is now subject to the State Essential Services Assessment (SESA). In addition, certain industrial facilities tax (P.A. 198, IFT) personal property and personal property receiving a New Personal Property (P.A. 328) exemption are subject to additional reporting requirements if the parcel no longer qualifies as EMPP either due to the IFT expiring or other exemptions no longer being applicable.

To claim the EMPP exemption, a fully completed and signed Form 5278, Affidavit and Statement for Eligible Manufacturing Personal Property and Essential Services Assessment, is no longer required to be mailed to the assessor where the qualified personal property is located if the taxpayer filed the Form 5278 for the corresponding parcel for the 2023 property tax year and the parcel continues to meet the predominant use test requirements. If a new parcel is established, or the prior year location didn’t qualify for EMPP treatment, a Form 5278 would need to be filed with the local assessor no later than Feb. 20, 2024.

Treasury has released additional guidance related to the 2024 year filing requirements for anyone who has claimed and been granted the EMPP for 2023.

Form 5278 shouldn’t be filed to report additions or disposals on an EMPP parcel. Taxpayers will need to report the additions and disposals of property for each of their EMPP parcels on their ESA Statement filed electronically with the Department of Treasury, which is done via Michigan Treasury Online (MTO) or via an approved eFile provider. This certification and corresponding payment in full of the ESA assessment will need to occur between May 1 and August 15 to prevent any interest or late payment penalties (or possible rescission of the exemption if delayed beyond April 15 of the following year).

As previously mentioned, any new parcels or any newly qualifying parcels for the EMPP exemption will still need to pay the ESA assessment instead of the traditional ad valorem personal property tax on that parcel. Additional information regarding the ESA requirements can be found on the Treasury’s website.

If a property no longer qualifies as exempt EMPP, a form 5277 should be filed to rescind the exemption by February 20 and a corresponding non-EMPP property tax return would also be needed by that same date.