Opinion
355735 356449
10-14-2021
JAMES S. KEMPER III, TRUSTEE, Petitioner-Appellant, v. TOWNSHIP OF LEELANAU, Respondent-Appellee. JAMES S. KEMPER, Petitioner-Appellant, v. TOWNSHIP OF LEELANAU, Respondent-Appellee.
UNPUBLISHED
Tax Tribunal LC Nos. 20-003471-TT, 20-002750-TT
Before: James Robert Redford, P.J., and Kirsten Frank Kelly and Anica Letica, JJ.
PER CURIAM.
In these consolidated appeals, petitioner challenges the Michigan Tax Tribunal's (the Tribunal's) decisions regarding his principal residence exemption (PRE) and his PRE affidavit. In Docket No. 355735, petitioner appeals as of right the Tribunal's order of dismissal that dismissed petitioner's appeal because it was not filed within 35 days of the denial of his PRE. In Docket No. 356449, petitioner appeals as of right the Tribunal's final opinion and judgment that denied petitioner's appeal for a PRE for tax year 2020. We affirm.
James S Kemper III, Trustee v Twp of Leelanau, unpublished order of the Court of Appeals, entered March 16, 2021 (Docket No. 355735).
I. BACKGROUND FACTS
This case involves the denial of petitioner's claimed PRE for the four parcels of land that make up petitioner's home in Omena, Michigan. Respondent is the taxing authority for the area. Petitioner bought the property in 2004, and in 2008, applied for and was granted a PRE for the property. Also in 2008, petitioner married Linda C. Welch. Although petitioner and Welch lived together at the Omena property, Welch retained her home in Barrington, Illinois, and claimed the Illinois equivalent of a PRE. Petitioner and Welch also filed joint tax returns in Michigan. Respondent conducted an audit of petitioner's claimed PRE and discovered the exemption that Welch claimed. On February 25, 2020, the Leelanau County Treasurer denied petitioner's PRE for tax years 2017 through 2020.
See 35 ILCS 200/15-175. Whether the Illinois exemption was substantially similar to the Michigan PRE was not at issue.
On April 30, 2020, Welch sent a letter to the Cook County Assessor's Office rescinding her homeowner exemption for the Illinois property. On May 14, 2020, petitioner submitted a PRE affidavit to respondent. The affidavit indicated that neither petitioner nor Welch claimed a similar exemption in another state. On June 11, 2020, the Cook County Assessor's Office mailed a notice of intent to record lien regarding Welch's Illinois property, which required Welch to pay for the exemptions that she rescinded.
In July 2020, petitioner filed a petition with the July Board of Review, pursuant to MCL 211.7cc(19), to restore his PRE for tax years 2017 through 2019. The July Board took no action because the Board lacked the authority to hear the appeal.
In Docket No. 355735, petitioner filed a petition with the Tribunal, challenging the denial of his PRE. Petitioner stated that he appealed the PRE denial to the July Board of Review pursuant to MCL 211.7cc(19) because the PRE for tax years 2017 through 2019 had been removed from the tax roll when the exemption was denied. Although the assessor believed that the July Board did not have jurisdiction to hear the appeal because the PRE was on the tax roll for the prior years, petitioner asserted that the Guidelines for the Michigan Principal Residence Exemption (PRE Guidelines) provided that an exemption was removed from the tax rolls on the date of the denial. This was supported by MCL 211.7cc(10), which similarly directs a local assessor to remove a denied exemption from the tax roll. Petitioner concluded that "[i]t is clear that the denial had the effect of removing, immediately and retroactively, the exemption from the tax roll." Petitioner requested the Tribunal restore his PRE for tax years 2017 through 2019.
Michigan Department of Treasury, Guidelines for the Michigan Principal Residence Exemption Program <https://www.michigan.gov/documents/taxes/2856_PRE_guidelines_607370_7.pdf> (accessed October 11, 2021).
Respondent filed an answer to the petition and asserted that the Tribunal did not have jurisdiction to hear the petition. Respondent asserted that it had not issued a denial because the initial PRE denial was issued by the Leelanau County Treasurer. Similarly, the July Board did not issue a denial because the Board only has jurisdiction over exemptions that were not on the tax roll, and petitioner's PRE was on the tax roll. Respondent also noted that the Tribunal had dismissed petitioner's first appeal of the PRE denial as untimely. Respondent requested dismissal of the petition on the basis that the Tribunal lacked jurisdiction.
In the first appeal, the Tribunal's order of dismissal states that the petition was not filed within 35 days of the final decision. A search of the docket in the prior appeal reveals that petitioner appealed the February 25, 2020 PRE denial on April 17, 2020 (51 days later). See Kemper v Leelanau, MTT (Docket No. 20-000779), entered May 6, 2020.
The Tribunal entered an order of dismissal, concluding that it did not have authority to hear the appeal because it was not filed within 35 days of the issuance of the PRE denial. Although petitioner framed the issue as appealing the July Board's July 21, 2020 denial, "the denial was actually issued by [respondent] on February 25, 2020, and that [p]etitioner was attempting to have the exemption restored by the July 2020 Board of Review." Further, a Board of Review only has authority to grant or deny requests for exemptions that were not on the tax roll. Because petitioner's PRE was on the tax roll for 2017 through 2019, the Board did not have authority to hear petitioner's appeal. Therefore, the Tribunal dismissed the case.
In Docket No. 356449, petitioner field a petition with the Tribunal challenging the denial of his PRE affidavit. Petitioner argued that because Welch rescinded her Illinois exemption, petitioner was entitled to the PRE because "[a]t the time of his submission of the 2020 PRE Affidavit[, petitioner] met all of the requirements of the Act." Respondent answered and argued that petitioner had already appealed the denial to the Tribunal, which dismissed the case. Instead of appealing the dismissal, petitioner filed a new PRE affidavit. The affidavit was never approved or denied because respondent did not have jurisdiction to alter the denial of another entity, i.e., Leelanau County. Further, the Tribunal already disposed of the issue of the initial PRE denial. Accordingly, respondent argued that the Tribunal did not have jurisdiction over the case.
The administrative law judge (ALJ) held a hearing and issued a proposed opinion and judgment. The ALJ found that Welch's Illinois exemption was rescinded on June 11, 2020. Petitioner was not entitled to the PRE because on the date the affidavit was filed, May 14, 2020, Welch's Illinois exemption was still effective. Further, the July Board did not have authority to hear petitioner's appeal because "the properties' PRE for the 2017, 2018, 2019, and 2020 tax years 'was' on the tax roll and 'is' no longer on the tax roll for those tax years" due to the February 25, 2020 PRE denial. Petitioner filed exceptions to the ALJ's proposed opinion and judgment concerning the effective date of Welch's rescission and that petitioner could appeal to the Board of Review.
The Tribunal issued a final opinion and judgment and determined that the ALJ's proposed judgment was correct and petitioner's exception regarding the timing and effect of Welch's rescission was legally incorrect. The Tribunal held that under Marie De Lamielleure Trust v Treasury Dep't, 305 Mich.App. 282; 853 N.W.2d 708 (2014), "[a] rescission of an exemption claim is effective at the time the claim is removed from the tax roll, not at the time the removal of the claim is filed by the claimant."
Further, the Tribunal noted that, at the time of the hearing before the ALJ, petitioner had not yet filed an income tax return for 2020. "As such, it was not known whether the disqualifying factor shall be present for tax year 2020." If petitioner were to file a joint tax return, the denial of the PRE was appropriate under De Lamielleure. And if the Tribunal overturned the PRE denial and petitioner were to file a joint tax return for 2020, "[r]espondent would have no power to issue a second denial for that tax year following the Tribunal's order." Finally, the Tribunal agreed with the ALJ that if petitioner would have filed the PRE affidavit between June 11, 2020 and June 30, 2020, the Board of Review would have had the authority to hear the appeal. Although petitioner argued that he already attempted to raise the issue before the July Board, "the Tribunal notes that [the appeal to the Tribunal involved in Docket No. 355735] does not involve the 2020 tax year and is not on point." Therefore, the Tribunal held that petitioner was not entitled to the PRE for 2020. These appeals followed.
II. STANDARD OF REVIEW
"Absent fraud, our review of [the Tribunal's] decisions is limited to determining whether the [Tribunal] erred in applying the law or adopted a wrong legal principle." VanderWerp v Plainfield Charter Twp, 278 Mich.App. 624, 627; 752 N.W.2d 479 (2008). "An 'error of law' occurs . . . if the Tax Tribunal's decision is not supported by competent, material, and substantial evidence on the whole record." Forest Hills Co-operative v Ann Arbor, 305 Mich.App. 572, 586; 854 N.W.2d 172 (2014). "If there is no factual dispute and fraud is not alleged, appellate review is limited to whether the Tax Tribunal made an error of law or adopted a wrong legal principle." Id. at 586-587. "This Court reviews de novo whether the Tax Tribunal erred as a matter of law when interpreting and applying statutes." New Covert Generating Co, LLC v Covert, __ Mich.App. __, __; __ N.W.2d __ (2020) (Docket Nos. 348720; 348721); slip op at 8.
It is well established that the primary goal of statutory construction is to ascertain and give effect to the intent of the Legislature. The words used by the Legislature in writing a statute provide us with the most reliable evidence of the Legislature's intent. If the statutory language is clear and unambiguous, this Court must apply the statute as written, and no further judicial construction is necessary or permitted. Moreover, statutes exempting persons or property from taxation must be narrowly construed in favor of the taxing authority. [Stirling v Leelanau, __ Mich.App. __, __; __ N.W.2d __ (2021) (Docket No. 353117); slip op at 3 (quotation marks and citations omitted).]
III. DOCKET NO. 355735
Petitioner argues that the Tribunal erred by determining that the July Board did not have authority to hear his appeal. Petitioner asserts that because his PRE was denied, the exemption was retroactively removed from the tax rolls, which permitted the July Board to hear his appeal under MCL 211.7cc(19). We disagree."Michigan's PRE is governed by MCL 211.7cc and MCL 211.7dd." Foster v Van Buren Co, 332 Mich.App. 273, 281; 956 N.W.2d 554 (2020). Under MCL 211.7cc(1), "[a] principal residence is exempt from the tax levied by a local school district for school operating purposes to the extent provided under . . . MCL 380.1211, if an owner of that principal residence claims an exemption as provided in this section." To qualify for a PRE,
The property owner is required to file an affidavit which, among other provisions, requires the owner to "state that the property is owned and occupied as a principal residence by that owner of the property on the date that the affidavit is signed and shall state that the owner has not claimed a substantially similar exemption, deduction, or credit on property in another state." [Campbell v Mich. Dep't of Treasury, 331 Mich.App. 312, 317; 952 N.W.2d 568 (2020), lv gtd 506 Mich. 964 (2020), quoting MCL 211.7cc(2).]
"MCL 211.7cc(3) states conditions in which a person otherwise qualified to receive the PRE in [MCL 211.7cc(1)] is disqualified from doing so." Foster, 332 Mich.App. at 281. In pertinent part, MCL 211.7cc(3) provides:
Except as otherwise provided in subsection (5), a married couple who are required to file or who do file a joint Michigan income tax return are entitled to not more than 1 exemption under this section. For taxes levied after December 31, 2002, a person is not entitled to an exemption under this section in any calendar year in which any of the following conditions occur:
(a) That person has claimed a substantially similar exemption, deduction, or credit, regardless of amount, on property in another state . . . .
(b) Subject to subdivision (a), that person or his or her spouse owns property in a state other than this state for which that person or his or her spouse claims an exemption, deduction, or credit substantially similar to the exemption provided under this section, unless that person and his or her spouse file separate income tax returns.
"An owner may appeal a denial by the assessor of the local tax collecting unit under subsection (6) . . . or a denial by the county treasurer . . . under subsection (11) to the residential and small claims division of the Michigan tax tribunal within 35 days of that decision." MCL 211.7cc(13). But this time requirement does not apply when the PRE was not on the tax roll. In such a situation, "an owner who owned and occupied a principal residence within the time period prescribed in subsection (2) for which the exemption was not on the tax roll . . . may file an appeal with the July board of review or December board of review in the year for which the exemption was claimed or the immediately succeeding 3 years." MCL 211.7cc(19).
See also MCL 211.7cc(11) ("If a county elects to audit the exemptions claimed under this section as provided in subsection (10) and . . . believes that the property for which an exemption is claimed is not the principal residence of the owner claiming the exemption, the county treasurer . . . may, except as otherwise provided in subsections (5), (32), and (33), deny an existing claim by notifying the owner . . . in writing of the reason for the denial and advising the owner that the denial may be appealed to the residential and small claims division of the Michigan tax tribunal within 35 days after the date of the notice.").
Petitioner argues that, although MCL 211.7cc(13) provides a 35-day limit for filing an appeal with the Tribunal, he was able to bypass that limit and file an appeal with the Board of Review because the denial of his PRE removed the exemption from the tax roll "immediately and retroactively." Petitioner cites MCL 211.7cc(11) and the PRE Guidelines as support for the directive that an exemption is removed from the tax rolls when such exemption is denied. See MCL 211.7cc(11) ("If the county treasurer . . . denies an existing claim for exemption, the county treasurer . . . shall direct the assessor of the local tax collecting unit in which the property is located to remove the exemption of the property from the assessment roll . . . ."); Michigan Department of Treasury, Guidelines for the Michigan Principal Residence Exemption Program <https://www.michigan.gov/documents/taxes/2856_PRE_guidelines_607370_7.pdf> p 11 (accessed October 11, 2021) ("Is the exemption removed from the tax roll at the time the notice of denial is done? Yes.").
While petitioner is correct that an exemption is removed from the tax rolls upon denial of the exemption, this does not create an avenue to bypass the appeal to the MTT in favor of appealing to the Board of Review. As an initial matter, such an interpretation would render portions of MCL 211.7cc nugatory because the various sections requiring an appeal to the Tribunal within 35 days of a denial would be ineffective. See MCL 211.7cc(6), (8), (11), and (13). "[W]e must give effect to every word, phrase, and clause and avoid an interpretation that would render any part of the statute surplusage or nugatory." Nyman v Thomson Reuters Holdings, Inc, 329 Mich.App. 539, 544; 942 N.W.2d 696 (2019) (quotation marks and citation omitted; alteration in original).
Further, the PRE Guidelines explicitly address petitioner's contention:
Can an appeal be made to the Board of Review to overturn a denial?
No. The Board of Review has no authority to overturn a denial. An appeal of denial of a [PRE] must be made to the Residential/Small Claims Division of the Michigan Tax Tribunal. An appeal of a denial issued by the Department of Treasury must be made to the Department of Treasury, Hearings Division. [Guidelines for the Michigan Principal Residence Exemption Program <https://www.michigan.gov/documents/ taxes/2856_PRE_guidelines_607370_7.pdf> p 11.]
This information was also provided at the bottom of the PRE denial. See Michigan Department of Treasury, Notice of Denial of Principal Residence Exemption, Form 4075 ("If you disagree with this denial, you may appeal to the Residential/Small Claims Division of the Michigan Tax Tribunal within 35 days of the denial.").
The form available through the Michigan Department of Treasury's website is a more recently revised version than the form that was sent to petitioner and is contained in the lower court record. Regardless, the quoted statement is identical in both versions.
Therefore, the Tribunal did not err by determining that petitioner was required to appeal the denial to the Tribunal within 35 days of the notice of denial. MCL 211.7cc(13).
IV. DOCKET NO. 356449
Petitioner argues that the Tribunal erred by determining that the effective date of Welch's rescission was the date Cook County sent a notice of lien for the recoupment of taxes, instead of the date that Welch requested the rescission or even the date that Cook County acknowledged receipt of Welch's request. Petitioner also argues that he could have appealed respondent's denial of his PRE affidavit to the July Board of Review. Finally, petitioner argues that, under Campbell, the PRE remained effective until December 31, 2020. We disagree.The Tribunal determined that petitioner did not qualify for a PRE in 2020 on the basis of the timing of his PRE affidavit. Petitioner submitted the affidavit on May 14, 2020. Despite Welch's request to Cook County to rescind her Illinois exemption on April 30, 2020, the Tribunal found that her rescission was not effective until June 11, 2020, the date that the exemption was removed from the Illinois tax roll. In coming to this determination, the Tribunal relied on De Lamielleure. In De Lamielleure, 305 Mich.App. at 283, the petitioner was a trust for Marie De Lamielleure. In 2004, following the death of De Lamielleure, the petitioner filed a request to rescind the PRE for the property at issue. Id. However, the local assessor did not effectuate the request on the mistaken belief that it was unnecessary to remove the PRE until the property was sold. Id. at 283-284. The respondent audited the petitioner, determined that it was not eligible for a PRE, and assessed the tax for tax years 2005 through 2007. Id. at 284. The Tribunal reinstated the PRE for those tax years. Id. at 283. On appeal, this Court determined that the Tribunal made an error of law because the petitioner "benefitted from [the PRE that De Lamielleure claimed during her lifetime] despite an ineffectual attempt to rescind the PRE." Id. at 287. "Additionally, the Legislature's inclusion of scenarios in which an assessor failed to rescind a PRE as requested and in which a rescinded PRE had not been removed from the tax rolls indicate that a claim can continue to exist despite the intention to have it removed." Id.
The Tribunal did not make an error of law when it used De Lamielleure to find that the effective date of Welch's rescission of the Illinois exemption was the date that it was removed from the tax roll and not the date that Welch expressed her intention to have the exemption rescinded. Further, the date that Cook County acknowledged receipt of Welch's request similarly is not the effective date because that was not the date that the exemption was actually rescinded.
Additionally, petitioner's attempt to distinguish this case from De Lamielleure is without merit. Although De Lamielleure involved the rescission of Michigan exemption while this case involves the rescission of an Illinois exemption, the difference is immaterial because both cases center on the effective date of the rescission for purposes of the Michigan PRE. Petitioner also suggests that the rules in Illinois regarding the rescission of an exemption are different from the rules in Michigan without providing any supporting authority. An argument is abandoned when an appellant fails to "properly support [the] argument with analysis or citation of relevant authorities . . . ." Johnson Family Ltd Partnership v While Pine Wireless, LLC, 281 Mich.App. 364, 386; 761 N.W.2d 353 (2008).
Petitioner next argues that he was entitled to appeal respondent's denial of his PRE affidavit to the July Board of Review. The Tribunal acknowledged that petitioner would have been able to appeal to the July Board if his PRE affidavit had been filed after Welch's Illinois exemption was rescinded: "The Tribunal agrees with the conclusion of the [proposed order and judgment] that [p]etitioner would have qualified for the exemption if the claim had been filed between June 11, 2020 and June 30, 2020, and as such, the power is reserved to the July or December Board of Review as controlled by statute." But at the time that petitioner filed the PRE affidavit, he was not entitled to a PRE because Welch still claimed a substantially similar exemption in Illinois. Therefore, whether petitioner could have appealed the May 14, 2020 PRE affidavit to the Board of Review is immaterial because the Board would have been unable to grant the PRE affidavit. See MCL 211.7cc(2) and (3)(b).
Petitioner finally argues that, under Campbell v Mich. Dep't of Treasury, 331 Mich.App. 312; 952 N.W.2d 568 (2020), lv gtd 506 Mich. 964 (2020), the PRE was effective until December 31, 2020. "Generally, an issue is not properly preserved if it is not raised before, addressed, or decided by the circuit court or administrative tribunal." Polkton Charter Twp v Pellegrom, 265 Mich.App. 88, 95; 693 N.W.2d 170 (2005). Petitioner never raised the issue that the PRE remained in effect until December 31, 2020. Because this issue was not raised before the Tribunal, it is unpreserved for appeal. This Court is under no obligation to review unpreserved claims of error. See Walters v Nadell, 481 Mich. 377, 387; 751 N.W.2d 431 (2008). Although "this Court has [the] inherent power to review an issue not raised in the trial court to prevent a miscarriage of justice," id., more than the loss of money is needed to show a miscarriage of justice or manifest injustice, Napier v Jacobs, 429 Mich. 222, 233-234; 414 N.W.2d 862 (1987). We conclude there is no miscarriage of justice or manifest injustice in declining to consider the issue that petitioner did not raise before the Tribunal. We therefore decline to address the issue.
Affirmed.