Bonzheim v. City of Wyoming
| Decision Date | 19 May 2022 |
| Docket Number | 357452 |
| Parties | KAREN J. BONZHEIM, Petitioner-Appellant, v. CITY OF WYOMING, Respondent-Appellee. |
| Court | Court of Appeal of Michigan — District of US |
KAREN J. BONZHEIM, Petitioner-Appellant,
v.
CITY OF WYOMING, Respondent-Appellee.
No. 357452
Court of Appeals of Michigan
May 19, 2022
UNPUBLISHED
Tax Tribunal LC No. 20-003539-TT
Before: Letica, P.J., and Markey and O'Brien, JJ.
Per Curiam.
Petitioner appeals as of right the Tax Tribunal's final opinion and judgment denying her the poverty exemption for the 2020 property taxes on her home located in Wyoming, Michigan. We reverse.
I. BASIC FACTS AND PROCEDURAL HISTORY
On June 6, 2017, the State Tax Commission (STC) issued a bulletin[1] addressing the application of MCL 211.7u, the homestead property tax exemption for persons unable to pay because of poverty. The bulletin instructed that local units were required to adopt guidelines used to approve or deny a poverty exemption that included consideration of total household income as well as an asset test. It advised of items to be designated as income that they included "[r]egular payments from social security."[2] When addressing the asset test, the bulletin stated:
The purpose of an asset test is to determine the resources available: cash, fixed assets or other property that could be converted to cash and used to pay property taxes in the year the poverty exemption is filed. The local unit should require that claimants provide a list of all assets when applying for a poverty exemption. Following is a list of assets that may be included in the annual guidelines
• A second home, land, vehicles
• Recreational vehicles such as campers, motor-homes boats and ATV[]s
• Buildings other than the residence
• Jewelry, antiques, artworks
• Equipment, other personal property of value
• Bank accounts (over a specified amount), stocks
• Money received from the sale of property such as stocks, bonds, a house or car (unless a person is in the business of selling such property)
• Withdrawals of bank deposits and borrowed money
• Gifts, loans, lump-sum inheritances and one-time insurance payments
• Food or housing received in lieu of wages and the value of food and fuel produced and consumed on farms
•Federal non-cash benefit programs such as Medicare, Medicaid, food stamps, and school lunches. [Emphasis added.]
On November 18, 2019, the Wyoming City Council resolved to adopt a local poverty exemption. The resolution reflects that, among other things, an applicant for the exemption must file with the City Assessor:
A sworn statement that the fair market value of the combined assets of all persons residing in the residence for which the exemption is sought do not exceed the following guidelines. Assets include but are not limited to, real estate other than the principal residence, personal property, motor vehicles excluding the cash value of one automobile used for routine transportation needs, recreational vehicles and equipment, certificates of deposit, savings accounts, checking accounts, stocks, bonds, life insurance, retirement funds, and any other tangible or intangible person[al] property or thing of value.
i. $2, 500 for the claimant, adjusted annually in accordance with cost of living adjustments based on the Inflation Rate Multiplier annually calculated by the Michigan State Tax Commission, and
ii. $6, 000 for the household seeking exemption, adjusted annually in accordance with the cost of living adjustments based on the Inflation Rate Multiplier annually calculated by the Michigan State Tax Commission.
With the assistance of legal counsel, petitioner, a Wyoming resident, applied for the poverty exemption for the 2020 tax year. According to her application, petitioner owned a home in Wyoming and utilized this home as her primary residence, where she resided as a single household with her brother, David Neely. Petitioner delineated a $12, 986 annual income, with $11, 743 in annual expenses. Respondent's application includes an income worksheet that apprises applicants of the following items that may be included as income:
• Regular contributions from persons not living in the residence.
• Net receipts from non-farm or farm self-employment (receipts from a person's own business, professional enterprise, or partnership, after business expense deductions).
• Regular payments from social security, railroad retirement, unemployment, workers compensation, veteran's payments, public assistance, Supplemental Security income (SSI).
• Alimony, child support, military family allotments, or other regular support from an absent family member or someone not living in the household.
• Alimony, child support, military family allotments.
• Private and governmental retirement and disability pensions, regular insurance, annuity payments.
• College or university scholarships, grants, fellowships, and assistantships.
• Dividends, interest, and net income from rentals, royalties, estates, trusts, gambling or lottery winnings. [Underlining in original, italics added.]
To calculate her income on this form, petitioner reported $9, 674 in Social Security benefits and $3, 312 in food stamp benefits.
On the asset worksheet, petitioner delineated no items. She recorded individual and household assets of $0. However, respondent's worksheet indicates that the following, but not limited itemization, may be considered assets:
• A second home, rental property, land, etc.
• Vehicles
• Recreational vehicles such as campers, motor-homes, boats and ATV[]s
• Buildings other than the residence
• Jewelry, antiques, artwork.
• Equipment, tools, and other personal property of value
• Bank accounts, stocks.
• Money received from the sale of property such as stocks, bonds, a house or car
• Withdrawals of bank deposits and borrowed money
• Gifts, loans, lump-sum inheritances and one-time insurance payments
• Food or housing received in lieu of wages and the value of food and fuel produced and consumed on farms
• Federal non-cash benefit programs such as Medicare, Medicaid, food stamps, and school lunches. [Emphasis added.]
Thus, respondent's application listed food stamps as an asset for purpose of calculating the poverty exemption. However, petitioner purportedly did not identify any food assistance benefits as assets because, when she applied, her Bridge card[3] account had a balance at or near zero.[4]
Attached to her application, petitioner submitted a Social Security Benefit Statement, which reflects that she received $9, 674 in benefits in 2019. She provided documentation that her Social Security benefit amount for 2020 would be $819 a month or $9, 828 annualized. Petitioner also presented a "Notice of Case Action" from the Department of Health and Human Services (DHHS), which reflected that her monthly food stamp benefits for the period January 1 to April 30, 2020, for herself and Neely, was $276 a month or $3, 312 annualized. This notice characterized the benefit issued to a "household" with a size of "2."
The Wyoming Board of Review reviewed petitioner's application at its July 2020 meeting. The board members completed a review affidavit. The affidavit concluded that petitioner passed the "income test," having less income than the limit for the poverty exemption, $16, 910. However, it was also concluded that petitioner failed the "asset test," having claimed $3, 312 in assets when the asset limit for the exemption was $6, 000.[5] On July 23, 2020, the Wyoming Assessor's Office sent petitioner a letter informing her that her exemption application was denied because of a "[f]ailed asset test."
On August 25, 2020, petitioner appealed to the Small Claims Division of the Tax Tribunal. On March 12, 2021, the Administrative Law Judge (ALJ) issued a proposed opinion and judgment,
recommending that petitioner was not entitled to the property exemption for the 2020 tax year. The proposed opinion and judgment contained the following findings of fact:
1. The subject property is located at 4531 Pinehurst Avenue SW, Wyoming, MI in Kent County.
2.The subject property is classified as residential real.
3.Petitioner owned the subject property for the tax year at issue.
4.The subject property had a principal residence exemption (PRE) of 100% for the tax year at issue.
5.Petitioner submitted an application requesting the Poverty Exemption on July 7, 2020.
6.The number of persons residing in the subject household for the tax year at issue was two (2).
7. The "federal poverty guidelines" or alternative guidelines adopted by Respondent for the subject household for the tax year at issue provide for an income level of $16, 910 for a household of two (2).
8.Petitioner's annual household income pursuant to MCL 211.7u for the year at issue is $9, 672 based on her receipt of $806 in monthly Social Security income.
9.Respondent has adopted an "asset test" that provides for the maximum value of assets for the applicant of $2, 500 and for the household of $6, 000.
10.The value of the applicant assets for Petitioner is $3, 312 based on her receipt of food stamps in the amount of $276 per month.
The ALJ summarized petitioner's argument and rejected it, stating:
Here, Petitioner claims that she qualifies for the poverty exemption but was denied because she failed Respondent's asset test. Petitioner also claims that (i) she has zero assets and reported her monthly food stamps in the amount of $276 as income as required by other jurisdictions, (ii) she recently declared bankruptcy and listed zero assets on her bankruptcy petition, and (iii) she disagrees with Respondent's position on food stamps, as an asset is what you have available and not what you may receive. Although Petitioner submitted documentation in support of her claims, Petitioner failed to properly...
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