Campbell v. Dep't of Treasury

• Court: Michigan Supreme Court
• Writing for the Court: Welch, J.
• Citation: Campbell v. Dep't of Treasury, 509 Mich. 230, 984 N.W.2d 13 (Mich. 2022)
• Decision Date: 09 June 2022
• Docket Number: Docket No. 161254,Calendar No. 1
• Parties: Andrew P. CAMPBELL, Petitioner-Appellee, v. DEPARTMENT OF TREASURY, Respondent-Appellant.

509 Mich. 230

984 N.W.2d 13

Andrew P. CAMPBELL, Petitioner-Appellee,

v.DEPARTMENT OF TREASURY, Respondent-Appellant.

Docket No. 161254

Calendar No. 1

Supreme Court of Michigan.

Argued November 9, 2021

Decided June 9, 2022

Dana Nessel, Attorney General, Fadwa A. Hammoud, Solicitor General, and James A. Ziehmer, Assistant Attorney General, for the Department of Treasury.

Jason C. Long, Birmingham, for the Real Property Law Section of the State Bar of Michigan, amicus curiae.

BEFORE THE ENTIRE BENCH

Welch, J.

In this property tax dispute, we consider whether a property owner is entitled to claim a principal residence exemption (PRE) under Michigan tax law when the owner received a similar tax benefit for a home in another state. We conclude that the property owner is not entitled to the PRE. Specifically, under MCL 211.7cc(3)(a), a property owner "is not entitled to [the PRE] in any calendar year in which ... [t]hat person has claimed a substantially similar exemption, deduction, or credit, regardless of amount, on property in another state." MCL 211.7cc(3)(a) (paragraph structure omitted). Accordingly, we reverse the judgment of the Court of Appeals and reinstate the Department of Treasury's October 2, 2018 decision and order of determination denying petitioner's PRE for the 2017 tax year.

I. FACTS AND PROCEDURAL HISTORY

Petitioner, Andrew P. Campbell, is a lifelong Michigan resident. For many years, petitioner claimed and enjoyed a PRE on his Michigan residence. In late 2016, petitioner purchased a second home in Surprise, Arizona. Petitioner indeed received a surprise the following year: respondent, the Michigan Department of Treasury (Treasury), reviewed and denied petitioner's PRE claim for his Michigan property for the 2017 tax year. The denial notice stated the following:

The parcel did not contain a dwelling owned and occupied by a person(s) as his or her principal residence. A person is not entitled to a PRE if the property is not occupied by the owner as his or her principal residence as defined by MCL 211.7dd and/or if any of the conditions detailed in Subsection (3) of MCL 211.7cc occur (refer to the back of this letter for the applicable statutory language). [Emphasis omitted.]

Petitioner appealed Treasury's determination to the Michigan Tax Tribunal's Small Claims Division. As part of his appeal, petitioner attached numerous documents in an attempt to demonstrate his Michigan residency, including his driver's license, insurance, vehicle registrations, voter registration, library card, credit card and banking statements, tax records, and a jury summons. Treasury's position was that it was not questioning whether petitioner actually maintained his Michigan home as his principal residence. Rather, Treasury determined that petitioner was not entitled to the PRE for the 2017 tax year because he had claimed a substantially similar exemption, deduction, or credit in Arizona that same year.

At the Tax Tribunal hearing, petitioner admitted that he had received, unknowingly and unintentionally, a substantially similar exemption, deduction, or credit on his Arizona tax bill because, at least according to the state of Arizona, the Arizona property was his primary residence (and thus eligible for a reduction on property taxes otherwise owed). When petitioner became aware that the effect of this Arizona "primary residence" status would eliminate his ability to claim the PRE on his Michigan property taxes, he promptly contacted the Maricopa County Assessor's Office and had the classification corrected on a prospective basis. By all appearances, this seems to have been an honest mistake.

However, Treasury took the position that under Michigan law, it makes no difference whether the substantially similar exemption, deduction, or credit is deliberately claimed or later rescinded.

The Tax Tribunal agreed with Treasury that petitioner was not entitled to the PRE for the 2017 tax year because he had claimed a substantially similar tax benefit in Arizona and that this determination stood without regard to the amount of the benefit offered by Arizona or petitioner's subsequent rescission of the Arizona primary residence classification. Despite upholding Treasury's determination under MCL 211.7cc(3)(a), the Tax Tribunal then held, with minimal analysis, that petitioner's Michigan PRE continued until the end of that tax year—i.e., December 31, 2017—under a different subsection, MCL 211.7cc(4). The result of this decision was that petitioner was set to receive both the Michigan PRE and Arizona's substantially similar tax benefit for the 2017 tax year. Treasury appealed.

Our Court of Appeals affirmed in a published opinion, holding that "the no-longer-valid exemption remained in effect through December 31 of the 2017 tax year" under MCL 211.7cc(4) and that petitioner "is entitled to 100% of the PRE for that year." Campbell v. Dep't of Treasury , 331 Mich. App. 312, 327, 952 N.W.2d 568 (2020). It reasoned that this was the necessary result of "the public-policy choices made by the Legislature in the statutes at issue." Id. at 327 n. 3, 952 N.W.2d 568. In particular, the Court understood Subsection (4) as "creating a uniform taxation scheme that promotes ease of administration" because it "provides a uniform formula for determining the date on which an exemption that has become invalid ceases to apply." Id. at 324, 952 N.W.2d 568. We granted leave to consider whether our Court of Appeals erred by interpreting MCL 211.7cc(4) as allowing petitioner's PRE to continue through December 31 of the calendar year in which he was not entitled to the exemption. Campbell v. Dep't of Treasury , 506 Mich. 964, 950 N.W.2d 742 (2020).¹

II. STANDARD OF REVIEW

Our review of Michigan Tax Tribunal decisions is limited. Mt. Pleasant v. State Tax Comm , 477 Mich. 50, 53, 729 N.W.2d 833 (2007). "In the absence of fraud, error of law or the adoption of wrong principles, no appeal may be taken to any court from any final agency provided for the administration of property tax laws from any decision relating to valuation or allocation." Const. 1963, art. 6, § 28. We review de novo questions of statutory interpretation. Mt. Pleasant , 477 Mich. at 53, 729 N.W.2d 833.

III. ANALYSIS

A. INTERPRETATIVE STANDARDS

Under the General Property Tax Act (GPTA), MCL 211.1 et seq. , "all property, real and personal, within the jurisdiction of this state, not expressly exempted , shall be subject to taxation." MCL 211.1 (emphasis added). We understand and give effect to the Legislature's intent as expressed in its words and phrases according to their plain meaning. Bisio v. Village of Clarkston , 506 Mich. 37, 44, 954 N.W.2d 95 (2020).

Although the Tax Tribunal's interpretation of a tax statute is entitled to " ‘respectful consideration,’ " we will enforce an unambiguous statute as written.

SBC Health Midwest, Inc. v. Kentwood , 500 Mich. 65, 71, 894 N.W.2d 535 (2017) (citation omitted).

B. THE MICHIGAN PRINCIPAL RESIDENCE EXEMPTION

Because taxation is the rule and exemption from taxation the exception, the burden is on the claimant to establish the right to a tax exemption. Detroit v. Detroit Commercial College , 322 Mich. 142, 149, 33 N.W.2d 737 (1948) ; MCL 211.1. The PRE is governed by MCL 211.7cc, which details how a local tax collecting unit, when the exemption is properly claimed, must exempt a qualifying principal residence from the collection of the tax levied by local school districts for school operating purposes. Subsection (1) provides an express exemption for a principal residence "if an owner of that principal residence claims an exemption as provided in [ MCL 211.7cc ]."² MCL 211.7cc(1). Subsection (2) specifies the mechanics of how a property owner may claim the PRE by filing an affidavit with the local tax collecting unit on a form prescribed by Treasury attesting both "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 "that the owner has not claimed a substantially similar exemption, deduction, or credit on property in another state." MCL 211.7cc(2).

The remaining sections of MCL 211.7cc provide, in pertinent part:

(3) ... 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. Upon request by the department of treasury, the assessor of the local tax collecting unit, the county treasurer or his or her designee, or the county equalization director or his or her designee, a person who claims an exemption under this section shall, within 30 days, file an affidavit on a form prescribed by the department of treasury stating that the person has not claimed a substantially similar exemption, deduction, or credit on property in another state. A claim for a substantially similar exemption, deduction, or credit in another state occurs at the time of the filing or granting of a substantially similar exemption, deduction, or credit in another state. If the assessor of the local tax collecting unit, the department of treasury, or the county denies an existing claim for exemption under this section, an owner of the property subject to that denial cannot rescind a substantially similar exemption, deduction, or credit claimed in another state in order to qualify for the exemption under this section for any of the years denied. If a person claims an exemption under this section and a substantially similar exemption, deduction, or credit in another state, that person is subject to a penalty of $500.00. The penalty shall be distributed in the same manner as interest is distributed under subsection (25).

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(4) Upon receipt of an affidavit filed under subsection (2) and unless the claim is denied under this section , the assessor shall

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