Campbell v. Mich. Dep't of Treasury

331 Mich.App. 312

952 N.W.2d 568

Andrew P. CAMPBELL, Petitioner-Appellee,

v.MICHIGAN DEPARTMENT OF TREASURY, Respondent-Appellant.

No. 350248

Court of Appeals of Michigan.

Submitted January 15, 2020, at Lansing.

Decided February 4, 2020, 9:05 a.m.

Dana Nessel, Attorney General, Fadwa A. Hammoud, Solicitor General, Suzanne Sonneborn, Chief Legal Counsel, and James A. Ziehmer and Michael Hill, Assistant Attorneys General, for the Michigan Department of Treasury.

Before: Boonstra, P.J., and Tukel and Letica, JJ.

Tukel, J. Respondent appeals by right the order of the Michigan Tax Tribunal (MTT) entitling petitioner to claim a 100% principal residence exemption (PRE) for tax year 2017 on certain real property. We affirm.

I. UNDERLYING FACTS

Petitioner is a lifelong Michigan resident who purchased property in Arizona in 2016. When petitioner purchased the Arizona property, the state of Arizona automatically gave him a $600 credit on his tax bill without petitioner's knowledge, apparently because it assumed the Arizona property was petitioner's primary residence. Petitioner claimed a PRE for his Michigan property when he filed his 2017 taxes, but respondent denied the exemption because petitioner had received a similar exemption from Arizona for that same tax year. After learning that Arizona considered his Arizona residence to be his primary residence, petitioner informed the treasurer of Maricopa County, Arizona, that he was not an Arizona resident. Petitioner's Arizona residency status was changed "within 24 hours." Despite Arizona changing petitioner's residency status, however, respondent still refused to grant petitioner a PRE for the Michigan property for tax year 2017.

Petitioner appealed this denial, and an "informal conference" was conducted in August 2018 with the parties participating by telephone. The referee recommended that the PRE for the Michigan property remain denied, and respondent's director of the Bureau of Tax Policy adopted the referee's recommendation. Petitioner then filed a petition for relief in the MTT in November 2018. The MTT held a telephonic hearing in May 2019 and issued a written order in July 2019. The MTT found that petitioner did not apply for the Arizona property tax exemption but that Arizona had automatically given it to him at closing. Nevertheless, the MTT found that even though petitioner had not applied for the exemption, under MCL 211.7cc(3), he still "claimed" an exemption similar to the PRE in another state for tax year 2017. See note 1 of this opinion. Accordingly, the property did not qualify for the PRE, and petitioner's rescission of the Arizona exemption had no effect on the Michigan PRE. Nonetheless, the MTT concluded that under MCL 211.7cc(4), petitioner's previous PRE for the Michigan property remained in effect through December 31, 2017. Thus, the tribunal ruled that the Michigan property was entitled to a 100% PRE for the 2017 tax year.

Respondent moved for reconsideration, and the MTT denied the motion. This appeal followed.

II. STANDARD OF REVIEW

Unless there is fraud, this Court's "review of MTT decisions is limited to determining whether the MTT 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). If this Court's "review requires the interpretation and application of a statute, that review is de novo." Power v. Dep't of Treasury , 301 Mich. App. 226, 230, 835 N.W.2d 622 (2013). However, "[t]his Court will generally defer to the [MTT's] interpretation of a statute that it is charged with administering and enforcing." Twentieth Century Fox Home Entertainment, Inc. v. Dep't of Treasury , 270 Mich. App. 539, 541, 716 N.W.2d 598 (2006) (quotation marks and citation omitted; alteration in original). Additionally, " ‘statutes exempting persons or property from taxation must be narrowly construed in favor of the taxing authority.’ " Power , 301 Mich. App. at 230, 835 N.W.2d 622, quoting Liberty Hill Housing Corp. v. Livonia , 480 Mich. 44, 49, 746 N.W.2d 282 (2008). Finally, "[w]e deem the tribunal's factual findings conclusive if they are supported by ‘competent, material, and substantial evidence on the whole record.’ " Liberty Hill , 480 Mich. at 49, 746 N.W.2d 282 (quotation marks and citations omitted).

III. ANALYSIS

As an initial matter, whether petitioner was properly denied the PRE is not at issue in this appeal. Respondent takes no issue with the portion of the MTT's decision that ruled the PRE was properly denied. The issue is whether the PRE, after being denied, should have continued through December of that tax year, 2017, or whether it should have ceased immediately upon the granting of the Arizona exemption.

PREs are created by and addressed under MCL 211.7cc of the General Property Tax Act, MCL 211.1 et seq. , which provides:

(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. Notwithstanding the tax day provided in [ MCL 211.2 ], the status of property as a principal residence shall be determined on the date an affidavit claiming an exemption is filed under subsection (2). [ MCL 211.7cc(1).]

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." MCL 211.7cc(2). There are a number of exclusions to a claimed PRE. See MCL 211.7cc(3). In relevant part, MCL 211.7cc(3) states:

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 ... a person who claims an exemption under this section shall, within 30 days, file an affidavit on a form ... 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....

(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. [Emphasis added.]

MCL 211.7cc(4), which is at the heart of this appeal, provides:

Upon receipt of an affidavit filed under subsection (2) and unless the claim is denied under this section, the assessor shall exempt the property from the collection of the tax levied by a local school district for school operating purposes to the extent provided under ... MCL 380.1211, as provided in subsection (1) until December 31 of the year in which the property is transferred or , except as otherwise provided in subsections (5), (32), and (33), is no longer a principal residence as defined in [ MCL 211.7dd ], or the owner is no longer entitled to an exemption as provided in subsection (3). [Emphasis added.]

The critical issues in this case are the meaning of the phrase "until December 31 of the year in which" certain events occur and whether that language applies only to the immediately connected phrase "the property is transferred" or whether it also applies to the following phrases, "is no longer a principal residence" and "the owner is no longer entitled to an exemption." Respondent asserts that the December 31 language modifies only the immediately connecting phrase and not the two following phrases. Accordingly, respondent argues, petitioner should not have received a PRE for 2017 because once he was no longer entitled to the exemption, the PRE immediately ceased.

This Court and our Supreme Court have not previously addressed whether the December 31 language in MCL 211.7cc(4) applies to one, two, or all three of the circumstances set forth in the statute. Accordingly, this is an issue of first impression.

"When interpreting a statute, [this Court] must ascertain the Legislature's intent," which is accomplished "by giving the words selected by the Legislature their plain and ordinary meanings, and by enforcing the statute as written." Griffin v. Griffin , 323 Mich. App. 110, 120, 916 N.W.2d 292 (2018) (quotation marks and citation omitted). If a statute is unambiguous, it must be applied as plainly written. McQueer v. Perfect Fence Co. , 502 Mich. 276, 286, 917 N.W.2d 584 (2018). This Court may not read something into the statute "that is not within the manifest intent of the Legislature as derived from the words of the statute itself." Id. (quotation marks and citation omitted). Additionally, this Court should "consider both the plain meaning of the critical word or phrase as well as its placement and purpose in the statutory scheme. As far as possible, effect should be given to every phrase, clause, and word in the statute." In re AGD, Minor , 327 Mich. App. 332, 343, 933 N.W.2d 751 (2019) (quotation marks and citation omitted).

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