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VALU TEC UPDATE
October 30, 2006
MICHIGAN PERSONAL PROPERTY REPORTING UPDATE
Sent: Thursday, October 26, 2006 9:03 AM
To: Tony Sokol
Cc: Harold Anderson; Scott Lonberger; Gail Mitchell; Kelli Sobel; Dianne Wright
Subject: Re: Personal Property Issue
STC Bulletin 3 of 2000 states that "the costs of Computer Numeric Controls and Programmable Logic Controls are reported at Section B of form L-4175 along with the machines they serve." Further, the instructions to form L-4175 relating to Section B describe a variety of specific types of computer controlled equipment when are reported in Section B. Under MCL 211.19, adherence to these instructions (for reporting purposes) is mandatory, although this statute regulates the form of reporting and does not prevent the assessor from considering a value different than that reached by using the STC recommended valuation procedure. The only, very narrow, exception to Section B reporting is also set forth in STC Bulletin 3 of 2000, which allows certain narrowly defined portions of Distributive Control Systems (as defined in the Bulletin) to be reported in Sections D and F, but only if the accounting records (not the tax reps recalculations) provide sufficiently detailed entries. Finally, anyone considering the matter should be aware that the STC has consistently determined incorrect reporting when the purported "computer costs" of machinery have been "split out" by the taxpayer. As you know the penalty and interest in effect for incorrect reporting is at the rate of 1.25% per month and it frequently takes up to 3 or 4 years (after the due date for the earliest under-reporting) for a determination of under-reporting to be made by the STC. I have received several complaints from taxpayers that tax reps have been paid and are long gone by the time a STC order is issued. I have also personally sent a certified letter to one tax rep commemorating the fact that computer costs cannot be split out. A taxpayer could ask whether the rep has received such a letter from me. The taxpayer could also call me or request that the tax rep indicate in writing that they have inquired of us regarding the split-out of computer costs, as suggested by the last paragraph of the section of the form L-4175 Instructions which is entitled "Page 2 - General Instrucitons for Sections A through F:"
The information contained in this response constitutes an interpretation of one or more statutes (or other authoritative pronouncements) administered by the Bureau of Local Government Services and not legal advice. As the interpretation reached in this response is limited to the facts provided, any variation in those facts might result in a different interpretation being reached. Therefore, the recipient may wish to consult counsel before proceeding in this matter.
Timothy Schnelle, Manager
Commercial/Industrial/Utilities Valuation Section
Assessment and Certification Division
Michigan Department of Treasury
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