Property taxes 101 part two: Administration

Everyone pays property taxes but many citizens do not understand the process used to determine their tax bill.

Everyone pays property taxes, but many citizens do not understand the process used to determine their tax bill. Michigan State University Extension has made it a little easier for Michigan taxpayers to become educated about the tax assessment process by going over some of the most confusing concepts.

Property taxes are the single largest source of revenue for local units of government. Cities and townships share three constitutional powers: assessing property, collecting property taxes and conducting elections. The administration of property taxes is a joint effort between the local, county and state government. 

Property tax collection is a 12-month process even though citizens only pay these taxes once or twice a year. Tax Day is December 31 of each year for assessment purposes. The class, use and value of property as of December 31 are used to determine the state equalized value (SEV) for the next year.

The municipal assessor must send the Notice of Assessment to each property owner by March 1 of the following year. Property owners may appeal this assessment if they disagree with either the value or classification in the notice. The appeal goes to the local Board of Review. This Board is made up of property owners in the community appointed by local elected officials. The Board reviews the assessment rolls of the community and hears property owner’s appeals. This Board is the only body with the authority to change or correct the municipality’s assessment rolls.

The final assessment rolls are sent to the county in April. The county’s role is to assure that all communities are assessing property using the same valuation methods, a process called equalization. The State Tax Commission issues the final equalization order. The local government certifies their millage rates (including reductions) and hearings on “truth in taxation” were held. At this point, the taxable value is known for each parcel in the city, village or township and the millage rates have been certified as accurate and correct. Taxes may be paid annually or split into summer and winter payments. 

Unpaid taxes as of March 1 are considered delinquent and are turned over to the county Treasurer by state law to collect. Most counties have established a Delinquent Tax Revolving Fund (DTRF) which enables the County Treasurer to reimburse the local government for those unpaid taxes. This makes sure that the local government has enough revenue to provide for the health, safety and welfare of its residents. When the County Treasurer collects these unpaid taxes, those monies are returned to the fund, hence the name “revolving fund.”

Properties that have two years unpaid taxes are subject to tax forfeiture. If the county has reimbursed the local government for these unpaid taxes, the Treasurer can foreclose and take possession of the property.

To learn more about the history of property taxes, see “Property taxes 101 – Part One

The Citizens Research Council of Michigan’s “Outline of the Michigan Tax System” can provide a review of all the different local and state taxes in Michigan. 

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