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Estate of Schubert v. Department of Treasury

Court of Appeals of Michigan

December 21, 2017

ESTATE OF MARGUERITE SCHUBERT and DALE E. SCHUBERT PERSONAL REPRESENTATIVE, Petitioner-Appellants,
v.
DEPARTMENT OF TREASURY, Respondent-Appellee.

         Tax Tribunal LC No. 15-000240-TT

          Before: Murphy, P.J., and M. J. Kelly and Swartzle, JJ

          PER CURIAM.

         Petitioner, Dale Schubert as personal representative for the Estate of Marguerite Schubert, appeals as of right the Tax Tribunal order determining that the Estate was not entitled to a principal residence exemption (PRE), MCL 211.7cc(1), for the 2010, 2011, 2012, and 2013 tax years. For the reasons stated in this opinion, we affirm.

         I. BASIC FACTS

         The subject property (823 S. Lakeshore Drive) is a residential property located in Ludington, Michigan. Schubert and her husband purchased the property in 1977. According to petitioner, she first filed an affidavit claiming a PRE for the property in 1994, and it was granted at that time.[1] It appears that from 1994 until 2013, Schubert continued to claim and receive a PRE on the property. However, around August 2013, the Department began an audit on the property. And, on November 14, 2013, the PRE was denied for the 2010, 2011, 2012, and 2013 tax years after the Department determined that it was not owned and occupied as Schubert's principal residence.

         Schubert, through her personal representative, sought an informal conference before the Department's PRE unit. The hearing was held on September 22, 2014.[2] Petitioner asserted that before her retirement, Schubert was a public school teacher in Midland, Michigan. After her retirement, she continued to use a Midland apartment as her mailing address until her son took over responsibility for her bills. Additionally, her extended family remained in Midland, and she continued to see doctors in Midland. Petitioner represented to the conference referee that Schubert intended to live at the Ludington property during her retirement. Schubert's son explained at the conference that Schubert seasonally resided in Florida, Arizona, Midland, and Ludington, but that she spent most of the year at the Ludington property.[3] He maintained that Schubert only kept the apartment in Midland for convenience. In the summer of 2012, Schubert moved into a rehabilitation center, where she stayed until September or October 2012. She then returned to the subject property. In the fall of 2013, she entered a different rehabilitation facility, where she remained until her death in 2014.

         Despite the facts presented by petitioner, the Department maintained that its denial of the PRE was proper for a number of reasons. First, it questioned whether Schubert was an "owner" as defined by MCL 211.7dd(a). Second, it contended that there was no evidence that Schubert occupied the property as her principal residence during the 2010 through 2013 tax years. Third, the Department asserted that in 2012 and 2013, when Schubert was at the rehabilitation facilities, she did not maintain an intent to return to the subject property and she did not meet the requirements to retain the exemption under MCL 211.7cc(5)(a), (b), or (c).

         The informal conference referee found that Schubert was an owner of the property because she was a grantor who had placed her property in a revocable trust. See MCL 211.7dd(a)(vi). The referee, however, determined that petitioner had failed to present any documentation showing that the Ludington property was Schubert's principal residence, whereas the Department presented a number of documents to show that Schubert's principal residence was her Midland apartment. The referee further stated that because there was no evidence that the Ludington property was Schubert's principal residence during the 2010 through 2012 tax years, petitioner could not establish that Schubert was entitled to retain the exemption under MCL 211.7cc(5).[4]

         On February 13, 2015, the informal conference recommendation was adopted as the Department's final decision under MCL 211.7cc(8). Petitioner appealed the decision to the Tax Tribunal, asserting that Schubert had established a PRE for the property in 1994 and had thereafter continuously maintained the property as her primary residence until her death in 2014. In response, the Department conceded that Schubert owned the Ludington property, but contended that she did not occupy it as her principal residence for the tax years at issue. It presented documentary evidence showing that Schubert's driver's license listed her Midland address until September 2013, that her 2009 through 2012 Michigan Income tax returns listed her Midland address, that her voter registration history listed her Midland address and indicated that she was registered to vote in Midland, and that her vehicle registration address was her Midland address. In addition, the Department submitted a copy of a PRE Questionnaire completed by petitioner during the August 2013 audit, which indicated that the property was occupied "seasonally, " and a letter from Schubert's son admitting that the Midland address was Schubert's permanent mailing address.

         Petitioner responded by submitting a number of documents to establish that Schubert owned and occupied the property as her principal residence for the tax years in question. In particular, he submitted copies of envelopes sent to Schubert at her Ludington address in 2013 and 2014; a tax refund check from 2014 that reflected Schubert's Ludington address; a copy of the certificate of title for Schubert's vehicle that listed her Ludington address; a copy of Schubert's Michigan identification card apparently issued in September 2013 that proclaimed Schubert's address was in Ludington; a copy of Schubert's voter identification card stating that as of 2014 she was registered to vote in Ludington; a copy of Schubert's voter details stating that she had voted absentee in 2008, 2010, and 2012;[5] a copy of her obituary published in a Ludington area newspaper; an affidavit indicating that a letter to Schubert's creditors was published in a Ludington area newspaper; a document purporting to show that Schubert's will was probated in the county that Ludington is located within; and progress notes from Schubert's rehabilitation home noting that shortly before her death Schubert requested to be taken back to Ludington.[6]

         On June 17, 2016, the Tribunal issued a final opinion and judgment, affirming the Department's denial of the PRE for tax year 2010, 2011, and 2013, but reversing its denial for the 2013 tax year.[7] Petitioner moved for reconsideration, arguing in part that petitioner had not been allowed sufficient time to rebut the Department's evidence. On July 15, 2016, the Tribunal granted the motion, finding that rebuttal evidence may have been improperly excluded. The Tribunal ordered that the rehearing be limited to one hour, and it subsequently denied petitioner's motion to extend the time for the hearing to two hours. At the rehearing, petitioner submitted additional evidence, including copies of unredacted individual income tax returns for 2009 through 2012, a copy of the first page of Schubert's 2010-2012 Michigan Homestead Property Tax Credit claim, and a copy of a letter from Consumer's Energy stating that the subject property had not received external electrical services since June 2008.

         On February 1, 2017, the Tribunal affirmed the Department's denial of the PRE for the 2010, 2011, 2012, and 2013 tax years. The Tribunal determined that in order to qualify for a PRE, a person must both own and occupy a property as his or her principal residence on or before the relevant date of the tax years involved. The Tribunal held that although there was no question that Schubert owned the property during the relevant tax years, there was a question as to whether she occupied it as her principal residence. The Tribunal found that, based on the evidence presented, it was clear that Schubert "had a presence" at the property; however, it found that her Midland address was her principal residence. The Tribunal explained that Schubert used her Midland address for her 2009 through 2012 income tax returns; that she was registered to vote in Midland until October 3, 2013; that her Michigan Identification Card listed her Midland address until September 13, 2013; and that her vehicle was registered in Midland in 2010. The Tribunal further found that virtually all of petitioner's documentary evidence was developed after Schubert was audited in August 2013. Finally, the Tribunal found that because Schubert did not occupy the property as her principal residence before moving into a nursing home, petitioner did not qualify under MCL 211.7cc(5) for a PRE for the 2013 tax year.

         II. PRINCIPAL RESIDENCE EXEMPTION

         A. STANDARD OF REVIEW

         Petitioner argues that the Tribunal erred by affirming the Department's denial of a PRE for the property for the 2010 through 2013 tax years. In the absence of fraud, this Court reviews decisions by the Tax Tribunal for misapplication of the law or adoption of a wrong principle. Power v Dep't of Treasury, 301 Mich.App. 226, 229-230; 835 N.W.2d 622 (2013). When the Tribunal's findings of fact are supported by competent, material, and substantial evidence on the whole record those findings are conclusive. EldenBrady v City of Albion, 294 Mich.App. 251, 254; 816 N.W.2d 449 (2011). "[S]tatutes exempting persons or property from taxation must be narrowly construed in favor of the taxing authority." Power, 301 Mich.App. at 230 (quotation marks and citation omitted). The burden of proving entitlement to a tax exemption rests with the person claiming the exemption. Stege v Dep't of Treasury, 252 Mich.App. 183, 189; 651 N.W.2d 164 (2002).

         Issues regarding the proper interpretation and application of a statute are reviewed de novo. Manske v Dep't of Treasury, 282 Mich.App. 464, 468; 766 N.W.2d 300 (2009). When interpreting a statute, our main goal is to determine the Legislature's intent. EldenBrady, 294 Mich.App. at 254. The most reliable indicator of the Legislature's intent is the words used in the statute. Id. Therefore, we first examine the statutory language, giving the words used their plain and ordinary meaning. Id. at 254-255. If a statute defines a word ...


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