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Hardenbergh v. Department of Treasury

Court of Appeals of Michigan

March 27, 2018

DEPARTMENT OF TREASURY, Respondent-Appellee.

          Tax Tribunal LC No. 14-000990-TT

          Before: Sawyer, P.J., and Borrello and Servitto, JJ.


         Petitioners appeal as of right the final judgment of the Tax Tribunal upholding the Department of Treasury's denial of petitioners' request for waiver of interest under MCL 211.7cc(8). We affirm.

         The principal facts are not in dispute. Since at least 2005, Lewis R. Hardenbergh has resided on land he owns in Manistee, Michigan. Contiguous to his property is another parcel (the subject property), measuring approximately four acres and including a cottage occupied by a caretaker of the property, a house, a log cabin, two garages, and three sheds. The subject property was owned by Lewis's mother, Flora, but upon her death in 2006, it transferred to her children, petitioners.

         Upon acquiring the property in 2006, petitioners applied for a principal residence exemption (PRE) given that Lewis's property was contiguous to the subject property, although none of petitioners intended to reside, or did reside, on the subject property. When Lewis requested PRE status for the subject property David Meister, the county assessor, sought the guidance of the Manistee County Equalization Director. The director informed Meister that "the value attributable to the buildings on the Subject Property would not qualify for the PRE, but the land itself would qualify for the PRE." Because the value of the buildings amounted to 15 percent of the total taxable value of the property, petitioners claimed, and they were granted, PRE status for 85 percent of the property.

         In November 2013, the Manistee County Treasurer determined that the subject property is not eligible for the PRE and, hence, denied the PRE for 2010 through 2013. The county issued petitioners a corrected tax bill for $80, 384.90, including $20, 231.06 in interest.

         In February 2014, petitioners requested that respondent waive the interest, pursuant to MCL 211.7cc(8), which permits respondent to waive interest in the instance that the county assessor submits an affidavit attesting to an error enumerated in the statute. In their request, petitioners noted that they had followed "the guidance [the assessor] received from the County Director in claiming an 85% PRE exemption [sic]." Pursuant to statutory requirements, Meister also submitted an affidavit requesting that respondent waive the interest and noting the reason why the subject property had been allowed the 85 percent PRE. Respondent denied the interest waiver request, stating, "Based on the information we received, it has been determined that insufficient documentation was submitted to show that an assessor's error occurred as required by MCL 211.7cc(8)."

         Petitioners appealed respondent's denial of the interest waiver to the Michigan Tax Tribunal.[1] In their petition, petitioners pleaded that "the explanation submitted by the Assessor outlined the facts and circumstances which . . . constitute an 'other error' by the Assessor pursuant to [MCL 211.7cc(8).]." Petitioners further asserted that respondent made no findings to support its determination denying the interest waiver and that its decision was arbitrary. In their request for relief, petitioners requested that the Tribunal reverse respondent's decision and order that "the waiver of penalty interest be granted . . . ." Respondent countered that the "error" made was not the type of error that MCL 211.7cc(8) contemplated, and petitioners' request to waive interest was based on equitable principles not contained in the statute.

         After a hearing, the Tribunal entered a Final Opinion and Order denying petitioners' interest waiver request. It reasoned that that "other errors" are those akin to classification errors, and further noted that it was not entirely persuaded that the error at the heart of the case was made by the assessor. Petitioners now appeal.

         On appeal, petitioners first argue that the Tribunal's interpretation of MCL 211.7cc(8) was erroneous. We disagree.

         "Review of a decision by the [Michigan Tax Tribunal] is very limited." Drew v Cass Co, 299 Mich.App. 495, 498; 830 N.W.2d 832 (2013). Unless fraud is alleged, this Court reviews the Tribunal's decision for a "misapplication of the law or adoption of a wrong principle." Liberty Hill Housing Corp v City of Livonia, 480 Mich. 44, 49; 746 N.W.2d 282 (2008). "The Tribunal's factual findings will not be disturbed as long as they are supported by competent, material, and substantial evidence on the whole record." Drew, 299 Mich.App. at 499 (citation and quotations omitted). "Substantial evidence" is "more than a scintilla of evidence, although it may be substantially less than a preponderance of the evidence." Leahy v Orion Twp, 269 Mich.App. 527, 529-530; 711 N.W.2d 438 (2006) (citation omitted). Finally, this Court reviews de novo issues of statutory construction. Drew, 299 Mich.App. at 499.

         "Michigan's principal residence exemption, also known as the 'homestead exemption, ' is governed by §§ 7cc and 7dd of the General Property Tax Act [GPTA], MCL 211.7cc and MCL 211.7dd." Drew, 299 Mich.App. at 500 (citation and quotations omitted). The GPTA allows a PRE in the instance that the property is owned and occupied as a principal residence. MCL 211.7cc(2). The owner of the property claims the exemption by filing an affidavit attesting that the owner of the property owns it and occupies it as the owner's principal residence. MCL 211.7cc(2). The act also authorizes the county to audit claimed exemptions. MCL 211.7cc(10). In the instance the county denies a claimed PRE, the county treasurer issues a corrected tax bill including interest. MCL 211.7cc(11).

         Under certain circumstances, the Department of Treasury may waive the interest accrued in a corrected tax bill issued as a result of a rescinded ...

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