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Merlo
Merlo, Accountant
Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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We have a small business in Michigan, we owe personal property

Resolved Question:

We have a small business in Michigan, we owe personal property taxes. The city is threatening to close us down and auction stuff off. Our bank (due to several loans we have) has a lien on everything we own. Can the city shut us down or can they just put a lien on the business?
Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.
HelloCustomer

Can you please tell me what city your business is located in.

Customer: replied 7 years ago.
Livonia, Michigan
Expert:  Merlo replied 7 years ago.
HelloCustomer

The city cannot actually shut down your business, but they are authorized to seize and sell the personal property of a business if the PP taxes remain unpaid.

Once seized, the personal property of the business is tagged, or removed from
the property. All property seized then falls under the control of the City Treasurer.

If unpaid personal property taxes remain after six (6) days of seizure, the
Treasurer may sell the property in accordance with State Law.

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Thank youCustomerbr />

Customer: replied 7 years ago.

They can do this even though the bank has liens on everything?

Expert:  Merlo replied 7 years ago.
Hello againCustomer

The tax liens take precedence over any other liens on the property. The first lien holders would be notified and they would have the opportunity to purchase the assets for the amount of the oustanding tax bill. That is why with many property loans the lender requires you to include your tax payments as part of your note, because the lenders know that a tax lien would take precedence.

I also want to clarify a point that I made earlier, which is not entirely correct. The city can actually close your business for non payment of PP taxes. However, in most cases they would instead just seize the assets. But the business could be closed if the city decides this is a necessary step.

Here is a link to a page on the MI website where you can read more about the different actions that may be taken by the state to collect delinquent PP taxes.

http://74.125.113.132/search?q=cache:Y1s0gX-45ScJ:www.michigan.gov/treasury/0,1607,7-121-1755-156496--,00.html+michigan+personal+property+tax+delinquent+seize&cd=9&hl=en&ct=clnk&gl=us

If this was helpful please press the Accept button.

Thank youCustomerbr />

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