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Maverick
Maverick, Attorney
Category: Legal
Satisfied Customers: 6423
Experience:  20 years experience as a civil trial and appellate lawyer
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How does the township treasurer have to collect delinquent

Customer Question

how long does the township treasurer have to collect delinquent personal property taxes on a business. We bought a business that had undisclosed personal property taxes from 10 years ago
JA: Where is the property located?
Customer: Monroe county michigan
JA: Has any paperwork been filed?
Customer: do just letters requesting payment
JA: Anything else you want the lawyer to know before I connect you?
Customer: I see where the treasurer has the ability to request the courts to discharge the taxes after 5 years. But the treaurers letter sound like he can try and collect for ever
Submitted: 1 month ago.
Category: Legal
Expert:  Maverick replied 1 month ago.

Welcome to Just Answer! My name is***** give me a few minutes to review your inquiry. Thank you for your patience.

Expert:  Maverick replied 1 month ago.

Every year, businesses and manufacturers pay tax on items for their business including office equipment, furniture and machinery. The tax paid is sent to the state treasury and then allocated back to local communities to pay for essential public services including public safety. Pursuant to Mich. Comp. Laws § 205.27a(2), the Department may assess a deficiency, interest, or penalties within four years of the date set for filing the required return or four years after the date the return was filed, whichever is later.

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Customer: replied 1 month ago.
no you didn't answer my question. I'm asking about personal property taxes levied on equipment purchased and used in Michigan. Every year a business is suppose to file a return and pay tax. I am part of a group of people that bought a business in August of 2012. It wasn't disclosed to us there were unpaid personal property taxes. When personal property taxes are delinquent it becomes the township treasurers responsible to collect them. I'm asking is there a statue of limitations on how long they can try can collect them. Some of the unpaid taxes are more than 5 years past due
Expert:  Maverick replied 1 month ago.

Please re-read my answer. It is spot on. Not sure why you are saying I did not answer your question. Even though the township treasurer collects it, it is sent to the State of Michigan and thus State law governs here.

Customer: replied 1 month ago.
there is a section of the law 211.56a Sec.56a that seems to say after 5 years the treasurer shall petition the court to have the taxes discharged. Our township treasurer thinks he can keep trying to collect these unpaid taxes forever. Is there a time limit?211.56a Personal property taxes uncollected for 5 years; petition; striking from rolls; judgment; duties of county treasurer.
Sec. 56a.(1) If a tax levied on personal property remains uncollected for more than 5 years after that tax becomes delinquent, the township or city treasurer shall prepare a statement showing all of the following:(a) The taxes levied upon personal property that remain unpaid.(b) The names of the persons against whom those taxes were assessed.(c) The amount assessed against each person that remains uncollected, together with all fees, penalties, and interest due under this act or under a city charter.(2) The original copy of the statement prepared pursuant to subsection (1) shall be filed with the circuit court of the county in which the township or city is located together with a petition. Two or more township or city treasurers may file a joint petition under this section.(3) The petition shall state all of the following:(a) That the taxes upon personal property as shown in the statement have remained unpaid for more than 5 years after they were returned to the county treasurer as delinquent.(b) That the taxes have remained delinquent despite the fact that the township or city treasurer or his or her predecessors in office exercised due diligence in an effort to collect the taxes.(c) The taxes are, to the township or city treasurer's best knowledge and information, uncollectible.(4) The petition shall request that a date, not less than 30 nor more than 45 days after the date of filing the petition, be set for a hearing on the petition and that the court enter a judgment in favor of the township or city, striking those taxes from the tax rolls of the county and township or city. If a judgment is entered in favor of the township or city, the taxes in the statement shall cease to constitute an asset of the township or city, the county in which the township or city is located, and any school district or other taxing entity in which the personal property was located at the time it was assessed for taxes.(5) The township or city treasurer shall, not less than 10 days before the date set by the circuit court for the hearing, notify the county treasurer and the clerk or secretary of any school district in which any personal property may have been located at the time it was assessed for taxes that a petition was filed with the circuit court under this section, that the statement required under this section was prepared, and the date set for the hearing on the petition.(6) Within 15 days after the hearing on the petition, the court shall enter a judgment that as to all items or personal taxes set forth in the statement of uncollected taxes filed with the court for which the township or city treasurer and his or her predecessors in office have exercised due diligence in an effort to collect the taxes upon that personal property, those taxes shall be stricken from the tax rolls of the county and of the township or city and shall cease to constitute an asset of the township or city, the county in which the township or city is located, and any school district in which the personal property was located at the time it was assessed for taxes, and that the debt created by the provisions of this act or by any city charter of the person assessed for those taxes to the township or city shall, from the date of entry of the judgment, assume the status of a debt against which the statute of limitations has run.(7) A copy of the judgment shall be served upon the county clerk, the clerk of the township or city, and the clerk or secretary of each school district located in the township or city.(8) In a county in which the county treasurer collects delinquent personal property taxes as provided in section 56, the county treasurer shall undertake and carry out all of the proceedings to strike delinquent personal property taxes from the county tax rolls as provided in this section.
Expert:  Maverick replied 1 month ago.

After much additional reading and research, these are my best conclusions:

1. Some unofficial commentary I read suggest that Section 205.27 which cites a 4 year limitations period is correct and applicable. I read that section and could not find anything that says it specifically relates to business personal property taxes or even personal property taxes, generally.

2. The section you cited does not really place a bar to collection after 5 years because of the way Sections (3) (b) & (c) are worded. Plus, I could not find any legal authority talking about a specific limitations period for taxes; other than Section 205.27. That said, your section is the best argument for arguing that a 5 year limitations period may apply since it says that the treasurer "shall" do X, Y & Z.

3. You may want to see if you can take benefit of this exemption some how.

Conclusion: There does not appear to be any direct legal precedent establishing a limitations period on collecting these taxes.

I know this is not the answer you wanted to hear, but I am assuming that you are paying for a professional and honest answer.

Customer: replied 1 month ago.
Thanks
Expert:  Maverick replied 1 month ago.

You are welcome. Thank you for using Just Answer.