Feb. 10 deadline looms for businesses to file for new exemption from personal property tax

SBAM and three of the state’s other leading business organizations today alerted Michigan small business owners to the Feb. 10 filing deadline for a new exemption from the state’s personal property tax (PPT).

Lawmakers approved the exemption in 2012 because the PPT in effect double-taxes businesses on equipment such as computers, vehicles, desks and machinery, and is a disincentive to invest in Michigan. The exemption took effect Dec. 31, 2013 for the 2014 tax year.

Business leaders from SBAM, the Michigan Manufacturers Association, the Michigan Chamber of Commerce and the National Federation of Independent Business (NFIB) joined forces to ensure businesses eligible to eliminate their tax know how to do so.

“No other state in the country taxes equipment as unfairly as Michigan, putting us at a competitive disadvantage,” said Rob Fowler, president and CEO of the Small Business Association of Michigan. “This opportunity to eliminate the tax makes good economic sense for business owners and the state.”

In addition to the state’s 6 percent sales tax, Michigan businesses pay personal property taxes on equipment not just once, but every year. They pay the PPT for as long as they own the equipment, no matter how old it gets.

“Estimates are that almost 80 percent of small businesses that now pay the Personal Property Tax will be exempt,” said Charlie Owens, NFIB state director. “This is real tax relief for Michigan small business.”

Under the new exemption, businesses that own, lease or possess commercial and industrial personal property with a market value of less than $80,000 may eliminate their 2014 PPT bill. To be eligible, businesses must file the MI Treasury Form 5076 (Affidavit of Owner of Eligible Personal Property Claiming Exemption from Collection of Taxes) by Feb. 10.

“The PPT punishes companies for making capital investments and is particularly hard on manufacturers,” said Chuck Hadden, president and CEO of the Michigan Manufacturers Association.

Businesses that qualify for the exemption by filing the affidavit on time are not required to file a Personal Property Statement. However, they are required to maintain adequate books and records on the equipment.

“This long-overdue tax reform is an important step forward for Michigan job providers,” said Rich Studley, president and CEO of the Michigan Chamber of Commerce. “Eliminating the cost and compliance headaches associated with this archaic tax will be welcome relief for small and large employers alike.”

The affidavit form and information sheet are available at www.michigan.gov/taxes, click on “Personal Property Tax Exemptions – Recent Legislative Changes.”