Spring Lake Township Board members recently discussed how firmly they want to defend their tax assessment values, noting that a trip to the Michigan Tax Tribunal in Lansing can cost more than $10,000 in appraisal, legal and administration fees.
Grand Haven City Manager Pat McGinnis said the city is facing the same difficulties. Since 2007, they've seen 68 tax disputes reach the state Tax Tribunal, with a high of 18 in 2010 and a low of five this year.
McGinnis said some out-of-state tax consulting companies are preying on local businesses, offering to cut their taxes for a slice of the savings.
“These are predatory practices at the expense of all of our taxpayers,” McGinnis said.
Typically, the tax consulting company will suggest a property value that is a fraction of what the city feels it's worth, according to McGinnis. Because the numbers are so far apart, instead of being settled at the local level by the Board of Review, the case goes to the state Tax Tribunal.
“They know at that point it gets costly for us,” said McGinnis of the $185-per-hour attorney fees. “We’re looking at being into it for thousands (of dollars) to defend a legitimate value.”
McGinnis noted that the long-term effect of such practices could be devastating to municipalities.
“If everyone did it, it would gut our system,” he said. “The business may pay less in taxes, but the overall effect will be having to raise the taxes on everyone else to put that cop ... or snowplow on the street.”
McGinnis said it can be a difficult balancing act knowing how far to fight. Sometimes the fight can cost more than the tax dollars a victory would bring.
Entities such as the local library, county and public schools receive the bulk of collected taxes, yet the municipalities pay the cost of fighting disputed assessments.
McGinnis said Grand Haven “rigorously defends” its tax values, but sometimes it’s not worth it.
“We suck it up and give up money to avoid the fight,” he said. “We’ve got to make these values stick.”
McGinnis suggested a change that could help alleviate the problem of out-of-town companies from filing property assessment disputes on behalf of local businesses — requiring personal appearances. Currently, it is not necessary to appear in person to file a dispute. The property tax appeal consultant can submit documents to the assessor and Board of Review by mail.
If the case isn’t resolved at the local level — which McGinnis says likely will not happen because of the huge difference in value perception — it goes to Lansing, where the money meter really starts ticking.
Not every local government is putting up a fight. Grand Haven Township Manager Bill Cargo said he considers property tax disputes part of a government’s job, noting that the 1 percent administrative fee added to tax bills helps defray costs.
“We have a couple of different (disputes) every year,” he said. “I don’t have any complaints against the process.”
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