Keeping the Michigan Disabled Veteran Exemption: Audits, Rescission and Clawback

Section 211.7c was created by 2023 PA 151 as the other half of the bargain that ended annual reapplication. It is short, and every part of it can cost money. The 45-day duty. The veteran must file a rescission form with the local assessing unit, in a form and manner prescribed by the State Tax Commission, within 45 days after either of two events: ceasing to use and own the property as a homestead, or no longer meeting the qualifications in 211.7b. Selling the house starts the clock. So does a VA decision that reduces the rating below the qualifying level, which is the event a veteran is least likely to connect to a property tax form. There is no notice requirement on the assessor to prompt it. The audit. Each local assessing unit must implement an audit program prescribed by the State Tax Commission that includes, at a minimum, the audit of all information filed under 211.7b(2). A property may not be audited more than once every three years unless there is a reasonable belief that it is ineligible, which is a limit on the assessor rather than a protection worth relying on. What a denial costs. The assessor may deny a new claim, or an existing claim following an audit, and may deny for the current year and the three immediately preceding calendar years. Four years of a total property tax exemption on a Michigan homestead is a large number. Interest runs at 1 percent per month or fraction of a month from the date the taxes were last payable without interest, so on the oldest year that is close to half the tax again. Interest then begins accruing afresh 60 days after the corrected bill is issued, at the same rate. The mechanics after a denial. If the tax roll is with the local unit, it amends the roll and the local treasurer issues a corrected bill within 30 days of discovery. If the roll is with the county, the county treasurer prepares a supplemental bill within 30 days. Taxes in a corrected or supplemental bill are returned as delinquent on March 1 of the year immediately after the bill is issued, which is a short runway. The appeal. The assessor must notify the individual of the denial, the reason for it, and that it may be appealed to the residential and small claims division of the Michigan Tax Tribunal within 35 days after the date of the notice. Thirty-five days from the date of the notice, not from receipt, is the deadline to diary. The small claims division does not require a lawyer. The practical reading. The 2023 pair of acts traded an annual form for a continuing exemption plus a continuing obligation. A veteran who moves, remarries into different ownership, transfers the house into a trust, or has a rating reduced now has an affirmative duty to tell the assessor inside 45 days, and the consequence of silence is a four-year clawback with interest rather than simply losing the exemption going forward.