The following opinion is presented on-line for informational use only and does not replace the official version. (Mich. Dept. of Attorney General Web Site - http://www.ag.state.mi.us)



STATE OF MICHIGAN

BILL SCHUETTE, ATTORNEY GENERAL

GENERAL PROPERTY TAX ACT:

Delinquent tax foreclosure process; special assessments, penalties

The General Property Tax Act, MCL 211.1 et seq., does not authorize the 3% penalty described in section 44(3) of the Act, MCL 211.44(3), to be returned to the county treasurer at the time of the delinquent tax settlement. But under section 107(1) of the Act, MCL 211.107(1), a city or village charter or ordinance may provide for the imposition and return of a similar penalty. Delinquent special assessments, including civil fines, may only be placed on the property tax roll, collected in a like manner as taxes, and foreclosed under the provisions of the General Property Tax Act, MCL 211.1 et seq., if expressly authorized by statute. While the General Property Tax Act, MCL 211.1 et seq., does not authorize adding the 1% property tax administration fee described in MCL 211.44(3) to a special assessment that is subject to foreclosure as a tax, a city or village may impose and collect a similar administration fee pursuant to MCL 211.107(1).

Opinion No. 7263

April 17, 2012

Honorable Goeff Hansen
State Senator
The Capitol
Lansing, Michigan 48909

You have asked several questions concerning Michigan’s delinquent property tax foreclosure process described in sections 78 through 78o of the General Property Tax Act (GPTA or Act), MCL 211.78 – 211.78o.

Penalties imposed for summer and winter levies

You first ask1 how a July (summer) levy penalty or a December (winter) levy penalty imposed by a city or township for late payment on property taxes is treated at the time of the delinquent tax settlement with the county treasurer.

Regarding this question, unless a local charter provides otherwise, summer taxes become a lien on property on July 1, and if not paid by September 14 are subject to additional interest. MCL 211.44a. Winter taxes become a lien on property on December 1. MCL 211.40.

Under section 78a(2) of the GPTA, MCL 211.78a(2), “[o]n March 1 in each year, taxes levied in the immediately preceding year that remain unpaid shall be returned [to the county treasurer] as delinquent for collection.” At this March 1 “settlement,” the county treasurer pays to the local unit the unpaid balance on the local unit’s tax rolls, making the local unit whole, and the county treasurer assumes responsibility for collecting the unpaid taxes.

Section 44(3) of the GPTA, MCL 211.44(3), authorizes local taxing units to impose a 1% property tax administration fee and a 3% late penalty charge before unpaid taxes are turned over delinquent to the county treasurer. The use of the term “penalty” in your question is understood to mean the 3% penalty authorized by section 44(3):

Except as provided by subsection (7), on a sum voluntarily paid before February 15 of the succeeding year, the local property tax collecting unit shall add a property tax administration fee of not more than 1% of the total bill per parcel. . . . A property tax administration fee is defined as a fee to offset costs incurred by a collecting unit in assessing property values, in collecting the property tax levies, and in the review and appeal processes. . . . Except as provided in subsection (7), on all taxes paid after February 14 and before taxes are returned as delinquent under section 78a(2) the governing body of a city or township may authorize the treasurer to add to the tax a property tax administration fee to the extent imposed on taxes paid before February 15 and . . . a late penalty charge equal to 3% of the tax. [MCL 211.44(3).]

In turn, section 44(7) of the GPTA provides that a local governmental unit shall not impose a fee or penalty absent adoption of a resolution or ordinance:

The local property tax collecting treasurer shall not impose a property tax administration fee, collection fee, or any type of late penalty charge authorized by law or charter unless the governing body of the local property tax collecting unit approves, by resolution or ordinance adopted after December 31, 1982, an authorization for the imposition of a property tax administration fee, collection fee, or any type of late penalty charge provided for by this section or by charter, which authorization shall be valid for all levies that become a lien after the resolution or ordinance is adopted. However, unless otherwise provided for by an agreement between the assessing unit and the collecting unit, a local property tax collecting unit that does not also serve as the assessing unit shall impose a property tax administration fee on each parcel at a rate equal to the rate of the fee imposed for city or township taxes on that parcel. [MCL 211.44(7); emphasis added.]

Section 44(6) of the GPTA addresses what amounts are returned delinquent to a county treasurer, including the property tax administration fee:

Along with taxes returned delinquent to a county treasurer, the amount of the property tax administration fee prescribed by subsection (3) that is imposed and not paid shall be included in the return of delinquent taxes and, when delinquent taxes are distributed by the county treasurer under this act, the delinquent property tax administration fee shall be distributed to the treasurer of the local unit who transmitted the statement of taxes returned as delinquent. Interest imposed upon delinquent property taxes under this act shall also be imposed upon the property tax administration fee and, for purposes of this act other than for the purpose of determining to which local unit the county treasurer shall distribute a delinquent property tax administration fee, any reference to delinquent taxes shall be considered to include the property tax administration fee returned as delinquent for the same property. [MCL 211.44(6); emphasis added.]

Where the language of a statute is unambiguous, it must be presumed that the Legislature intended its plain meaning and the statute must be enforced as written. Roberts v Mecosta County General Hosp, 466 Mich 57, 63; 642 NW2d 663 (2002). Nothing may be read into an unambiguous statute that is not within the manifest intent of the Legislature as derived from the words of the statute itself. Omne Financial, Inc v Shacks, Inc, 460 Mich 305, 311; 596 NW2d 591 (1999). Thus, the intent of the Legislature must be derived from the actual language of the statute and not from missing language. AFSCME v Detroit, 468 Mich 388, 400; 662 NW2d 695 (2003).

Looking at the plain language of these statutes, MCL 211.44(3) authorizes the imposition of the 3% penalty if, under MCL 211.44(7), the local unit passes a resolution or adopts an ordinance authorizing imposition of the 3% penalty. See Detroit v 19675 Hasse, 258 Mich App 438, 454; 671 NW2d 150 (2003) (“MCL 211.44(7) does not occupy the field, but explicitly contemplates that local units may assess late penalties”); Gorney v City of Madison Heights, 211 Mich App 265; 535 NW2d 263 (1995). MCL 211.44(6) states that the 1% administration fee is included with taxes returned to the county treasurer, but does not provide that the 3% penalty may be included with the delinquent taxes returned to the county treasurer.

Nothing in the GPTA provides that the 3% penalty may be returned at the time of the delinquent tax settlement. However, MCL 211.107(1) provides that a city or village may enact charter provisions or ordinances imposing differing treatment of penalties:

The requirements of this act relating to the amount and imposition of interest, penalties, collection or administration fees, the procedures for collection of taxes, and the enforcement of tax liens are applicable to all cities and villages if not inconsistent with their respective charters or an ordinance enacted pursuant to their respective charters. [Emphasis added.]

Under this statute, if a city or village charter or ordinance conflicts with the specified requirements of the GPTA, the charter or ordinance prevails. See Booker v Detroit, 469 Mich 892, 893; 668 NW2d 623 (2003); AERC of Michigan, LLC v Grand Rapids, 266 Mich App 717, 722; 702 NW2d 692 (2005). Thus, a city or village charter or ordinance can impose different requirements than those of the GPTA concerning the amount and imposition of interest, penalties, collection or administration fees, the procedures for collection of taxes, and the enforcement of tax liens. Even though the GPTA does not provide that the 3% penalty is included with the delinquent taxes returned to the county treasurer, under MCL 211.107(1), a city or village may provide by charter or ordinance that a similar penalty be included with the delinquent taxes returned to the county treasurer.

It is my opinion, therefore, that the GPTA, MCL 211.1 et seq., does not authorize the 3% penalty described in section 44(3) of the Act, MCL 211.44(3), to be returned to the county treasurer at the time of the delinquent tax settlement. But under section 107(1) of the Act, MCL 211.107(1), a city or village charter or ordinance may provide for the imposition and return of a similar penalty.

Special assessments

You also ask what items may be placed on the tax roll as special assessments and foreclosed under the provisions of the GPTA if unpaid. In particular, you inquire about civil fines.

Michigan courts distinguish between taxes and special assessments:

A special assessment is a levy upon property within a specified district. Although it resembles a tax, a special assessment is not a tax. Knott v City of Flint, 363 Mich 483, 497; 109 NW2d 908 (1961). In contrast to a tax, a special assessment is imposed to defray the costs of specific local improvements, rather than to raise revenue for general government purposes. [Kadzban v City of Grandville, 442 Mich 495, 500; 502 NW2d 299 (1993).]

But various statutes authorize the collection of unpaid special assessments in the same manner as property taxes.2

In some cases, however, delinquent assessments, liens, fees, costs, and charges can be foreclosed upon only if the property taxes themselves are also subject to foreclosure. Within this latter group are liens for unpaid fines or assessments in a municipal civil infraction action regarding buildings or land. See MCL 600.8731(3)-(4).3

A county, like other local units of government, has only those powers granted to it by the constitution or by law and those reasonably implied from an express grant. Const 1963, art 7, §§ 1 and 34; Wright v Bartz, 339 Mich 55, 60; 62 NW2d 458 (1954). The power to tax lies exclusively with the Legislature and may not be inferred. Molter v Dep’t of Treasury, 443 Mich 537, 543; 505 NW2d 244 (1993). The Legislature may delegate that authority to a local unit of government, but a local unit cannot enlarge or diminish that grant absent express statutory authority. Const 1963, art 4, § 1; City of Berkley v Royal Oak Twp, 320 Mich 597, 601; 31 NW2d 825 (1948); Market Place v City of Ann Arbor, 134 Mich App 567, 581; 351 NW2d 607 (1984); Johnson v Genesee County, 232 F Supp 567 (ED Mich 1964).

Keeping in mind the rules of statutory construction, the inability of local taxing units to enlarge or diminish their delegated taxing authority, and the many statutes that expressly grant local units the authority to collect certain special assessments through the GPTA’s tax-enforcement provisions, see n 2, a special assessment or civil fine may only be collected in the same manner as property taxes if there is express statutory language providing for such treatment.

It is my opinion, therefore, that delinquent special assessments, including civil fines, may only be placed on the property tax roll, collected in a like manner as taxes, and foreclosed under the provisions of the GPTA, MCL 211.1 et seq., if expressly authorized by statute.

1% property tax administration fee

Materials provided with your request raise one final question, whether the 1% property tax administration fee provided for in MCL 211.44(3) also applies to special assessments that, pursuant to statute, may be foreclosed as taxes under the GPTA.

MCL 211.44(3) provides that “on a sum voluntarily paid before February 15 of the succeeding year, the local property tax collecting unit shall add a property tax administration fee of not more than 1% of the total bill per parcel.” (Emphasis added.)4 This fee is designed to “offset costs incurred by a collecting unit in assessing property values, in collecting the property tax levies, and in the review and appeal processes.” Id. The portion of the fee that is not paid is included along with taxes returned delinquent to a county treasurer. MCL 211.44(6). And when delinquent taxes are distributed by the county treasurer under the GPTA, the delinquent property tax administration fee is distributed to the treasurer of the local unit who transmitted the statement of taxes returned as delinquent. Id.

Even assuming that the governing body of the local taxing unit has properly authorized imposition of the 1% administration fee by resolution or ordinance, the GPTA does not expressly authorize the addition of that fee to a special assessment. The statutory purposes of the fee – offsetting costs incurred by a collecting unit in assessing property values, in collecting the property tax levies, and in the review and appeal processes – relate only to property taxes and not to special assessments.

Although section 78a(1) of the GPTA, MCL 211.78a(1) defines “taxes” as including unpaid special assessments, that definition expressly applies only to sections 78 – 79a, MCL 211.78 – 211.79a, containing the foreclosure process.

Similarly, section 55 of the GPTA, allowing the return of unpaid special assessments to the county treasurer for collection, states that special assessments shall be treated as “taxes” after they are returned to the county treasurer for collection:

A township treasurer or other collecting officer may include as a delinquent tax any unpaid special assessment which is delinquent on the last day of February in the delinquent taxes returned to the county treasurer the next day pursuant to this section. A delinquent special assessment included as a delinquent tax pursuant to this section shall, after return to the county treasurer, be a valid tax for all purposes under this act. [MCL 211.55.]

And section 44(10)(d), MCL 211.44(10)(d), which defines the “amount of tax” required to be included on a tax bill as including special assessments, expressly applies that definition to the requirements of the tax bill under section 44(1), MCL 211.41(1), and does not apply that definition to section 44(3), which includes the 1% administration fee on the “total tax bill.” MCL 211.44(3) (emphasis added).

Thus, where the Legislature intended “taxes” to include “special assessments,” it expressly provided for that result. It did not do so in section 44(3), MCL 211.44(3), authorizing the addition of a fee of up to 1% to tax bills. Therefore, the Legislature has not provided that the 1% administration fee applies to special assessments.5

But as discussed above, MCL 211.107(1) allows a city or village to adopt different procedures concerning the amount and imposition of interest, penalties, collection or administration fees, the procedures for collection of taxes, and the enforcement of tax liens. Thus, a city or village may authorize the addition of a similar administration fee to a special assessment.

It is my opinion, therefore, that while the GPTA, MCL 211.1 et seq., does not authorize adding the 1% property tax administration fee described in MCL 211.44(3) to a special assessment that is subject to foreclosure as a tax, a city or village may impose and collect a similar administration fee pursuant to MCL 211.107(1).


BILL SCHUETTE
Attorney General

1   Although your request raised an initial question regarding the cancellation of pre-existing liens after foreclosure, a similar question was addressed in OAG, 2010-2011, No 7258, p __ (May 6, 2011).

2   For example, see MCL 41.350g (assessments authorized to provide a township water supply for fire protection); MCL 41.728 (assessments for various township public improvements); MCL 41.801(4) (assessments for township police and fire protection); MCL 68.33 (assessments for village improvements); MCL 104A.3 (assessments for public improvements for fourth class cities); MCL 123.757 (assessments for public works); MCL 324.30715 (assessments to recover costs of normal lake level proceedings); MCL 324.30915 (lake improvement assessments); MCL 560.192a (assessments against property benefited by retention basins). See also, MCL 280.266 (taxes levied for the construction, cleaning out, widening, deepening, straightening or extending of drains); MCL 124.508a(2) and (9) (solid waste reduction program fees); MCL 125.541(6) and (7) (liens to recover costs incurred in demolishing, maintaining, and making a dangerous building safe); MCL 247.64(2) (liens to recover the costs of removing noxious weeds); MCL 286.105 (liens to recover the costs of eradicating white pine blister rust); MCL 324.9120(2) (liens to recover costs of soil erosion and sedimentation control measures); MCL 324.11143(3) (assessments for expenditures regarding hazardous waste service fund); and MCL 333.2455(3) and (4) (assessments for expenses incurred to remove a nuisance, unsanitary condition, or cause of illness created by a building).

3   See also, MCL 117.4r(3) (city administrative hearings bureau liens), and MCL 211.89c(3) (solid waste fees in a city with a population of 600,000 or more).

4   As discussed above, section 44(7) of the GPTA, MCL 211.44(7), provides that the 1% administration fee cannot be imposed unless the governing body of the local taxing unit has approved imposing the fee by resolution or ordinance adopted after December 31, 1982.

5   This conclusion is consistent with the advice given by the Department of Treasury in Frequently Asked Questions, found at <http://www.michigan.gov/taxes/0,1607,7-238-43535_43541-155078--,00.html#5.6> (accessed January 18, 2012).