Tax Tribunal Reforms Under ReviewMay 4, 2017
May 4, 2017
A House panel took a look under the lid of the Michigan Tax Tribunal this morning, but any legislative tinkering designed to update the system may be work in progress.
Due to a time conflict with another committee, Rep. Brandt Iden (R-Oshtemo Twp.), the sponsor of HB 4412, spoke only briefly at the hearing.
“This is the result of about a year and a half of work,” Idem said. “We need to strengthen the court going forward so that we can maintain an even, a fair, and a balanced playing field.”
After Iden exited the hearing, Jason Puscas and Greg Nowak of the Detroit Regional Chamber of Commerce pinch hit for him.
“(The Tribunal) is the sole court of jurisdiction for tax issues,” Puscas said. “It is meant to be affordable and accessible. We don’t believe that the sky is falling, but the statute it operates under is certainly outdated since it (the Tribunal) was founded in the 1970s.”
Puscas went on to say that it was becoming increasingly difficult to find “members” (i.e. judges) to sit on the Tribunal. He pointed out that the position on the seven-member Tribunal that is supposed to filled by a CPA has been vacant for some time. Changes, Puscas argued, are needed to make the position more attractive. Among the changes would be an increase in salary.
“Currently, their salary is about $93,000,” Puscas told the committee. “A District Court Judge’s salary is about $135,000 annually and an administrative law manager makes $120,000. We need to make this an attractive place to work.”
Under HB 4412, a Tribunal “member” would receive an annual salary that was not less than the maximum salary paid an administrative law manager.
Other aspects of the bill that are meant to make a post as Tribunal “member” more attractive, would include allowing temporary members on both a full or part-time basis and the establishment of regional offices — so members wouldn’t always have to travel to Lansing.
Nowak asserted that, another reason for increasing Tribunal “member” salaries, is that it would diminish the pressure on increasing court fees to provide needed revenues to relieve budget pressures.
“The bill has common sense reforms that are fair, neutral and provide quality,” Nowak argued.
Rep. Peter Lucido (R-Shelby Twp.) asked about a provision that requires the Governor to “consider a list of qualified candidates solicited from at least one appropriate professional association located and primarily operating in the state” when making an appointment to the tribunal.
“What if the Governor wants to appoint outside of that?” Lucido wanted to know.
Puscas and Nowak said the Governor could still appoint whomever he wanted.
“Would it (the qualified candidate list) be so a group could try to stack the deck with its members?” Lucido asked.
Nowak said it was about trying to help attract judges.
Lucido asked if there is currently a lack of competency on the Tribunal.
Nowak didn’t say there was a lack of competency, but pointed out that a Tribunal judge needs to possess expertise.
Rep David Maturen (R-Brady Twp.) said he remembered back to when the system was first created and the original intent was to have the entire Tribunal hear cases. Then he made reference to what he called a “disastrous decision” by a Tribunal judge that an Appeals Court had overturned in “Menards v Escanaba,” (See “COA Ruling Runs Parallel To House ‘Dark Stores’ Legislation,” 5/27/16).
“I’d like to help my colleague Representative Iden out and make a good bill out of it,” Mauren said.
Nowak replied that the more the quality of Tribunal judges are negatively affected, the more the burden would fall on the appellate courts.
Judy Allen, director of legislative affairs for the Michigan Township Association (MTA), told the committee that her group has concerns with the bill, particularly that it would increase the threshold for “small claims” from $100,000 to $250,000.”
“If we took a position today it would probably not be what the [bill] sponsor would like me to share,” Allen said.
Dan Stanleu, representing the Taxation Law Section of the State Bar association, testified in favor of HB 4412. The legislation is also supported by the Michigan Chamber of Commerce, The Michigan CPAs Association, and Consumers Energy. The Michigan Municipal League, the Michigan Association of Counties and the Michigan Realtors are currently neutral. The Michigan Assessors Association opposes the bill.
The Grand Rapids Area Chamber of Commerce expressed concern about finding adequate funding for the increased spending the bill would require. According to the House Fiscal Agency, HB 4412 would have a significant, and likely negative, fiscal impact on the Department of Licensing and Regulatory Affairs