HART ENTERPRISES INC V SPARTA TWP
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STATE OF MICHIGAN
COURT OF APPEALS
HART ENTERPRISES, INC.,
UNPUBLISHED
December 22, 2005
Petitioner-Appellant,
v
No. 256817
Michigan Tax Tribunal
LC No. 00-291075
SPARTA TOWNSHIP,
Respondent-Appellee.
Before: Fitzgerald, P.J., and O’Connell and Kelly, JJ.
PER CURIAM.
Petitioner, Hart Enterprises, Inc., appeals as of right from a decision of the Michigan Tax
Tribunal in this personal property assessment action. We affirm.
Petitioner contends that the Tax Tribunal erred when it found petitioner disposed of
$98,923.45 worth of personal property in 2001. We disagree. At the hearing before the Tax
Tribunal, petitioner’s vice president testified that the property was disposed of before petitioner
relocated to Sparta Township in April 1998. The auditor hired by respondent testified that
petitioner disposed of the property in 2001. In addition, the depreciation expense report provided
by petitioner to the auditor indicated on its face that the disposal took place in 2001. Based on
the information contained in the depreciation expense report, the Tax Tribunal concluded that the
disposal occurred in 2001.
“In the absence of fraud, review of a Tax Tribunal decision is limited to determining
whether the tribunal erred in applying the law or adopted a wrong principle.” Catalina
Marketing Sales Corp v Dep’t of Treasury, 470 Mich 13, 18-19; 678 NW2d 619 (2004). “The
Tax Tribunal’s factual findings are conclusive if supported by competent, material, and
substantial evidence on the whole record.” Id. Substantial evidence is evidence that a
reasonable mind would find adequate to support a decision but may be less than a
preponderance. Sweepster, Inc v Scio Twp, 225 Mich App 497, 502; 571 NW2d 553 (1997).
Moreover, in a dispute before the Tax Tribunal regarding the value of property for
taxation purposes, the petitioner has the burden of establishing the true cash value of property.
MCL 205.737(3). However, the Tax Tribunal is under a duty to apply its expertise to the facts of
a case in order to determine the appropriate method of arriving at the true cash value of property.
Great Lakes Division of National Steel Corp v City of Ecorse, 227 Mich App 379, 389; 576
NW2d 667 (1998). Thus, the Tax Tribunal has a duty to make its own, independent
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determination of true cash value. Id. Accordingly, the Tax Tribunal is not bound to accept the
parties’ theories of valuation. Id. at 390.
We find that the Tax Tribunal’s determination that $98,923.45 worth of personal property
was disposed of in 2001 was supported by competent, material, and substantial evidence on the
whole record. First, the depreciation expense report indicated on its face that the disposal took
place in 2001. Second, the auditor testified, based on his understanding of, and familiarity with,
the generic software program used to generate the depreciation expense report, that if the
property had been disposed of in an earlier year, it would not have appeared on the report for
2001. Third, petitioner did not present evidence to refute the auditor’s testimony. Fourth,
although petitioner presented testimony that the property was disposed of prior to its move to
Sparta Township, the weight given to that testimony was within the Tax Tribunal’s discretion.
Teledyne Continental Motors v Muskegon Twp, 163 Mich App 188, 191; 413 NW2d 700 (1987),
citing Kern v Pontiac Twp, 93 Mich App 612, 622; 287 NW2d 603 (1979).
Petitioner also contends that the State Tax Commission multipliers for idle property
should have been applied to certain pieces of equipment located at petitioner’s facility. We
disagree.
The Michigan Constitution calls for the uniform taxation of property. Lionel Trains, Inc
v Chesterfield Twp, 224 Mich App 350, 351; 568 NW2d 685 (1997). Thus, the State Tax
Commission manual sets forth uniform guidelines for assessing personal property. Id. Under the
guidelines, all idle property is treated the same and the true cash value of idle property is
calculated utilizing the idle multiplier, as opposed to an in-use multiplier. Id. at 351-352. The
Tax Commission manual defines “Idle Equipment” as follows:
Idle equipment is equipment which has been disconnected and is stored in
a separate location. This equipment is not part of the existing process, not even
on a standby basis . . . .
Sometimes, equipment may be “idle-in-place” because storage in a
separate location is not feasible. This could be due to the large size of the
equipment involved or the fact that it is underground equipment. Proof should be
presented to the assessor that equipment is “idle-in-place.”
Petitioner maintained that it operated on a “job shop basis,” i.e., manufactured goods only when
it received an order and that, once the order was filled, the equipment ceased operation and
became idle. Thus, petitioner classified the equipment as idle if, on the respective tax day, the
equipment was not in operation and there were no outstanding orders requiring use of the
equipment.
The Tax Tribunal, however, found that petitioner’s equipment was “Standby Equipment”
rather than “Idle Equipment.” The Tax Commission manual defines “Standby Equipment” as
follows:
Standby equipment is equipment which is not usually in use but is ready
and immediately on hand for use when needed. For example, a company might
have a standby boiler which is used when there are problems with the main boiler.
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This could also be true of production machinery and equipment standing by for
use in emergencies. Standby equipment is considered necessary for production
even though it is not being used during certain periods of time.
Standby equipment is valued the same as machinery and equipment in use.
Finding that the property constituted “standby equipment,” the Tax Tribunal refused to apply the
idle property multipliers to the personal property. The Tax Tribunal’s decision to classify Hart’s
equipment as “Standby Equipment” rather than “Idle Equipment” was supported by competent,
material, and substantial evidence in the record. First, petitioner failed to present records to
substantiate its claim that the equipment was idle. Second, petitioner’s definition of idle was
inconsistent with the definition of “Idle Equipment” provided in the Tax Commission guidelines.
Therefore, even though petitioner labeled the property “idle,” the Tax Tribunal was not required
to accept petitioner’s determination. Third, there was no evidence from which the Tax Tribunal
could conclude the processes in which these pieces of equipment were involved were
discontinued rather than temporarily suspended. Fourth, during the audit, the auditor did not
observe any equipment that was unplugged, off to the side, or otherwise removed from the main
manufacturing assembly areas.
Ultimately, petitioner urges us to find that the Tax Tribunal erred because it failed to give
the appropriate weight to the testimony of petitioner’s vice president. However, the weight given
to evidence presented by the parties is a matter within the Tax Tribunal’s discretion. Teledyne
Continental Motors, supra. Accordingly, the Tax Tribunal has discretion to determine the
credibility of the witnesses before it.
In addition, because we review the Tax Tribunal’s decision for an error of law, “it does
not matter that the contrary position is supported by more evidence, that is, which way the
evidence preponderates, but only whether the position adopted by the agency is supported by
evidence from which legitimate and supportable inferences were drawn.” Sweepster, supra at
502. The Tax Tribunal’s decision is supported by evidence from which legitimate and
supportable inferences were drawn.
In sum, conclude that the Tax Tribunal’s finding that $98,923.45 worth of personal
property was disposed of in 2001 was supported by material, competent, and substantial
evidence in the record. In addition, we hold that the Tax Tribunal’s characterization of
petitioner’s equipment as “Standby Equipment” was supported by material, competent, and
substantial evidence and, therefore, the Tax Tribunal did not commit an error of law when it
refused to apply the idle equipment multipliers to the personal property at issue.
Affirmed.
/s/ E. Thomas Fitzgerald
/s/ Peter D. O’Connell
/s/ Kirsten Frank Kelly
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