Free Michigan 4816 Template in PDF

4816, Page 2

Instructions for Form 4816

Request to Bill Seller Following a Principal Residence Exemption (PRE) Denial

This form must be submitted by the county or local treasurer (whoever is in possession of the tax roll) when requesting that the

Department of Treasury (Department) bill a seller for additional taxes, interest and penalties resulting from a PRE denial where the property has been transferred to a bona ide purchaser. Speciically, Subsections 6, 8 and 11 of Michigan Compiled Laws 211.7cc state that “if the property has been transferred to a bona ide purchaser before additional taxes were billed to the seller as a result of the

denial of a claim for exemption, the taxes, interest, and penalties shall not be a lien on the property and shall not be billed to the bona

ide purchaser ….” The local tax collecting unit in possession of the tax roll then notiies the Department, which “shall then assess the

owner who claimed the exemption under this section for the tax, interest, and penalties accruing as a result of the denial of the claim for exemption ….” In other words, the seller (the person denied) is responsible for all additional taxes, interest and penalties due for

the years up to and including the year of the sale if the purchaser is a “bona ide purchaser.” The PRE is not removed in these bona ide purchaser situations.

A “bona ide purchaser” is one who purchases in good faith for valuable consideration. Therefore, a person who receives property

through an inheritance, foreclosure or one who receives property through a quit claim without valuable consideration, would not qualify as a bona ide purchaser. If the new owner is not a bona ide purchaser, the taxes are added back to the tax roll and the purchaser is responsible for the additional taxes, interest and penalties which become a lien on the property.

There are rare situations, however, where the person(s) or entity that was denied the PRE lost the property in a foreclosure or some other circumstance to an “acquiring entity,” which then subsequently sold the property to a bona ide purchaser. In these situations, the “acquiring entity” that sold the property would be responsible for the additional taxes, interest and penalties although the denial notice was issued to the prior owner. In these unusual circumstances, since the property was not acquired for valuable consideration, the transfer to the “acquiring entity” is not considered a bona ide purchase. As a result, the “acquiring entity” is responsible for the additional taxes, interest and penalties. If this rare situation occurs, explain in Part 3 the circumstances involved and attach any supporting documents. If the “acquiring entity” has not sold the property to a bona ide purchaser, the billing of additional taxes, interest and penalties must occur at the county or local unit level (whichever is in possession of the tax roll) since the transfer was not a bona ide purchase.

In order for the Department to process a request to bill the seller (the person or entity who was issued the denial notice) for additional taxes, interest and penalties in a bona ide purchaser situation, this form must be completed with the required documents attached. Upon

review of the completed form and supporting documents, the Department will process and issue a bill, which will include additional taxes and applicable interest and penalties, to the person(s) or entity listed in Part 3.

PART 1: PROPERTY INFORMATION

All of the information in Part 1 must be provided to the Department to process the request. Use a separate form for each property tax identiication number.

PART 2: PRE DENIAL INFORMATION

A copy of the PRE denial notice relating to the property in Part 1 must be submitted with this form. The date of the denial notice must be listed on the form along with the person(s) or entity that issued the denial notice. If the denial notice was issued to the current owner of

the property, the billing of additional taxes, interest and penalties must occur at the county or local unit level (whichever is in possession of the tax roll) and does not qualify as a bona ide purchaser situation. In addition, if the purchaser is not a “bona ide purchaser,” as described earlier, the billing also must occur at the county or local level.

For each year the PRE was denied, requiring the Department to bill the seller, list the school operating millage rate, taxable value, and the due date of the school operating taxes (summer, winter, or combined summer/winter).

PART 3: BILLINg INFORMATION

A copy of the deed, land contract or other legally executed document transferring the property from the seller to the bona ide purchaser must be submitted with this form. Each seller to be billed must be listed including a current mailing address (if the mailing address is available). If the seller is a company, the complete company name, address, and Federal Employer Identiication Number (FEIN), if available, must be provided.

PART 4: cOuNTY OR LOcAL uNIT cONTAcT INFORMATION

Complete the contact information in the event the Department has a question or needs clariication. The completed form and supporting documents must be mailed to the address at the bottom of the form. Failure to provide complete information or adequate supporting documentation will result in delays in processing.

If you have any questions, call the PRE Unit at (517) 373-1950 or e-mail PTE-Section@michigan.gov.