Municipal Wind Turbine Tax Revenues Under Threat as Utilities Continue to Press Tax Appeals

Wind power can provide economic benefits to municipalities in Michigan that authorize the development of wind farms, while helping to improve the environment. Potential benefits include new jobs as well as increased tax revenues for schools and roads.

However, many Michigan communities are mired in legal challenges due to changes to the wind turbine tax formula over the past decade.

In 2007, the Michigan State Tax Commission established a formula for the taxation of wind turbines. The original formula was that each wind turbine’s tax liability was based on 100 percent of its value for the first year and amortized over 15 years until it reached 30 percent.

In 2011, the State Tax Commission adopted a new tax schedule that started at 80% of the actual cash value of a wind turbine and then decreased to 30% in the seventh year.

The changes meant that municipalities would see less tax revenue from wind farms and led to a wave of tax appeals filed with the Michigan Tax Tribunal by utilities. Media reports suggest that utilities have filed more than 1,100 appeals for tax refunds.

In June, the Michigan Tax Tribunal ruled in favor of DTE Energy requiring Bloomfield and Sigel Townships to reimburse certain amounts of wind turbine taxes collected for the 2016 and 2017 tax years. Many more decisions are expected in the months. (and years) to come.

These developments pose a number of challenges for municipalities, including the time and expense required to fight tax remedies, as well as adjusting budgets for the prospect of less tax revenue in the future (and possibly to reimburse a part that has already been collected).

The Michigan legislature is taking action to address these issues. In May, the Michigan Senate introduced Senate Bill 441 which would establish a new valuation table in law that would apply “retroactively to the determination of the true cash value of any wind energy system subject to the system. an appeal still pending on the effective date of the amendment. law which added this paragraph concerning property taxes collected from January 1, 2016. ”

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