Background
Sue Anne and Matthew Wilks purchased property in Sault Sainte Marie, Michigan, in 2019. Sue Anne moved there from Washington in April 2020 to care for her elderly parents, while Matthew remained in Washington. The couple claimed a principal residence exemption for the Michigan property for tax years 2020 through 2023.
The Department of Treasury retroactively denied the exemptions, relying in part on the couple’s originally filed 2021 Michigan nonresident income-tax return. The Wilkses explained that they had mistakenly failed to mark Sue Anne as a Michigan resident and later filed an amended return showing her as a resident and Matthew as a nonresident. The Michigan Tax Tribunal granted a 100% exemption for all four years, and Treasury appealed.
The Court’s Holding
The Michigan Court of Appeals affirmed. Addressing an issue of first impression, the court held that MCL 211.7cc(3)(c) does not disqualify a property owner from a principal residence exemption when an amended Michigan income-tax return corrects an erroneously reported nonresident status. An amended return supersedes the original return and therefore constitutes the operative return for determining residency under the statute.
The court also reasoned that a neighboring statutory provision expressly prevents taxpayers from rescinding similar out-of-state benefits to qualify for a Michigan exemption, while MCL 211.7cc(3)(c) contains no comparable restriction on amended Michigan returns. Treasury’s separate argument that Sue Anne lacked the intent to establish Michigan residency was waived because Treasury had conceded before the Tax Tribunal that ownership and occupancy were not disputed for 2020 and 2021.
Key Takeaways
- An amended Michigan income-tax return supersedes the original return for purposes of the principal residence exemption’s nonresident-return disqualification.
- An initially filed nonresident return does not automatically and permanently bar the exemption when an amended return correctly establishes resident status.
- A party cannot revive on appeal an ownership, occupancy, or residency issue that it expressly conceded before the Tax Tribunal.
Why It Matters
The published decision clarifies that an honest residency-status error on a Michigan income-tax return can be corrected without necessarily forfeiting a principal residence exemption. The operative amended return, rather than the superseded original, controls under MCL 211.7cc(3)(c).
The ruling also underscores the importance of preserving arguments in Tax Tribunal proceedings: an express concession below eliminates the claimed error and prevents appellate review of the conceded issue.