Detroit Public Schools will not have to pay back property taxes it collected without voter approval from 2002 through 2004, the Michigan Supreme Court ruled last week.
The decision means that the cash-strapped school district will not have to repay nearly $260 million to taxpayers after it was sued by Detroit-based Briggs Tax Service LLC last year. The high court said Briggs and other taxpayers were not entitled to a refund because the class-action lawsuit was not filed within the required 30-day limit.
In September 1993, DPS won voter approval for a levy increase that was set to expire in 2002. The district continued to levy the tax through 2004.
Briggs last year filed a claim seeking a refund with the state’s Tax Tribunal. The tribunal dismissed the claim because it had not been filed within 30 days of the issuance of the tax bills, as required under state statute.
The Court of Appeals later reversed the tribunal’s judgment, holding that Briggs was able to seek a refund because the tax was a mutual mistake of fact between the taxpayer and the assessor, a distinction that gives petitioners three years to file suit for unauthorized taxes. The Supreme Court’s decision last Tuesday found that the case was not a mutual mistake between the taxpayer and the assessor, and therefore the 30-day time frame applied.
“There is no doubt that a mistake occurred in this case,” the court said in its opinion. “DPS levied a tax without the requisite voter approval. This resulted in wrongful assessments that petitioner and other taxpayers paid in full. However, we conclude that this mistake does not constitute a 'mutual mistake of fact,’ and therefore doesn’t warrant a longer three-year limit for a refund.”
