How to Complete and File Michigan Form 5278: Parts 1 and 2, Filing, and ESA

Michigan Form 5278 is the annual claim manufacturers file to exempt qualifying production equipment from local personal property tax under the Eligible Manufacturing Personal Property (EMPP) program. The completed form has to reach the assessor of the local unit where the equipment sits no later than February 20 of the tax year. Miss that date and the equipment stays on the local tax rolls for the year, no matter how clearly it would have qualified.¹ The same form doubles as the report Treasury uses to calculate the Essential Services Assessment (ESA) you pay in August in place of the local tax.

Who the Form Is For

Two categories of personal property qualify. Qualified new personal property is equipment first placed in service, anywhere, after December 31, 2012. Qualified previously existing personal property is equipment first placed in service more than ten years before the current calendar year.² In either case the equipment also has to meet the definition of eligible manufacturing personal property under MCL 211.9m and MCL 211.9n.

That definition turns on use. Equipment must be used predominantly in industrial processing, or in direct integrated support of it. Direct integrated support covers research and development on goods produced in industrial processing, testing and quality control, engineering, receiving and storing materials or scrap at the processing site, warehousing finished goods produced there, and sorting or sequencing that supports just-in-time inventory.³

A few things never qualify. Utility personal property and any equipment used to generate, transmit, or distribute electricity for sale are excluded, even sitting inside an otherwise eligible facility.³ Equipment used primarily for administration, general office work, or storage unrelated to production also falls outside.

What Goes in Part 1

Part 1 identifies the taxpayer, the property, and its location, and carries the certification that ties everything together. Have this ready before you open the form:

The parcel identification number the assessor uses for the personal property. If there isn’t one yet, call the local assessor and ask for a number to be assigned before you file.¹
The local unit where the equipment physically sits. If it’s in a village, list both the village and the township.
The property owner’s legal name, address, and federal employer identification number.
A signed certification that the property qualifies as EMPP. Without the signature the form cannot be processed.

What Goes in Part 2

Part 2 reports 100% of the fair market value of each qualifying asset at the time it was first acquired. This is not book value and not what you paid for used equipment. The state applies a rebuttable presumption that the price the first owner paid, plus freight, sales tax, installation, and other capitalized costs (capitalized interest excluded), equals the acquisition cost.¹

The costs go into columns by the year the equipment was first placed in service, which is the year the original owner put it into use, not the year your company acquired it. A wrong year lands the asset in the wrong column and distorts the ESA calculation later. Construction in progress has its own line.

One trap: if a piece of equipment is covered by an Industrial Facilities Tax certificate that took effect before January 1, 2013 and hasn’t expired, its acquisition cost is reported at half of the normal fair market value.¹

Leased Equipment

A leasing company cannot claim the exemption on its own equipment and cannot file Form 5278 for property it leases out. By default the lessor reports leased personal property on Form 632 and the equipment stays taxable locally. If the lessor and lessee agree, the lessee can instead report the leased equipment on its own Form 5278 by attaching a completed Form 5467 (Election of Lessee Report of Eligible Manufacturing Personal Property).¹ That election has to be in place before the February 20 deadline, so if leased equipment is significant, start the conversation with the lessor well ahead.

How to File

Send or deliver the completed form to the assessor of the local unit where the property is physically located. The deadline is firm: delivered or postmarked no later than February 20 of the tax year.¹ If you mail it, use certified mail with return receipt. If you hand-deliver, ask for a date-stamped copy. That proof of filing date matters if anything later goes wrong.

The form has to be fully completed. An incomplete Form 5278 can be denied, and the State Tax Commission has determined that late-filed forms should not be accepted by local units.¹ There is no grace period at the local level.

If You Miss February 20

One narrow recovery route stays open. A taxpayer who misses the February 20 deadline can file Form 5278 directly with the March Board of Review before it adjourns, and the March Board has authority to grant the exemption.¹ Once the March Board adjourns the window is closed. Neither the July nor the December Board of Review has authority to grant the EMPP exemption or amend information reported on the form.⁴

This is where the postmark or date-stamped copy earns its keep. If the assessor lost or denied a form you can prove was timely, your appeal rights through the Board of Review are preserved. Without that proof, the Board may lack jurisdiction to hear you at all.

After You File: The ESA

Once the local assessor processes Form 5278 and forwards the information to Treasury, the state calculates the Essential Services Assessment from the acquisition costs you reported. Treasury issues an electronic statement through Michigan Treasury Online (MTO). Payment is due by August 15 of the assessment year and must be made electronically through MTO. Paper checks are not accepted for ESA.⁵

Late payment carries a 3% penalty per month on the unpaid balance, with a partial month counted as a full month, compounding up to a maximum of 27%.¹ If 2026 is your first assessment year, the late payment penalty is waived as long as you certify and pay in full by September 15; that waiver is not available to anyone who filed in 2025 or earlier.

The hard backstop is April 15 of the year after the assessment year. If the full ESA and all accumulated penalties are not paid by that date, Treasury is required by MCL 211.1057(5) to rescind the EMPP exemption on every affected parcel. Rescission puts the equipment back on the local tax rolls, and local property taxes become due as if the exemption never existed.⁶

Appealing a Denial

If the local assessor denies your Form 5278, when you can appeal depends on when the written denial was issued relative to the March Board of Review’s first working meeting.

Denial issued before the March Board’s first working meeting: you have to appeal to the March Board of Review. There is no option to skip it.
Denial issued after the March Board’s first working meeting: you can appeal to the March Board or go directly to the Michigan Tax Tribunal. A Tax Tribunal petition must be filed within 35 days of the denial.

If the March Board also denies the claim, that decision can be appealed to the Michigan Tax Tribunal within 35 days of the denial notice.⁴

Treasury can also issue its own Order of Rescission if it determines the property was never eligible. That order has to be issued no later than the first Monday in June of the year following the assessment year.⁶

Records to Keep

Keep supporting records for every asset on the form for as long as it stays on the form, plus at least three years after the asset is disposed of or removed. That means acquisition invoices, freight and installation receipts, sales tax records, lease agreements, any Form 5467 election, and documentation of when each asset was first placed in service. Large year-over-year swings in reported values and mismatches with other tax filings are the kinds of things that draw questions from assessors. When your figures are challenged, the burden of proof sits with you, and records organized by acquisition year are what make that manageable.

1
Michigan Department of Treasury. Eligible Manufacturing Personal Property Tax Exemption Claim, and Report of Fair Market Value of Qualified New and Previously Existing Personal Property
2
Michigan Department of Treasury. Personal Property Tax Exemptions
3
Michigan Legislature. MCL Section 211.9m
4
Michigan Department of Treasury. ESA Topic – Board of Review
5
Michigan Department of Treasury. Essential Services Assessment
6
Michigan Department of Treasury. ESA Topic – EMPP Rescissions and Appeals