From: TreasRevenueSharing <TreasRevenueSharing@michigan.gov>
Sent: Wednesday, August 6, 2025 8:48 AM
Subject: CY 2023 Qualified Heavy Equipment Rental Personal Property Distributions
Your local unit may have received one or more Qualified Heavy Equipment Rental Personal Property (QHERPP) distributions issued by the Michigan Department of Treasury (Treasury) on July 30, 2025. This email provides information regarding the QHERPP program and distributions.
What is QHERPP?
QHERPP was established under Public Act 35 of 2022 (Qualified Heavy Equipment Rental Personal Property Specific Tax Act) to address the taxation of certain heavy equipment rental personal property, beginning January 1, 2023.
Under QHERPP, owners of eligible personal property can apply for a property tax exemption from their local assessor each year. Owners that receive a QHERPP exemption become Qualified Rental Business Locations (QRBLs) and are responsible for collecting a QHERPP tax on rental transactions of exempt personal property and remitting the collected tax to Treasury.
Why are the distributions being made?
The revenues generated from the QHERPP tax are distributed to local units. This distribution is designed to replace traditional personal property tax revenue that may be lost due to QHERPP exemptions.
How is the QHERPP revenue distributed?
QHERPP revenue is distributed under two different methods, depending on whether a local unit has a QRBL within their boundaries:
- QHERPP 90% Distribution
- Recipients: Cities and townships with QRBLs that remitted taxes to Treasury during the distribution collection period.
- Distributions are calculated by prorating the amount of the QHERPP tax remitted by each QRBL during the distribution collection period.
- Treasury will be providing additional guidance by email directly to QHERPP 90% recipients in mid-August 2025 regarding allocation of QHERPP distributions to other taxing units.
- Per 2022 PA 35 Section 9(b)(i), within 35 days of receiving a QHERPP 90% distribution, cities and townships must allocate QHERPP distributions to other taxing units (which may include, but is not limited to, school districts, intermediate school districts, authorities, villages, and counties) that levied a millage on the QRBL.
- Per 2022 PA 35 Section 9(b)(i)(D), within 35 days of receiving a QHERPP 90% distribution, cities and townships must remit to the Treasury the amount that would otherwise be disbursed to a local school district for school operating purposes or to an intermediate school district receiving state aid under Section 56 or 62 of the State School Aid Act (1979 PA 94, MCL 388.1656 and 388.1662).
- QHERPP 10% Distribution
- Recipients: Cities, villages, townships, and counties that did not receive a QHERPP 90% distribution.
- Distributions are calculated using Personal Property Tax reimbursement data.
- Local units will not receive a payment if the distribution calculation is less than $0.01.
How can local units spend and account for these distributions?
Distributions not allocated to other taxing units can be spent as General Fund. These funds should be accounted for using account 101-000-569, Other State Grants. If the local unit believes this should be recorded separately, an open account under state grants may be used.
What are the calendar year (CY) 2023 distribution details?
The CY 2023 distributions were issued on July 30, 2025. The check descriptions note distributions are for September 2023, March 2024, and July 2024.
The distribution amounts are attached.
Why were distributions delayed?
Distributions for CY 2023 were not issued until July 30, 2025, due to several factors associated with launching the program:
- Implementation of a New Tax System: As a first-year program, significant time was needed to set up and test systems for tracking, reporting, and verifying tax collections from QRBLs statewide.
- Data Validation and Compliance: Treasury undertook comprehensive reviews to ensure that revenue data was complete and accurate before distributions were calculated.
- Coordination Across Entities: The program required collaboration among Treasury, local assessors, and rental businesses, with added time needed to reconcile exemptions and submitted taxes.
What’s to come?
- Web Page Updates: Check www.michigan.gov/revenuesharing for QHERPP updates on August 8, 2025.
- QHERPP 90% Guidance: Treasury will email allocation guidance to QHERPP 90% recipients in mid-August 2025.
- CY 2024 Distributions: Treasury is currently working on CY 2024 QHERPP calculations and aims to have funds distributed by September 30, 2025.
For additional information, please call 517-335-7484 or email TreasRevenueSharing@michigan.gov.
Thank you,
Revenue Sharing and Grants Division
Michigan Department of Treasury