Sec. 1. (a) The property of the United States and its agencies and instrumentalities is
exempt from property taxation to the extent that this state is prohibited by law from
taxing it. However, any interest in tangible property of the United States shall be assessed
and taxed to the extent this state is not prohibited from taxing it by the Constitution
of the United States.
(b) If the United States provides for the payment of money in lieu of property taxes
upon tangible property which is exempt from taxation, the payment shall be made to
and settled by the department of local government finance. The department of local government finance may make appraisements, assessments,
and agreements and may do all acts necessary to the ascertainment, settlement, and
collection of such a payment. The department of local government finance may distribute amounts so received to
the taxing units that would be entitled to the money if the payment were for taxes
upon the property. However, if the payment is made by the United States for the rendition of a particular
service, the department of local government finance shall distribute the payment to
the taxing unit which rendered the service. Where payment is made for a service, the department of local government finance
may not make a settlement with the United States without the prior approval of the
taxing unit involved.
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