CEI files amicus brief in SCOTUS case to protect homeowners from tax equity theft

On December 8, 2025, CEI filed an amicus brief in the case Michael Pung v. Isabella County, Michigan at the United States Supreme Court. This case raises a critical question: when the government takes property to satisfy a tax debt, is it obligated to provide the homeowners with just compensation equal to the true equity value of their property, rather than the depressed amount realized at a foreclosure auction?

Timothy Scott Pung lived in his Isabella County, Michigan home with his family for 14 years, and claimed a tax exemption under the Principal Residence Exemption (PRE). Following his death in 2004, his son, Michael Pung, and his family continued to live in the home and paid taxes at the exempt rate. However, a tax assessor determined that Michael was not entitled to the PRE and retroactively denied the tax exemption for 2007-2011. Although the Michigan Tax Tribunal eventually ruled in Michael’s favor and ordered restoration of the tax exemption for the disputed period, the tax assessor again determined that the PRE did not apply in 2012, leaving Michael with an unpaid $2,241.93 tax bill based on the County’s assessed value of $194,000. 

Isabella County moved to foreclose on the property. Michael successfully challenged the foreclosure at first, but the County ultimately prevailed on appeal and auctioned the home off for $76,008 – far below its true market value, and kept the surplus. (NOTE: this occurred prior to Rafaeli v. Oakland County (2020),  where the Michigan Supreme Court found that Oakland County’s retention of surplus funds from tax foreclosure sales to be an unconstitutional taking of property without just compensation in violation of Article 10, section 2 of the Michigan 1963 Constitution.) The purchaser of the property later resold it for $195,000.

Michael Pung filed suit in federal court alleging his property was taken in violation of the Fifth Amendment and that the financial punishment constitutes an unconstitutional excessive fine. The District Court awarded him the surplus proceeds of $73,766, but dismissed the excessive fine claim. Michael appealed, arguing that the compensation should reflect his true equity in the home he lost. The Sixth Circuit affirmed, and the Supreme Court agreed to hear the case.

CEI joined the Buckeye Institute, NFIB Small Business Legal Center, Inc., Mountain States Legal Foundation, Illinois Policy Institute, and Owners’ Counsel of America in an amicus brief in support of Michael Pung and other American homeowners who are victims of tax equity theft.

The injustice faced by Michael Pung and his family is not unique to Michigan. Across America, tax equity theft takes many forms. Thus, our amicus further urges the Court to extend its consideration to other forms of tax equity theft such as tax lien sales. Twenty-eight states currently have laws that allow municipalities to sell tax liens to private purchasers, who then collect interest, costs, and fees from homeowners. This often causes minor tax debts to balloon into financial disasters that can cost families their homes.

This predatory practice must end. When the government takes a home, it must provide the homeowners with just compensation that reflects the true equity value of the property, not the deflated amounts made at auction or through tax-lien sales. The Supreme Court now has an opportunity to set a precedent that will protect homeowners from this growing injustice.