April 15, 2015, Introduced by Reps. Clemente, Dianda, LaVoy, Bizon, Hooker and McCready and referred to the Committee on Tax Policy.
A bill to amend 1964 PA 284, entitled
"City income tax act,"
by amending section 43 of chapter 2 (MCL 141.643), as amended by
1996 PA 478.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
CHAPTER 2
Sec. 43. (1) A balance of the tax that is due the city at the
time of filing an annual return shall be paid with the return
unless the balance is less than $1.00, in which case payment is not
required.
(2) If the annual return reflects an overpayment of the tax,
the declaration of the overpayment on the return constitutes a
claim for refund. Subject to subsection (6), if the city or the
department agrees that a claim is valid, the city or the department
shall apply the overpayment first to a delinquent tax liability
under this ordinance of the taxpayer to the city. The city shall
apply any remaining overpayment against a subsequent liability
under this ordinance or, at the election of the taxpayer and if
indicated on the return, shall refund the overpayment. However, the
city shall not pay a refund of less than $1.00.
(3) If a valid claim for a refund of taxes, except a refund
under section 61, due for the taxable year 1992 or a taxable year
after 1992 is filed, interest at the rate and in the manner
established
in section 30(3) of Act No. 122 of the Public Acts of
1941,
being section 205.30 of the Michigan Compiled Laws, 1941 PA
122,
MCL 205.30, shall be added to the
refund. beginning 45 days
after
the claim is filed or 45 days after the date established
under
this ordinance for the filing of the return, whichever is
later.
For tax years after the 1996 tax
year and for which a city
has entered into an agreement pursuant to section 9 of chapter 1, a
claim for refund shall be paid from money in the city income tax
trust fund.
(4) For tax years after the 1995 tax year and for which a city
has entered into an agreement pursuant to section 9 of chapter 1,
if a taxpayer pays, when filing his or her annual return, an amount
less than the sum of the declared tax liability under this act, and
the
declared tax liability under the income tax act of 1967, Act
No.
281 of the Public Acts of 1967, being sections 206.1 to 206.532
of
the Michigan Compiled Laws, 1967
PA 281, MCL 206.1 to 206.713,
and there is no indication of the allocation of payment between the
tax liabilities against which the payment should be applied, the
amount paid shall first be applied against the taxpayer's tax
liability under this act and any remaining amount of payment shall
be
applied to the taxpayer's tax liability under Act No. 281 of the
Public
Acts of 1967. the income tax
act of 1967, 1967 PA 281, MCL
206.1 to 206.713. The taxpayer's designation of a payee on a
payment is not a dispositive determination of the allocation of
that payment under this subsection.
(5) If the claim for refund is reflected on a joint tax
return, the administrator shall allocate to each joint taxpayer his
or her share of the refund. The amount allocated to each taxpayer
shall be applied to his or her respective liabilities under this
ordinance.
(6) If the administrator or the department determines that all
or a portion of a refund claimed on a joint tax return is subject
to application to a liability of an obligated spouse, the
administrator or the department shall notify the joint taxpayers by
first class mail sent to the address shown on the joint return. The
notice shall be accompanied by a nonobligated spouse allocation
form. The notice shall state all of the following:
(a) That all or a portion of the refund claimed by the joint
taxpayers is subject to interception to satisfy a liability or
liabilities of 1 or both spouses.
(b) The nature of the liability and the name of the obligated
spouse or spouses.
(c) That a nonobligated spouse may claim his or her share of
the refund by filing a nonobligated spouse allocation form with the
city or the department not more than 30 days after the date the
notice was mailed.
(d) A statement of the penalties under subsection (9).
(7) A nonobligated spouse who wishes to claim his or her share
of a tax refund shall file with the city or the department a
nonobligated spouse allocation form. The nonobligated spouse
allocation form shall be in a form specified by the administrator
or the department and shall require the spouses to state the amount
of income or other tax base and all adjustments to the income or
other tax base, including all subtractions, additions, deductions,
credits, and exemptions, stated on the joint tax return that is the
basis for the claimed refund, and an allocation of those amounts
between the obligated and nonobligated spouse. In allocating these
amounts, all of the following apply:
(a) Individual income shall be allocated to the spouse who
earned the income. Joint income shall be allocated equally between
the spouses.
(b) Each spouse shall be allocated the personal exemptions he
or she would be entitled to claim if separate federal returns had
been filed, except that dependency exemptions shall be prorated
according to the relative income of the spouses.
(c) Adjustments resulting from a business shall be allocated
to the spouse who claimed income from the business.
(d) Ownership of other assets relevant to the allocation shall
be disclosed upon request of the administrator or the department.
(8) A nonobligated spouse allocation form shall be signed by
both joint taxpayers. However, the form may be submitted without
the signature of the obligated spouse if his or her signature
cannot be obtained. The nonobligated spouse shall certify that he
or she has made a good faith effort to obtain the signature of the
obligated spouse and shall state the reason that the signature was
not obtained.
(9) A person who knowingly makes a false statement on a
nonobligated spouse allocation form is subject to a penalty of
$25.00 or 25% of the excessive claim for his or her share of the
refund, whichever is greater, and other penalties as provided in
this ordinance.
(10) A nonobligated spouse to whom the administrator or the
department has sent a notice under subsection (6), who fails to
file a nonobligated spouse allocation form within 30 days after the
date the notice was mailed, shall be barred from commencing any
action against the city or the department to recover an amount
withheld to satisfy a liability of the obligated spouse to which a
joint tax refund is applied under this section. The payment by the
city or the department of any amount applied to a liability of a
taxpayer under this section shall release the department or the
city and the administrator from all liability to the obligated
spouse, the nonobligated spouse, and any other person having or
claiming any interest in the amount paid. A payment by the
department of treasury under this subsection shall be made from the
city income tax trust fund created in section 5 of chapter 1.
(11) As used in this section:
(a) "Nonobligated spouse" means a person who has filed a joint
city income tax return and who is not liable for an obligation of
his or her spouse described in this ordinance.
(b) "Obligated spouse" means a person who has filed a joint
city income tax return and who is liable for an obligation
described in this ordinance for which his or her spouse is not
liable.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No.____ or House Bill No. 4461 (request no.
00240'15) of the 98th Legislature is enacted into law.