August 18, 2015, Introduced by Rep. Pscholka and referred to the Committee on Tax Policy.
A bill to amend 1964 PA 284, entitled
"City income tax act,"
by amending sections 6 and 9 of chapter 1 and section 51 of chapter
2 (MCL 141.506, 141.509, and 141.651), section 9 of chapter 1 as
added by 1996 PA 478 and section 51 of chapter 2 as amended by 1982
PA 124.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
CHAPTER 1
Sec.
6. The Except as otherwise
provided in this section, the
uniform city income tax ordinance does not apply to a person or
corporation as to whom or which it is beyond the power of the city
to
impose the tax therein provided for in this act. An employer
located in this state that has an employee who is a resident of a
city that has a population of more than 600,000 and that imposes a
city income tax pursuant to this act is subject to that city's
withholding provisions for that employee even if the employer is
not doing business in that city or does not maintain an
establishment in that city. However, if that employer paid
$500,000.00 or less in total wages in the immediately preceding
calendar year and has fewer than 10 employees, that employer is not
required to withhold taxes from that employee pursuant to the
city's withholding requirements.
Sec. 9. (1) For the 1996 tax year and each year after 1996, a
city that imposes a city income tax pursuant to this act may enter
into an agreement with the department of treasury under which the
department of treasury shall administer, enforce, and collect the
city income tax on behalf of the city.
(2) City income taxes, interest, penalties, and collection
fees collected under an agreement entered into pursuant to
subsection (1) shall be kept in the city income tax trust fund and
shall be paid to the city, except that an amount of the taxes
collected as determined in the agreement may be retained by the
department of treasury to cover the cost of collection and
administration and that amount shall be deposited into the state
general fund. The department of treasury shall not charge to or
collect from a taxpayer any amount not otherwise authorized by law
in conjunction with the collection of city income tax pursuant to
an agreement entered into pursuant to this section.
(3) If the city enters into an agreement under subsection (1),
the agreement shall include provisions that relate to all of the
following:
(a) The development of and distribution of forms required by
the agreement and the ordinance under chapter 2.
(b) The processing of all payments.
(c) Enforcement procedures.
(d) Administrative and legal costs.
(e) Data exchange.
(f) Transfer and payment of funds.
(g) Termination of the agreement by either party.
(h) Any additional provisions as appropriate.
(4) If the city enters into an agreement under subsection (1),
the department shall administer, enforce, and collect the city
income tax on behalf of the city pursuant to 1941 PA 122, MCL 205.1
to 205.31. If the provisions of 1941 PA 122, MCL 205.1 to 205.31,
and this act or any ordinance of the city conflict, this subsection
applies and the department shall administer the tax pursuant to
1941 PA 122, MCL 205.1 to 205.31.
CHAPTER 2
Sec. 51. (1) An employer doing business or maintaining an
establishment within the city shall withhold from each payment to
the employer's employees on and after the effective date of this
ordinance, and an employer required to withhold under section 6 of
chapter 1 shall withhold from each payment to the employer's
employees who are residents of a city with a population of more
than 600,000 on and after the effective date of the amendatory act
that added this language, the tax on their compensation subject to
the
tax, after giving effect to
exemptions, as follows:
(a) Residents.
(i) At a rate equal to the rate set by ordinance to be levied
against resident individuals under this ordinance, but not to
exceed 3%, of all compensation paid to the employee who is a
resident of the city, if the employee is not subject to withholding
in any other city levying the tax.
(ii) At a rate equal to the difference in the percentage rate
of tax on resident individuals as set by ordinance to be levied
under this ordinance less the percentage rate of tax levied by any
other city in which the employee works, on all compensation earned
by the resident in another city.
(b) Nonresidents. At a rate equal to the rate set by ordinance
to be levied under this ordinance on nonresidents but not to exceed
50% of the percentage rate imposed on resident individuals of the
compensation paid to the employee for work done or services
performed in the city designated by the employee as the employee's
predominant place of employment. The withholding rate shall be
applied to the percentage of the employee's total compensation
equal to the employee's estimated percentage of work to be done or
services to be performed in the city for that employer, but no
withholding shall be required if the estimated percentage of work
is less than 25%.
(2) An employer withholding the tax is deemed to hold the tax
as a trustee for the city.
(3) An employer who is required to withhold and who fails or
refuses to deduct and withhold is liable for the payment of the
amount required to be withheld. The liability shall be discharged
upon payment of the tax by the employee but the employer is not
relieved of penalties and interest provided in this ordinance for
this failure or refusal.