HOUSE BILL No. 5704

 

July 16, 2014, Introduced by Rep. Hobbs and referred to the Committee on Tax Policy.

 

     A bill to amend 1964 PA 284, entitled

 

"City income tax act,"

 

by amending sections 51 and 54 of chapter 2 (MCL 141.651 and

 

141.654), section 51 as amended by 1982 PA 124 and section 54 as

 

amended by 1996 PA 442.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

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 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) Beginning January 1, 2014, an employer located in this

 

state that does not do business or maintain an establishment within

 

a city imposing a tax under a uniform city income tax ordinance but

 

has an employee who is a resident of a city that imposes a tax

 

under a uniform city income tax ordinance shall withhold the tax

 

from each payment to those employees on their compensation subject

 


to the tax, after giving effect to exemptions, at a rate equal to

 

the rate set by that ordinance to be levied against resident

 

individuals under the ordinance, but not to exceed 3%, of all

 

compensation paid to the employee.

 

     (3) (2) An employer withholding the tax is deemed to hold the

 

tax as a trustee for the city.

 

     (4) (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.

 

     Sec. 54. An employee with compensation subject to tax shall

 

Beginning January 1, 2014, every employer in this state shall

 

require each employee to file with his or her employer a form on

 

which the employee states the number of exemptions claimed, the

 

city of residence, the predominant place of employment, whether or

 

not the employee claims status as a qualified taxpayer of a

 

renaissance zone, and the percentage of work done or services

 

performed in the predominant place of employment. The percentage

 

shall be expressed as "less than 25%", "40%", "60%", "80%", or

 

"100%". The employer shall retain the form, rely on the information

 

on the form for withholding purposes unless directed by the city to

 

withhold on another basis, and, if the employee claims status as a

 

qualified taxpayer based on residency in a renaissance zone, the

 

employer shall forward a copy of the form to the city. If

 

information submitted by the employee is not believed to be true,

 


correct, and complete, the city shall be advised. As used in this

 

section, "Renaissance zone" means that term as defined in section

 

35.