HB-4618, As Passed House, December 18, 2018
HB-4618, As Passed Senate, December 13, 2018
SUBSTITUTE FOR
HOUSE BILL NO. 4618
A bill to amend 1964 PA 284, entitled
"City income tax act,"
by amending section 6 of chapter 1 and section 51 of chapter 2 (MCL
141.506 and 141.651), section 51 of chapter 2 as amended by 1982 PA
124, and by adding sections 86a, 86b, and 86c to chapter 2.
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. However, an
employer located in this state that does not do business in or
maintain an establishment in a city that has a population of more
than 600,000 and that imposes an income tax pursuant to this act
may voluntarily register to withhold taxes on compensation of
certain employees in accordance with this act. If an employer
voluntarily registers to withhold taxes pursuant to this section,
the employer is required to withhold taxes from all employees who
are residents of that city and to comply with sections 51 through
61 of chapter 2 and the alternative provisions of chapter 3. An
employee who is a resident of that city is not permitted to opt out
of the withholding requirements voluntarily imposed by his or her
employer pursuant to this section.
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) 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.
(4) An employer that voluntarily registers to withhold taxes
in accordance with section 6 of chapter 1 shall withhold from all
employees who are residents of that city based on the form required
to be filed by each employee under section 54 on their compensation
subject to tax, after giving effect to exemptions as provided under
subsection (1)(a). If an employer no longer wishes to voluntarily
withhold taxes under section 6 of chapter 1, the employer shall
file a written notice with the city, and with the administrator if
the administrator is not the city, indicating that the employer
House Bill No. 4618 as amended December 6, 2018
will no longer voluntarily withhold taxes from employees who are
residents of that city.
Sec. 86a. (1) Notwithstanding section 86, [a city that has a
population of more than 600,000
] may recover the tax with interest and penalties
without a judgment or order from a court of competent jurisdiction
by imposing a lien as provided under this section. However, the
city's authority to impose a lien under this section only applies
to property owned by a natural person and wages, or other income,
that are reported on a federal W-2 or 1099 form. A lien imposed
pursuant to this section is a lien in favor of the city against all
property and rights of property, both real and personal, tangible
and intangible, owned at the time the lien attaches, or afterwards
acquired by any person liable for the tax, to secure the payment of
the tax. The lien shall attach to the property from and after the
date that any report or return on which the tax is levied is
required to be filed and shall continue for 7 years after the date
of attachment. The lien may be extended for another 7 years by
refiling under subsection (2) if the refiling is done within 6
months prior to the expiration date of the original 7-year period.
(2) The lien imposed by this section shall take precedence
over all other liens and encumbrances, except bona fide liens
recorded before the date the lien under this ordinance is recorded.
However, bona fide liens recorded before the lien under this
ordinance is recorded shall take precedence only to the extent of
disbursements made under a financing arrangement before the forty-
House Bill No. 4618 as amended December 6, 2018
sixth day after the date of the tax lien recording or before the
person making the disbursements had actual knowledge of a tax lien
recording under this ordinance, whichever is earlier. A lien shall
be recorded and discharged in the same manner required for a state
tax lien under the state tax lien registration act, 1968 PA 203,
MCL 211.681 to 211.687.
(3) A purchaser or succeeding purchaser of property, from a
taxpayer in other than the ordinary course of business, against
which a lien has been properly recorded as provided under
subsection (2) is personally liable for the unpaid taxes that are
due on the lien. The purchaser's liability is limited to the value
of the property less any proceeds that were applied to balances due
on secured interests which are superior to the lien recorded under
subsection (2).
Sec. 86b. (1) Notwithstanding section 86, [a city that has a
population of more than 600,000
] may cause a demand to be made on a taxpayer for the
payment of a tax due under this ordinance. However, the city's
authority to cause a demand for payment under this section only
applies to property owned by a natural person and wages, or other
income, that are reported on a federal W-2 or 1099 form. If the
liability remains unpaid for 10 days after the demand and
proceedings are not taken to review the liability, a warrant may be
issued. Except as provided in this section, the city, through any
officer or agent or person authorized to serve process or through
authorized employees, may levy on all property and rights to
property, real and personal, tangible and intangible, belonging to
the taxpayer or on which a lien is provided by law for the amount
of the deficiency, and sell the real and personal property of the
taxpayer found within the state for the payment of the amount due,
the cost of executing the warrant, and the additional penalties and
interest. Except as provided in subsection (6), the officer or
agent or person serving the warrant shall proceed upon the warrant
in all respects and in the same manner as prescribed by law in
respect to executions issued against property upon judgments by a
court of record. A city, through its authorized representative, may
bid for and purchase any property sold pursuant to this section.
(2) A person that refuses or fails to surrender any property
or rights to property subject to levy, upon demand by the city, is
personally liable to the city in a sum equal to the value of the
property or rights not surrendered, but not exceeding the amount
due for which the levy was made, together with costs and interest
on the sum at the rate provided in section 82 from the date of the
levy. Any amount, other than costs, recovered under this subsection
shall be credited against the liability for the collection of which
the levy was made.
(3) In addition to the personal liability imposed by
subsection (2), if a person required to surrender property or
rights to property fails or refuses to surrender the property or
rights to property without reasonable cause, the person shall be
liable for a penalty equal to 50% of the amount recoverable under
subsection (2), none of which penalty shall be credited against the
liability for the collection of which the levy was made.
House Bill No. 4618 as amended December 6, 2018
(4) A person in possession of, or obligated with respect to,
property or property rights subject to levy and upon which a levy
has been made who, upon demand of the city, surrenders the property
or rights to property or discharges the obligation to the city or
who pays a liability under subsection (1) shall have that
obligation to a person delinquent in payment of a tax reduced in an
amount equal to the property or rights to property surrendered or
amounts paid to the city.
(5) Property described in section 6334 of the internal revenue
code of 1986, 26 USC 6334, is exempt from levy under this section
for an unpaid tax. The effect of a levy on salary or wages shall be
continuous from the date the levy is first made until the liability
out of which the levy arose is satisfied.
(6) A warrant notice of levy may be served by certified mail,
return receipt requested, on any person in possession of, or
obligated with respect to, property and rights to property, real
and personal, tangible and intangible, belonging to the taxpayer or
on which a lien is provided by law. The date of delivery on the
receipt shall be the date the levy is made. A person may, upon
written notice to the department, on behalf of the city, have all
notices of levy sent to 1 designated office.
Sec. 86c. (1) [If a city that has a population of more than
600,000
] files for
recording a lien imposed pursuant to this ordinance against
property or rights of property to satisfy a tax liability and the
city determines that the tax liability out of which the lien arose
is satisfied, the city shall file for recording a release regarding
the property or rights of property in the same manner required for
a state tax lien under the state tax lien registration act, 1968 PA
203, MCL 211.681 to 211.687, not more than 20 business days after
funds to satisfy the tax liability out of which the lien arose have
been applied to the taxpayer's account.
(2) If the city files for recording a lien imposed pursuant to
this ordinance against property or rights of property to satisfy a
tax liability and upon request the city determines that the
taxpayer named on the recorded lien does not have any interest in
certain properties owned by another person, the city shall file for
recording a certificate of nonattachment regarding the property or
rights of property, in the same manner as required for a state tax
lien under the state tax lien registration act, 1968 PA 203, MCL
211.681 to 211.687, with all due haste but not more than 5 business
days after the city determines that the lien is recorded or filed
against property or rights of property to which the city does not
have a lien interest under section 86a. The city shall clearly
indicate on the certificate of nonattachment that the taxpayer
named on the recorded lien does not have any interest in the
property or rights of property of the other person.
(3) If a warrant or warrant-notice of levy is issued and
served upon a person to levy on property or rights of property to
satisfy a tax liability and the city determines that the tax
liability out of which the warrant or warrant-notice of levy arose
is satisfied, the city shall serve a release of levy regarding the
property or rights of property on the person that was served the
warrant or warrant-notice of levy not more than 10 business days
after funds to satisfy the tax liability out of which the warrant
or warrant-notice of levy arose have been applied to the taxpayer's
account.
(4) If a warrant or warrant-notice of levy is issued and
served upon a person to levy on property or rights of property to
satisfy a tax liability and the city determines that the property
or rights of property are not subject to levy under section 86a,
the city shall serve a release of levy regarding the property or
rights of property on the person that was served the warrant or
warrant-notice of levy with all due haste but not more than 5
business days after the city determines that the property or rights
of property are not subject to levy under section 86a, the city
shall clearly indicate on the release of levy that the property or
rights of property were not subject to levy under section 86a.
(5) If a person is required to pay a fee to the city, a bank,
or other financial institution as the result of an erroneous
recording or filing of a lien as described in subsection (2), or an
erroneous issuance and service of a warrant or warrant-notice of
levy as described in subsection (4), the city shall reimburse the
fee to that person.
(6) If the city receives money to satisfy a tax liability or
liabilities or receives information that would cancel that tax
liability or those liabilities and subsequently files a lien for
recording specifying that tax liability or those liabilities, the
city, upon request and upon a determination by the city that the
lien was filed and recorded in error, with all due haste, but not
more than 5 business days after the city determines that it has
erroneously filed a lien for recording, shall file for recording a
certificate of withdrawal for that tax liability or those
liabilities which were satisfied which states that the recorded
lien for that tax liability or those liabilities was filed in
error.
(7) If the city receives money to satisfy a tax liability or
liabilities or receives information that would cancel that tax
liability or those liabilities and subsequently issues a warrant or
warrant-notice of levy specifying that liability or those
liabilities pursuant to this ordinance, upon request and upon a
determination by the city that the warrant or warrant-notice of
levy was issued in error, with all due haste, but not more than 5
business days after the department determines that it has
erroneously issued a warrant or warrant-notice of levy, the city
shall issue a release of levy for that tax liability or those
liabilities which were satisfied which states that the levy for
that tax liability or those liabilities was issued in error.