FAQs

1.  What is the history of the City of Detroit Income Tax Ordinance?

Detroit Ordinance No. 900-F was adopted by the Common Council (City Council) on September 15, 1964 and approved by Mayor Jerome P. Cavanaugh on September 18, 1964, becoming effective on January 1, 1965. The ordinance replaced prior Income Tax Ordinance No. 694-F, which took effect July 1, 1962.

Michigan cities are authorized to levy a city income tax upon adoption of a uniform ordinance prescribed by the legislature, and a number of cities have done so. The tax levied is a flat tax at limited rates on income. Withholding and estimated taxes are both required. The uniform ordinance sets forth apportionment provisions to determine the income amounts of non-residents and of businesses that conduct business activities, within and outside of the city, that are subject to tax.
Refer to: The City Income Tax Act, Act No. 284 of the Public Acts of 1964 as amended.
 

2.  Will you mail me the income tax forms?
The City will not be mailing tax forms for 2006 except for withholding and estimated tax vouchers. The tax returns, instructions and other income tax forms can be downloaded from the City website @ www.ci.detroit.mi.us. These will be published on the website in December 2006. The City will print flat forms and instructions for distribution to Neighborhood City Halls and Libraries. Citizens may also call the City at 313-224-3322 if they would like a copy mailed to them.
 

3. What are the tax rates?

Resident: 2.50%

Non-resident: 1.25%

Corporations: 1.00%
  

4. What are the personal exemptions?
Effective tax year 2005, personal tax exemptions reduced from $750 to $600.
 
5. Where should the returns be mailed?

They should be mailed to City of Detroit Treasurer P.O. Boxes:

The P.O. Boxes are same as last year for each tax type. Returns not mailed to the right P.O. Boxes will result in delayed refunds.  Please refer to the tax return for appropriate address as given below:

	Payment	Refund
Resident:	Treasurer, City of Detroit P.O. Box 673545 Detroit, MI 48267-3545	Detroit City Income Tax P.O. Box 553163  Detroit, MI 48255-3163
Non-Resident:	Treasurer, City of Detroit P.O. Box 673549 Detroit, MI  48267-3549	Detroit City Income Tax P.O. Box 553167 Detroit, MI 48255-3167
Extensions:	Treasurer, City of Detroit  P.O. Box 673553 Detroit, MI 48267-3553	Detroit City Income Tax P.O. Box 553171 Detroit, MI 48255-3171
Part-Year Resident:	Detroit City Income Tax P.O. Box 553171 Detroit, MI 48255-3171	Detroit City Income Tax P.O. Box 553173 Detroit, MI 48255-3173
Corporation:	Treasurer, City of Detroit  P.O. Box 673561 Detroit, MI 48267-3561	Detroit City Income Tax P.O. Box 553165 Detroit, MI 48255-3165
Partnership:	Treasurer City of Detroit P.O. Box 673570 Detroit, MI 48267-3570	Detroit City Income Tax P.O. Box 553176 Detroit, MI 48255-3176
Estimates:	Treasurer, City of Detroit Income Tax – 21601 P.O. Box 67000 Detroit, MI 48267-0216
Withholding:	Treasurer, City of Detroit Income Tax – 131901 P.O. Box 67000 Detroit, MI 48267-1319
Assessments:	Treasurer, City of Detroit Income Tax – 35001 P.O. Box 67000 Detroit, MI 48267-0350
MBIA:	Treasurer, City of Detroit Income Tax – 672979 P.O. Box 67000 Detroit, MI 48267-6729
Utility Users Tax:	Treasurer, City of Detroit Income Tax – 46501 P.O. Box 67000 Detroit, MI 48267-0465

6. How are interest and penalties calculated?

The current interest rate on income tax delinquencies is established by the Department of Treasury, State of Michigan. This rate changes every six months.
Penalty is 1% per month with a maximum of 25%. Estimated tax payments are not underpaid if they equal 70% of the tax due on the final return or 70% of the tax due on the return for the preceding year. Underpaid estimated taxes are charged interest at prevailing per annum interest rates and penalties.
 
7. What is the Utility Users Tax?

The tax is imposed on users of telephone, gas, and electricity services in the City of Detroit and is used exclusively to fund the Police Department. The rate is 5%. The tax is billed by the public utility or resale customer and remitted monthly to the city.
 
8. How long must I wait for a tax refund?

Claim for refunds are paid normally within 90 days of filing or 45 days after April 30, whichever is later.
Non-residents who work less than 100% of their time within the City of Detroit are required to complete Schedule N on page 2 of the D-1040 (NR).
 
Effective tax year 2005, City of Detroit is requiring that non-resident taxpayers who allocate less than 100% of their income to provide the following documentation:

    * A letter from their employer verifying lines 1 and 2 of the Schedule N.  The letter should include the name, title and phone number of the person signing the letter and should be on the official letterhead of the employer, and
      
    * Documentation/work-log showing days and locations worked in/out of the City of Detroit

Non-resident taxpayers based in Detroit who work in their homes cannot use those days as days worked outside Detroit.  Regulation 13.2 of the City Income Tax Ordinance provides that: “The mere fact that a non-resident employee takes work home with him and performs such work at his home does not permit allocation of compensation”.
 
If no documentation is provided i.e., employer letter and work log, the tax return will be returned requesting the missing documentation. This will result in delayed refunds.

Returns filed without the following documentation will also be returned to the taxpayers resulting in delayed refunds and/or disallowance of deductions/credits claimed.

    * Signatures
    * W-2s
    * Federal schedules-C, D, E, Form 2106, etc.,
    * Copy of federal 1040 for IRA and alimony deductions
    * Copy of the relevant City income tax return for “Other City tax credit”

In case a return is audited, refunds can be delayed depending on the taxpayer’s response time.
 
9. Does the City pay interest on refunds?

Yes. The current interest rate is established by the Department of Treasury, State of Michigan. As in the case of delinquencies, this rate changes every six months.
 
10. What are the requirements for remitting monthly and/or quarterly withholding tax payments?

Monthly payments: Required where the amount withheld per month exceeds $100. Payment is due on or before the last day of the month following the period in which taxes were withheld.
Quarterly payments: Allowed where amount withheld does not exceed $100 per month. Payment is due on or before the last date of the month following the quarter in which taxes were withheld. Employers must file an Annual Reconciliation (DW-3) along with DW-2’s at the end of each tax year.
 
11. What type of income is not taxable?

Gifts, inheritances and bequests; Pensions and annuities, including disability pensions (pre-retirement distributions are taxable); Proceeds of insurance (except payments from a health and accident policy paid for by your employer); Unemployment compensation, supplemental unemployment benefits (sub-pay), welfare relief payments; Workmen’s compensation or similar payment for death, injury or illness arising out of and in the course of an employee’s job; Interest on obligations of the United States, the states or subordinate units of government of the states; Military pay for members of the Armed Forces of the United States and the National Guard; and Social Security income or benefits. See instructions for more details.
 
12. I filed for a refund and I was denied. Why?

Refund may have been offset against prior delinquent assessment or may be barred by Statute of Limitations. Claims for refunds must be made within four (4) years from the date the payment was made or from the date the tax return was due. A 2002 tax return due on April 30, 2003 would be entitled to refund up to April 30, 2007.

Example:

2001 and prior years: Not eligible for refunds - barred by the Statute of Limitations.
2002: Eligible for refund if filed by April 30, 2007