HB 5576 Summary

• Requires employers located in Michigan (beginning January 1, 2013) that employ residents of cities with uniform city income tax ordinances to withhold taxes from those employees' compensation, even if the employer has no business location in the tax city.

• Sets withholding rate for non-resident employees at no more than 50% of the resident tax rate, applied only to the estimated percentage of work performed in the city (with no withholding required if work percentage is less than 25%).

• Maintains existing withholding requirements for employers doing business within a city, including rates not to exceed 3% for resident employees and up to 50% of resident rate for nonresidents.

• Requires employers to obtain completed forms from employees starting January 1, 2013, documenting exemptions claimed, city of residence, predominant place of employment, work location percentages, and renaissance zone qualification status.

• Establishes employer liability for failure to withhold required taxes, though liability is discharged if the employee later pays; employers remain subject to penalties and interest for non-compliance.