Mich. Admin. Code R. 206.20 - Withholding generally

Rule 20.

(1) Every employer, over whom Michigan has jurisdiction, required to withhold federal income tax from compensation paid an employee, shall also withhold Michigan income tax from (a) compensation paid to the employee if the employee is a resident of Michigan, and (b) from that portion of the compensation earned in Michigan if the employee is not a resident of Michigan, unless (i) the compensation is paid to an employee from whom the employer is prohibited from withholding Michigan income tax because of a federal law, or (ii) the employer is not required to withhold Michigan income tax because of a reciprocal agreement between Michigan and another state or between Michigan and another city. (See employer's tax guide.)

(2) Churches, schools, governmental agencies, and nonprofit organizations exempt from income tax shall withhold Michigan income tax from compensation paid employees the same as any other employer.

(a) Example 1. A church has a full-time secretary and withholds federal income tax from her compensation. The church shall also withhold Michigan income tax from her compensation.

(b) Example 2. A machine shop is located in Michigan close to the Indiana state line. It employs residents of both Michigan and Indiana and is required to withhold federal income tax from all employees. The firm shall withhold Michigan income tax from Michigan residents, but will not be required to withhold Michigan income tax from residents of Indiana who provide the employer with a certificate of nonresidency. Michigan and Indiana have a reciprocal agreement.

(c) Example 3. A contractor from Pennsylvania builds a shopping center in Michigan. He employs residents of Michigan from the local labor force and brings 2 of his permanent employees from Pennsylvania to Michigan for 3 months to supervise the construction. The contractor shall register and withhold Michigan income tax from the compensation paid to all employees engaged in the project including the compensation paid to the 2 residents of Pennsylvania for the compensation paid for the work performed in Michigan. This contractor has the same obligation to withhold the Michigan tax as a Michigan contractor who performs all of his business in Michigan.

Notes

Mich. Admin. Code R. 206.20

1979 AC