Notice on the Status of the City of Detroit Individual Income Tax Return Deadline

Date: March 25, 2021

Taxpayers have recently contacted the Department with questions regarding whether the April 15, 2021 deadline for the City of Detroit individual income tax will be automatically extended consistent with similar extensions granted at the federal and state levels. This notice explains the status of the April 15, 2021 due date for City of Detroit individual income tax returns due for tax year 2020. 

Status of the City of Detroit Filing Deadline

On March 17, 2021, the Internal Revenue Service (IRS) announced that individuals would receive an automatic extension of time until May 17, 2021 to file the 2020 federal individual income tax return and make any payments due on that return.[1]  The Michigan Department of Treasury likewise announced that it would provide identical relief for Michigan individual and composite income tax filers.[2] The relief provided by the Department was based on the Department's general statutory authority to waive both penalty and interest that would otherwise accrue for state income tax returns filed or payments made after the original due date of April 15, 2021.[3]  The Department was therefore able to match the federal extension relief through an exercise of administrative authority.  

Although the Department administers the city income tax for the City of Detroit, the City Income Tax Act[4] prevents extension relief from being provided in the same manner as provided for the state income tax.  In particular, while the Act permits a discretionary waiver of penalty,[5] it does not permit a similar waiver of interest.  Therefore, for purposes of administratively providing an extension until May 17, 2021 to file city individual income tax returns, the Department can waive penalty for returns filed after April 15, 2021, but cannot waive interest.

House Bill 4569 has been introduced to amend the City Income Tax Act to provide individuals with an automatic extension until May 17, 2021 to file the return and pay any tax due.  This legislation will preclude the imposition of any penalty or interest for a return filed for the period between April 15, 2021 and May 17, 2021.[6]  While House Bill 4569 is intended to codify the relief which currently exists at the federal and state levels, that legislation remains pending and may not be fully enacted into law as the April 15, 2021 filing deadline approaches. 

Taxpayers will receive the full extent of extension relief as provided in House Bill 4569. Until that legislation becomes law, however, the Department can provide relief only to the extent permitted by the City Income Tax Act. As of the date of this notice, therefore, 2020 city individual income tax returns will be subject to the following:

Penalty - All individuals will receive a waiver of penalty that would otherwise accrue for a 2020 tax return or payment that is filed between April 15, 2021 and May 17, 2021.  This waiver will be automatically applied to all returns filed during this period. 

Interest - Interest will accrue for individual income tax returns filed after April 15, 2021 as required by law. Interest will, however, only accrue to the extent there is a tax deficiency required to be paid with the return. For most taxpayers, interest that will accrue on such a deficiency is likely to be a nominal amount. Any interest that accrues on a tax deficiency will be waived, cancelled, or refunded in accordance with any legislation that is enacted.

The relief provided within this notice is limited to the 2020 annual tax return filed by individual income taxpayers for the City of Detroit.  Residents of other cities imposing a city income tax should contact their respective city income tax administrator for information on the due date of the 2020 tax return. 

The relief provided is further limited to individuals.  Businesses, estates, and trusts remain required to file a City of Detroit income tax return by April 15, 2021 and may be subject to penalty and interest for failure to do so. These taxpayers will receive extension relief for returns filed after April 15, 2021 only as permitted by legislation.

The status of the legislation may be monitored by visiting the Michigan Legislature's website.

Additional guidance may be issued in the event that an automatic extension is enacted into law. All future information regarding the 2020 filing deadline for the City of Detroit will be posted on the Department's website at www.michigan.gov/taxes.