The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN FRANK J. KELLEY, ATTORNEY GENERAL Opinion No. 5570 September 27, 1979 TAXATION: City income tax CITY INCOME TAX ACT: More liberal deductions than allowable by state law CITY INCOME TAX: Deduction for expenses incurred by an employee A city may not provide in an income tax ordinance for more liberal deductions than those enumerated in the city income tax act. Expenses incurred traveling from a city taxpayer's residence to his work station may not be deducted as an ordinary, necessary, reasonable expense incurred in connection with the performance of services as an employee. Honorable William A. Sederburg State Senator The Capitol Lansing, Michigan 48909 You have requested whether a city may provide more liberal deductions from a city income tax than are allowed by the City Income Tax Act, 1964 PA 284, MCLA 141.633 et seq; MSA 141.502 et seq, and more specifically, you have asked whether commuting expenses from a taxpayer's residence to his business location within the City of Lansing are deductible from the Lansing city income tax. Section 33 of the Lansing Uniform Income Tax Ordinance and section 33 of the City Income Tax Act, 1964 PA 284, supra, Sec. 33, enumerate the same four categories of deductions for employees as are contained in section 62(2) of the Internal Revenue Code, 26 USCA 62(2). (1) In regard to transportation expenses, section 62(2) of the Internal Revenue Code states: 'Trade and Business Deductions of Employees-- '(c) Transportation Expenses.--The deductions allowed by part VI (sec. 161 and following) which consist of expenses of transportation paid or incurred by the taxpayer in connection with the performance by him of services as an employee.' [Emphasis added] Section 33 of the Lansing City Income Tax Ordinance reads: 'Ordinance, necessary, reasonable and unreimbursed expenses paid or incurred by an individual in connection with the performance by him of services as an employee may be deducted from gross income in determining income subject to the tax to the extent the expenses are applicable to income taxable under this ordinance. The expenses are limited to the following: '(c) Expenses of transportation.' [Emphasis added] The key words of the provision are 'the performance . . . of services as an employee'. Travel to and from place of employment may not be considered as expenses incurred by an individual in connection with the performance of services as an employee for the person does not serve as an employee until arriving at the work station and is no longer an employee after leaving the work station. In addition, the Internal Revenue Code does not permit deductions for commuting costs between an employee's residence and his business location. Treas. Reg. Sec. 1.62-1(g). For purposes of the Michigan Income Tax Act of 1967, 1967 PA 281, MCLA 206.1 et seq; MSA 7.557(101) et seq, 'taxable income' for an individual means adjusted gross income subject to the adjustments indicated in section 33 of the Income Tax Act. Consequently, the starting tax base for individuals under the Michigan Income Tax Act incorporates only the employee deductions set forth in section 62(2) of the Internal Revenue Code. Furthermore, the Legislature's intent to follow the Internal Revenue Code is also revealed in sections 12 and 13 of the City Income Tax Act. Section 12 states in part: 'The tax shall apply on the following types of income of a resident individual to the same extent and on the same basis that the income is subject to taxation under the federal internal revenue code:' [Emphasis added] Likewise, section 13 states in part: 'The tax shall apply on the following types of income of a nonresident individual to the same extent and on the same basis that the income is subject to taxation under the federal internal revenue code:' [Emphasis added] It is, therefore, my opinion that (1) 1964 PA 284, supra, does not authorize more liberal deductions, other than those specifically enumerated, than are allowed for federal or state income tax purposes, and (2) that incurred traveling expenses from a city income taxpayer's residence to his work station within the City of Lansing are not deductible transportation expenses under section 33 of the Lansing Uniform Income Tax Ordinance. The Legislature may amend this provision if it believes that the current law is inequitable. Frank J. Kelley Attorney General (1)