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The Michigan Department of Treasury in January will begin administering Detroit’s business and fiduciary income tax returns, state and city officials announced Tuesday.

State Treasury will start processing the returns, beginning with the 2016 tax year, as part of an agreement with the city that already has Michigan handling collection of city income taxes for residents and non-resident commuter taxes.

This newest change will affect taxpayers subject to the city’s corporate, partnership and fiduciary filing requirements, as well as any business required to withhold Detroit income taxes, officials said.

Detroit’s business taxpayers will have the ability to submit their 2016 city corporate income tax returns electronically and have access to Treasury’s online services. As a result, officials say the city will benefit from improved accuracy of electronically filed returns as well as expanded compliance and enforcement efforts. Partnership and fiduciary returns will now be paper filed with Treasury.

The state’s processing of business and fiduciary income tax returns serves as the second phase of a coordinated program to improve the city’s tax collections.

The state for the first time this year began collecting the 2.4 percent city income taxes for residents and the 1.2 percent commuter tax on non-residents who work in Detroit for the 2015 tax year via a filing schedule included with state tax returns.

The agreement also allowed city taxpayers to file income taxes electronically for the first time.

“The first phase of this agreement with the Michigan Department of Treasury was very successful. For the first time, individual taxpayers were able to file their Detroit income taxes electronically,” Detroit Chief Financial Officer John Hill said in a released statement. “As the e-filing program expands to include corporate filers, we are continuing our efforts to make city government more accessible and user friendly to those we serve.”

Detroit leaders and Treasury staff said they are working collaboratively to ensure a seamless transition and quality customer service for taxpayers.

Detroit is one of about 20 cities in the state with its own municipal income tax, and it was the first to use the state treasurer’s office to handle filing.

“The Michigan Department of Treasury is focusing on building a culture of taxpayer service. Our partnership with the City of Detroit is an example of this work in action,” Michigan Treasurer Nick Khouri said in a statement. “For the first time, Detroit taxpayers will have access to a consolidated system for filing their city and state taxes.”

Forms, instructions and additional information will be available later this month on the Michigan Department of Treasury’s website.

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