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Benton Harbor committee hears limits of city income tax enforcement and its effect on contractors and commissioners
Summary
City staff told the Personnel Finance Committee that the local income tax filing deadline is April 30 and that residents pay 1% while non‑residents pay 0.5% on earnings within city limits; staff said compliance work is on hold for tax season and that contractor payroll withholdings will be monitored going forward.
An unidentified personnel and income‑tax staff member told the Benton Harbor Personnel Finance Committee that the city's income tax remains in effect for anyone who works or lives within the city limits and that tax returns are due April 30.
"If you live within the city limits it is 1% of all earned income regardless of where you work," the staff member said, and added that non‑residents pay 0.5% on income earned inside Benton Harbor. The presenter said compliance work — such as auditing prior returns and contractor payrolls — is temporarily on hold while the department processes tax‑season filings.
Commissioners questioned whether commissioners' monthly stipends and retirees are subject to the tax. The staff confirmed withholdings are taken from stipends but said recipients still must file city income tax returns under the same filing rules as federal and state returns.
The committee discussed how to enforce collections for contractors working in the city. City staff said contracts now include language requiring contractors to comply with city income tax rules and certified payroll submissions for state‑funded projects will be reviewed for tax withholdings. "We will be checking their withholdings as best we can do because they are responsible for filing and withholding," a city staff member said.
A commissioner urged the committee to revisit an earlier resolution that had been intended to "relieve some of that" tax burden for certain residents; the chair asked staff to forward the resolution for review at a future meeting.
The committee did not take a formal vote on changing the tax; staff said further compliance work will resume after tax season and recommended bringing the prior resolution and the committee's review back to a subsequent meeting.
