Detroit Wins at Michigan High Court in Law Firm Tax Dispute (1)

In a blow to legal and accounting firms, the Michigan Supreme Court has ruled that city income tax applies to money earned on services performed for an out-of-city customer so long as the firm’s employees did that work in the local taxing jurisdiction.

Honigman LLP, a large regional law firm based in Detroit, couldn’t get a $1.3 million reduction on local income taxes from 2010 to 2014 for services rendered to clients outside of the Motor City, the justices ruled on Monday.

The decision handicaps firms’ ability to source work for income tax purposes to regions of the ...