New Project From Ross Students Aims to Help Detroit Collect Unpaid Taxes

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As a native of Detroit, Chelsi Modest, BBA ’15, MAcc ’16, made a promise to give back to her hometown. She never imagined it would be through accounting. But, with the guidance of Ross professor Cathy Shakespeare, Modest and 10 of her fellow MAcc students worked on a project with the City of Detroit to help boost the city’s business income tax revenue.

The students created a partnership with Detroit’s Deputy Mayor Carol O’Cleireacain and were advised by several tax professionals who are also Ross alumni. They spent last semester strategizing high-level recommendations that O’Cleireacain’s staff could implement, which could ultimately result in improving city services.

“We received a very open-ended guide from the deputy mayor,” says Modest, who graduated in April and now works at EY in Detroit. “We had to find out who the taxable sectors are, who’s paying taxes, who’s not, and how we can improve on that going forward.”

Including Detroit, there are 22 cities in Michigan that impose a business income tax – meaning a tax for people who work in the city, even if they do not live there. However, there is a great sum of business taxes that have not been paid, and the students were helping to figure out a way Detroit can collect the money.

With less personal income taxes and business taxes to work with, the city has had trouble keeping amenities like streetlights and trash pickup running consistently. In the aftermath of a bankruptcy and new business opportunities sprouting throughout the city, Detroit is in a unique situation.

If I can provide a little insight and provide some valuable solutions, that is very uplifting.

-Chelsi Modest
BBA '15, MAcc '16

For the project, students were put into two teams. Modest’s team worked to find an estimated total of city taxes that could be collected and identified the gap in collections. The second team focused on the city’s independent contract issue and identified creative solutions to increase knowledge of and compliance with city income tax liabilities.

For Shakespeare, who is also the faculty director of the MAcc Program, this project is more than just crunching numbers. It opens the door of opportunity for Michigan Ross to continue making an impact.

“Our mission is to make a positive difference, and this is a prime example of that,” she says. “This is a real-time project where students are getting hands-on experience, but also doing something that’s making a social impact.”

The City of Detroit and the Ross MAcc Program will continue this partnership in the fall as they build on the inaugural project and brainstorm new ideas. Modest believes this new partnership is a start to addressing long-term economic issues affecting the city.

“What I love about this work is knowing where this can go or what it can transform into,” says Modest. “If I can provide a little insight and provide some valuable solutions, that is very uplifting.”

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