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Detroit turns resident's $500 income tax refund into a $5,300 bill

FILE - In a Dec. 12, 2008 file photo, a pedestrian walks by graffiti in downtown Detroit. On Thursday, July 18, 2013 Detroit became the largest city in U.S. history to file for bankruptcy when State-appointed emergency manager Kevyn Orr asked a federal judge for municipal bankruptcy protection. (AP Photo/Carlos Osorio, FILE)

The mystery of how Detroit went bankrupt continues to puzzle me...

Ella Joshua-Dixon was born and raised on Detroit’s west side, and it’s a city she still loves. So, when she decided to let the city’s tax department keep her $500 2011 refund, she thought she was being generous, helping her cash-strapped hometown in her own small way.

That backfired.

The city’s income tax division then sent her a letter, saying she owed back taxes, interest and penalties of $5,296 from years as far back as 1999.

By the end of the back-and-forth, the 47-year-old Auburn Hills accountant discovered that the city owed her more than that initial $500.

She was due another $416 — and fought back with copies of her W-2s and other documents, some wielded in person when she took time off her job to head downtown.

“What I would consider as doing a favor made out to be an invitation for harassment,” Joshua-Dixon said.

As Detroit grapples with bankruptcy, residents and the suburbanites who commute to jobs in the city are questioning the state of city income tax returns, especially those due a refund, and whether there’s a greater risk of being audited by a city looking in every corner for cash.

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