Ohio has one of the most complicated municipal tax systems in the country. Each year at tax time, it’s a costly burden for taxpayers across the state, especially business owners who operate in multiple municipalities. The Municipal Tax Reform Coalition, a group of 25 organizations across the state, is working to change that.
The group is supporting HB 5, sponsored by Rep. Cheryl Grossman (R-Grove City) and Rep. Michael Henne (R-Clayton). The legislation will achieve the goals of any good tax policy—making Ohio’s municipal income tax system simpler, fairer and more predictable.
It’s reform that’s long overdue in Ohio.
Former Ohio Tax Commissioner and current OSCPA Tax Legislation Policy Committee member Tom Zaino, CPA, JD, speaking on WCPN’s The Sound of Ideas radio show recently, said now is the time to work through the “tough issues” related to Ohio’s arcane municipal income tax system. “We need to make Ohio a better place to do business.”
The Ohio Society of CPAs has testified that the Ohio municipal tax system is overly burdensome for taxpayers, with compliance costs in many cases exceeding the taxes due.
One business owner who called the show stated he files over 100 municipal tax returns every year and owes less than $2 in taxes for 80% of those.
Cities are fearful that the bill would further reduce their annual revenues but Zaino emphasized HB 5 will not reduce the taxes businesses pay or change the rates. Cities retain that authority if HB 5 becomes law. In fact, cities could see better compliance with municipal tax because the rules will be more uniform and businesses will better understand them. Right now, there is a lot of confusion around Ohio’s patchwork system.
The House Ways and Means Committee heard sponsor testimony in February. Additional hearings are expected in this spring.
Make your voice heard on this issue if you want to see municipal tax reform become a reality in Ohio. Write a letter to your local newspaper editor supporting HB 5. Tell your legislators to support municipal tax reform. Visit http://munitaxreform.org to share your story and sign the petition for legislators.
For more information on municipal tax reform or other state and local tax issues, please contact Amy Gibson, CPA with Skoda Minotti's Tax Planning & Preparation Group by calling 440-449-6800.