A Much Needed Change | Tax Tip of the Week | No. 163

Ohio Municipal Tax Update

Hearings began a couple of months ago to find a way to simplify Ohio’s city income tax laws. Ohio is one of only 10 states where municipalities assess and collect an individual and business income tax.  All 10 states except Ohio and Pennsylvania have 22 or fewer cities assessing a municipal income tax, compared to almost 600 in Ohio.  To make matters more difficult, only Ohio allows each city to set their own definitions of income and other regulations.The Ohio Society of CPAs has been a leading advocate to get Ohio lawmakers to address the need for municipal income tax reform.  The following is some of the testimony they recently presented: “The problem is that Ohio’s strong home-rule orientation allows communities not only to set their own income-tax rates, which is an appropriate accommodation to differing local circumstances, but also to establish policies such as what constitutes business income and residency.” “It’s easy to see the paperwork nightmare this presents to a business with operations in more than one Ohio municipality: They can spend a fortune in time trying to sort out how many hours their employees worked in various communities, then applying each community’s unique tax code to those hours.”Just this week, our firm had to prepare 49 city tax returns for one of our small business clients that deliver services throughout the area!To learn more about the efforts to streamline Ohio’s municipal income taxes and to keep up with developments click here.We will keep you posted on this much needed tax reform.

As always, give us a call with any questions you may have.You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.Rick Prewitt - the guy behind TTWTax Tip of the Week Video Series:http://youtu.be/BlhqUiVEsJo...until next week.