Tax Tip of the Week | No. 433 | Municipal Net Profit Tax Return

Tax Tip of the Week | Nov 15, 2017 | No. 433 | Municipal Net Profit Tax Return

There are over 600 Ohio cities and villages that levy a municipal income tax. These taxes are administered by the  individual municipalities or by third party administrators. Business taxpayers are required to file and pay tax in every municipality where income is earned. The new plan is for the state to administer the business net profit tax. Note, this would not include sole proprietors and single member LLCs. This could be a savings of $800 million to municipalities and businesses if all businesses file centrally.According to the Tax Reform Plan, the business taxpayer will have the choice to file and have the net profit tax administered by multiple individual municipalities or to file with Ohio Department of Taxation. This is an ‘Opt-in’ choice and is not mandatory.Advantages for ODT will be one uniform tax return and one consistent governing body which will allow filing multiple municipalities to one central location. ODT will provide taxpayer information to the municipalities.ODT Role:Propose rulesPrescribe formsIssue bills, assessments, refundsConduct audits, certify debtsHandle appeals & other administrative mattersMunicipality Role:Retain responsibility for Employee Withholding & Individual filingsRetain control over tax rate and tax creditsBusiness taxpayers who want the cost savings of reporting and filing municipal tax are urged by the Ohio Tax Commissioner to sign up for a major new and convenient tax filing service. Businesses wanting to ‘opt-in’ for the centralized filing and state administration of the municipal net profit tax for the 2018 tax year can register now at the Department of Taxation’s website (www.tax.ohio.gov). Business taxpayers need to register specifically for the municipal net profit tax to take advantage of this new one-stop, cost-saving system, even if registered with the state to pay other taxes.Municipal Net Profit Tax Reform Timeline:By March 1, 2018 – business (calendar year filers) registers through OBGBy April 15, 2018 – business makes first quarterly estimated paymentBy April 15, 2019 – business files Tax Year 2018 tax returnYou can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website....until next week.