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Muni tax decision clears the way to register

Written on Nov 12, 2020

OSCPA staff report 

Last week’s announcement by the Ohio Supreme Court upholding a system of centralized collection of municipal business income taxes was big for Ohio CPAs and businesses. Now it’s time for those CPAs and businesses to reap the benefits by registering for that system, said Barbara Benton, CAE, OSCPA’s vice president of government relations. Benton, who has worked on the issue for years with Society members, legislators and other organizations, called the decision “a huge win for us.” 

“They strongly upheld what the Ohio Society and its members have wanted for so long, which is uniformity,” Benton said. “The big takeaway with that is there is no reason to wait. If you work with businesses that are operating in multiple cities, get in there with the Ohio Business Gateway. You can file and save a lot of administrative costs and headaches.” 

Another option is the IRS’s Modernized e-File (MeF) system. 

“If you don’t like dealing with the Gateway, you can file through MEF just as you do with your federal returns – and pay,” Benton said. 

The court decision rejected challenges to OSCPA-supported reforms in 2014’s House Bill 5 and 2017’s HB 49 that eliminated the sales throwback rule and created a centralized filing and payment option for the municipal net profits tax. The court also ruled that the state may not charge local governments a fee to cover administrative costs, but it added that should not threaten centralized collection. 

The Ohio Department of Taxation has estimated that centralized administration of the net profits tax could save all taxpayers as much as $800 million per year in compliance costs, but the provision itself only nets cities $750 million in revenue annually.