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OSCPA advances muni tax over the years

Written on May 13, 2022

OSCPA staff report 

One of OSCPA’s top legislative priorities for years has been achieving meaningful reforms to Ohio’s municipal tax structure—the most complicated in the nation. The success in passing a series of reforms in recent years has been a culmination of OSCPA’s hard work and consistent advocacy for Ohio’s accounting and business community. 

The impact of House Bill 5, signed into law December 19, 2014—and effective for taxable years beginning on or after January 1, 2016—was a significant victory for Ohio CPAs. A partnership of more than 30 organizations representing hundreds of thousands of businesses and professionals and led by OSCPA, the Ohio Municipal Tax Reform Coalition worked collaboratively to drive much- needed reforms to the state's municipal income tax code. 

In 2017, OSCPA continued the work with Ohio leaders and the Coalition again to pass additional, pro-business reforms that reduce costs and red tape, making it easier for taxpayers to comply with filing requirements. The law changes, effective for taxable years beginning on or after January 1, 2018, eliminated the sales factor throwback rule and created a centralized filing and payment option for the municipal net profits tax, saving taxpayers significant administrative costs. 

Three years later on Nov. 5, 2020, OSCPA prevailed again after the Ohio Supreme Court in Athens v. McClain upheld by a 6-1 vote the constitutionality of the reforms and denied the lawsuit collectively filed by more than 160 cities seeking to overturn laws that enabled sweeping, pro-taxpayer municipal income tax changes. 

“Challenges with municipal tax filings have long been one of the biggest complaints our members and the Ohio business community have raised,” said Greg Saul, Esq., CAE, OSCPA director of tax policy. “For the past couple of decades, OSCPA invested significant resources to achieve the positive changes Ohio now has in place, but more still needs to be done. We will continue to move the ball forward and to protect the important reforms that were already accomplished.” 

In early 2020, the pandemic began to impact municipal tax. The legislature passed Section 29 of House Bill 197 to quickly address a variety of employer withholding issues, followed the next year by introducing H.B. 157. The latter legislation, ultimately amended into HB 110, clarified for tax year 2021 that the original legislative intent of H.B. 197 was to apply solely to employer withholding and not to determine the location where a nonresident employee’s wages should be subject to tax liability, thus paving the way for qualified remote workers to receive refunds for tax year 2021. Refunds for tax year 2020, though, are still tied up in litigation across the state. 

Read the entire story on muni tax in the May/June issue of CPA Voice, hitting mailboxes soon.