ODT would include interest under centralized collection

Written on Mar 02, 2017

By Gary Hunt, senior content editor

Ohio Tax Commissioner Joe Testa this week told legislators that net profits tax dollars collected by the Department of Taxation would be distributed quarterly to municipalities along with pro rata share of interest earnings.

Centralized collection is one of the provisions supported by OSCPA in Gov. Kasich’s biennial budget proposal, House Bill 49.

In Feb. 28 testimony before the House Ways & Means Committee, Testa said under the proposal, business taxpayers will file one return through the Ohio Business Gateway.

“ODT will propose one set of rules to govern net profits tax collection, not rules that may differ from one municipality to the next,” he said. “Tax appeals will be more consistent, with appeals being made to one central independent body, like other state administered taxes, not to each municipality. Filing and payment will be required electronically through OBG. Furthermore, the capabilities of OBG will be enhanced so as to handle the volume of net profits returns and payments.”

Testa joined us on the latest episode of OSCPA Spotlight to dispel misconceptions about the plan and explain why centralized collection will help the state’s business climate. He pointed to ODT’s experience and proficiency in collecting sales and other taxes, and said other collections would work just as smoothly.

"We have lots of experience doing this efficiently and correctly,” Testa said, dismissing the notion the department would not pay cities what they are due. “We're not holding their money. We have a statutory administrative fee, and are proposing a statutory administrative fee for this. It would be illegal – we couldn't keep more than that.”

Under the proposal, ODT would collect a 1% administration fee, and Testa said “I would hope with efficiencies and time we could probably drive that down" further.

Watch the episode of OSCPA Spotlight above now to hear Testa’s answer to a legislator who thinks his community could administer the tax for less than 1%.

Also, this week, the 31 members of the Municipal Tax Reform Coalition, collectively representing several hundred thousand employers and professionals in Ohio, wrote a letter to legislators supporting centralized collection and another HB 49 provision, elimination of the municipal “throwback” rule. Read the letter in its entirety.

Opponents of centralized collection – city and village officials across the state – are fiercely speaking out against change. Legislators need to hear from YOU now to counter the opposition and help them understand the significant problems Ohio businesses now face. It’s easy to place a quick phone call or send an email or letter urging your state representative and state senator to support centralized collection of net profits tax. It truly WILL have an impact on what your elected officials think. Contact information can be found here or contact OSCPA’s government relations team for help.

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  1. Jim Matuszak | Mar 05, 2017

    I'm sure as accountants and business advisors we would all agree with Mr. Hattenbach's point regarding the importance of timely cash flow, whether it be to a municipality, state government, or any other organization for that matter, public or private.  The issue here is simply reducing the cost of compliance for Ohio businesses to make Ohio a more business-friendly place to do business.  If the OSCPA is going to support this issue, I respectfully request an explanation as to how the centralized collection of income taxes on business profits in Ohio will economically benefit Ohio businesses.

    It seems to me that the issues are with the filing of the net profit income tax returns more so than the collection of the related income taxes.  As accountants and businesses we can already choose to file municipal income tax withholding returns for businesses doing business in multiple jurisdictions via the Ohio Business Gateway without centralized collection.  Lets develop a solution that streamlines the filing process without centralizing the collection process.

    We can solve the problem for Ohio businesses without strengthening the state bureaucracies at the expense of the local bureaucracies and their constituents.

    As an OSCPA member and a city council member in Northwest Ohio, the explanations I've heard in favor of centralized collection so far seem to be coming only from Columbus based on less than all of the relevant facts.  I do not support centralized collection.

  2. Edward Hattenbach | Mar 03, 2017

    Sadly, the centralized collection of municipal taxes eliminates the most crucial element that municipalities rely on:  immediate access to their cash flow.  With resources reduced due to elimination of other tax revenues (franchise, personal property, estate taxes, and share of local government funds, the municipalities do not need the state treasury to interfere with their management of access to their cash flow, regardless of the interest that is paid.

    As a council member in a Southwestern Ohio community and a member of the OSCPA, I cannot support the rationale that is being communicated from Columbus.  Many other councils and municipalities agree.  

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