Judge rules centralized munipal tax filings can move forward in Ohio; Decision a victory for Ohio businesses

Written on Feb 21, 2018

Judge rules centralized municipal tax filings can move forward in Ohio; Decision a victory for Ohio businesses

Employers can opt in by March 1 for 2018 benefits

(COLUMBUS, OH) February 21, 2018—Judge David E. Cain of the Franklin County Court of Common Pleas today cleared the path for Ohio businesses to continue using a new, streamlined municipal tax filing system recommended by The Ohio Society of CPAs. In addition to rejecting the preliminary injunction request filed by some Ohio municipalities, Cain ruled the centralized collection provisions are constitutional and terminated the case.

The decision means Ohio employers can continue registering to centrally file and pay municipal net profits taxes this year through the Ohio Business Gateway instead of continuing to file individually in potentially hundreds of cities where they operate. Cain also upheld as constitutional all other disputed municipal tax provisions of H.B. 5 and H.B. 49.

“Judge Cain’s ruling is a victory for Ohio employers currently drowning in the costly and time-consuming shipwreck of municipal tax administration,” said Scott Wiley, CAE, president and CEO of The Ohio Society of CPAs. “Today’s ruling is a victory for the entire state economy, because it will allow job-producing employers to operate more efficiently in a competitive national and international environment.”

The Ohio Constitution, Judge Cain said, “makes it clear that the general assembly has the power to pass laws to limit the power of municipalities to levy taxes.”  Further, the cities “can argue the definition of the word ‘levy’ until they’re [sic] blue in the face, but using common sense, the Court can only find that the Collections deal with the levying of taxes.”

Calendar year-end employers have until March 1 to register for centralized filing through the Ohio Department of Taxation (ODT) and save what ODT estimates could be up to $1.6 billion annually in combined municipal tax filing costs.

The new system allows employers to file one single return and make one payment quarterly for all cities where they owe municipal net profit taxes. The Ohio Department of Taxation will then remit payments due to cities and villages monthly for businesses opting in to centralized filing, and handle all related administrative tasks for municipal net profit taxes.

Administrative fees for the state-operated process also average 70% less than those charged by regional tax administration entities such as the Regional Income Tax Agency (RITA) doing similar work for Ohio municipalities.

“CPAs have advocated for years to reform Ohio’s stifling municipal tax structure which the national, nonprofit advocacy group The Tax Foundation called ‘the worst among all 50 states,” Wiley said.  “Today’s decision reaffirms Ohio leaders’ commitment to simplify the state’s tax environment and provide relief to employers of every size.”

“We truly appreciate the efforts of The Ohio Department of Taxation and Ohio General Assembly to enact and uphold these significant reforms.”

Since 2012, The Ohio Society of CPAs has partnered with legislators and the Municipal Tax Reform Coalition, representing hundreds of thousands of Ohio businesses, to pass reforms aimed at fixing Ohio’s burdensome municipal tax system.

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