Bill to address municipal income taxing locations in Ohio could get committee vote

(The Center Square) – Despite opposition from cities around the state and in the wake of several lawsuits to stop municipalities from collecting income taxes from people who do not work in those cities, an Ohio House committee could vote on a bill that ends the practice.

The General Assembly created a temporary rule more than a year ago that said income taxes collected during the emergency health order would continue to go to the city where a stay-at-home employee would normally work.

The new legislation, which is up for its fourth hearing Tuesday in front of the House Ways and Means Committee, eliminates the temporary rule and says employees pay taxes where work is actually done, the sponsors said.

“No one knew at the time, of course, that a year later, the executive order would still be in effect,” Reps. Jay Edwards, R-Nelsonville, and Kris Jordan, R-Ostrander, said in sponsors’ testimony last month. “And what we don’t know today is when that declaration will come to an end. And that lack of clarity increases the chances for confusion and compliance questions.”

Ohio cities, especially larger ones that tend to be the home to many more employees and more employees who commute to work, argue a significant amount of revenue will be lost if taxes revert to where someone is working from home, rather than where they normally perform job duties.

The Columbus Chamber of Commerce argued against making an abrupt change during the pandemic and believed it would create greater confusion for businesses. The group wants the changes to be easy while keeping larger cities competitive when it comes to businesses.

“In order to achieve both of these objectives, we ask that any changes to Ohio’s municipal income tax structure be phased-in to allow businesses the time to understand the plan for those adjustments,” Holly Gross, vice president of government relations, said when she testified on behalf of the chamber. “While we appreciate the bill sponsors’ desire to provide clarity and consistency to the current tax regime, making this change amidst a pandemic could actually serve to create further confusion for business owners when we appear to be making substantial progress that will alleviate many of these concerns in due course.”

The Buckeye Institute, a research and education policy organization, received a court victory last week in a case involving an Ohio worker who was forced to pay income tax to the city where he normally would work, even though he had spent the majority of the past year working from home in another city.

That victory also led to The Buckeye Institute filing a new lawsuit in Cuyahoga County Court of Common pleas on behalf of Dr. Manal Morsy, a Pennsylvania resident who works in Cleveland. Morsy has not worked in Cleveland, nor the state, for more than year but continues to pay the city’s municipal income tax.

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