A state organization of certified public accountants is seeking uniformity in the state’s municipal tax code.
Ohio’s municipal tax code is complicated and makes it difficult for companies and individuals to understand and comply, said Amy Mignogna, director of tax policy for the Ohio Society of CPAs.
The society worked with Reps. Cheryl Grossman, a Republican from Grove City, and Mike Henne, a Clayton Republican, to introduce House Bill 601 that is designed to simplify Ohio’s municipal income-tax code.
“Creating a more uniform municipal tax code in Ohio has been one of OSCPA’s top legislative priorities for over 20 years,” said Clarke Price, CAE, president and CEO of The Ohio Society of CPAs. “When almost 90 percent of OSCPA members surveyed believe that Ohio’s municipal tax structure puts Ohio at an economic disadvantage compared to other states, it’s time for a change.”
Ohio is one of only 10 states where municipalities assess an individual and business income tax, and the only state where each entity can create its own definition of income and set its own rules and regulations, Mignogna said. The bill would create a more efficient system that will save business and individual taxpayers time and compliance costs.
A local comparison is Pennsylvania where each municipality can have its own tax, but state law mandates definitions, she said.
Each city, town or village can have its own definition of what makes up a work day for tax purposes, she said. The bill would make employees responsible for municipal tax to only the city where they spent the majority of their work day.
“This is extremely important in businesses like plumbing where a company could easily work in 30 municipalities or more during a year,” Mignogna said.
The change in what constitutes a work day will save a lot of workers and companies from having a number of small tax bills, she said. The bill would also lift the work minimum from 11 days to 20 days for a city to collect tax.
“Right now it can cost companies more in costs for compliance than the tax that is actually due,” Mignogna said. “It could cost $50 to $75 to comply with a $5 tax bill.”
The cost of compliance is something a number of business are concerned about when they consider relocation, she said.
“This bill will make Ohio more attractive to existing and potential job providers and help our state drive economic development,” Price said. “It is the right move for Ohio’s future.”
The bill should also result taxes being paid correctly more often to cities, Mignogna said. The current complexity of the law means some companies and individuals don’t handle the tax correctly.