Expanded coalition organizes effort to simplify Ohio’s municipal tax code

More uniform system will improve compliance and help create new jobs

(Columbus, OH) – A broad coalition of state and local organizations is renewing its effort to make Ohio a better place to work and run a business through a simplified municipal tax system. Today, the Municipal Tax Reform Coalition welcomed several new members.

“Ohio stands alone as the state with the most complicated municipal tax system in the nation,” said Amy Mignogna, director of tax policy for the Ohio Society of CPAs.  “Individuals and businesses spend an excessive amount of time and money complying with the law – resources that are better spent growing their businesses and supporting local communities.” 

The coalition welcomes three new members with the recent addition of the Central Ohio Chapter of the National Electrical Contractors Association, the Ohio Council of Retail Merchants, and the Ohio Newspaper Association.

“Like other businesses in every community, Ohio’s newspapers face the cost and complexity of the state’s unwieldy and confusing methods of local taxation,” said Dennis R. Hetzel, executive director of the Ohio Newspaper Association.  “It just makes sense to simplify and unify these requirements.”

Ohio’s current municipal tax system presents compliance problems for individual and business taxpayers, costs existing employers resources that could be redirected to growing their businesses and creating more jobs, and puts Ohio at an economic disadvantage for attracting new employers.

Ohio is one of only a handful of states where municipalities assess individual and business income tax, and the only state where almost 600 cities and villages create their own definitions of income and their own sets of rules and regulations.  Because each municipality is different, with unique requirements, businesses providing goods or services in multiple jurisdictions (for example, florists, plumbers, electricians, delivery services, catering companies, home healthcare providers, and lawyers to name just a few) are responsible for filing municipal income tax returns in potentially hundreds of municipalities. 

As a result of the patchwork nature of the municipal tax system, some businesses end up spending more in tax preparation fees than what they actually owe in taxes.

Working with interested parties and stakeholders, the coalition is seeking legislative change that would establish a more uniform municipal tax code that all municipalities assessing a tax on businesses or individuals would follow, including a uniform definition of income, withholding, penalties and interest, and all related rules and regulations other than tax rate and reciprocity rate.

The coalition is not calling for a centralized collection system, nor is it looking to reduce the amount of tax that individuals and businesses must pay.  In fact, a simplified code that is easier to understand and follow will likely lead to increased compliance with the law. 

“A more consistent, more uniform system will go a long way toward making it easier for all Ohio taxpayers to comply with the law,” Mignogna said.