Streamlined, centralized filing and payment option now available for Ohio municipal taxes
It is no secret that filing and paying municipal taxes in Ohio can be a confusing and time-consuming task. In an effort to save businesses what is expected to total $800 million, the Ohio Department of Taxation is urging corporate taxpayers to sign-up for a new, streamlined tax filing service. Registration is now available online (www.tax.ohio.gov) for businesses to ‘opt-in’ for centralized filing and state administration of the municipal net profit tax for the 2018 tax year, and the deadline to do so is March 1, 2018 for calendar year filers.
For corporations and pass-through entities that are required to report in multiple municipalities—there are more than 500 in Ohio—the new option will likely not only save time, but also money by allowing businesses to file a single return, rather than one in each municipality. Many businesses operating throughout Ohio spend a significant amount of time (or money) filing multiple municipal returns.
The Department of Taxation is now able to process all of the centrally filed returns and distribute the appropriate tax payments to each of the municipalities. The state will also handle all administrative functions, from appeals to audits.
The ultimate goal of this effort is to reduce compliance costs for businesses, though it is also important to note that the new law will not reduce the amount of taxes businesses owe. This new process will simply allow for more efficiency and better economies of scale, and be less costly than going through third-party administrators.
The Ohio Society of CPAs (OSCPA), an organization made up of many with front row seats to these challenges, has been a big proponent of the new system.
“Ohio business owners have complained for years about the excessive cost of complying with our complicated municipal tax system. This is a welcome change that will help them meet filing requirements efficiently and reinvest savings to grow their businesses,” says Barbara Benton, Vice President, Government Relations for the OSCPA.
As CPAs and tax professionals, we can certainly attest to the financial burden that many businesses operating in multiple municipalities face simply to remain compliant. This reform allows businesses to choose whether to file only one municipal net profit tax return with the state or continue to file with each and every municipality in which they do business.
If you believe opting-in will be beneficial to your business from an efficiency and expense standpoint, you should register for the program no later than March 1 (or the first day of the third month of your fiscal year). When making the election, you will need to notify the Ohio tax commissioner and each of the municipalities in which you did business during the previous tax year.
Keep in mind that businesses that choose to opt-in will commit to the new process for a full year, with renewal automatic unless canceled by the taxpayer. There will be no changes in quarterly estimates or tax return due dates due to this process change. Tax returns are due on the 15th day of the 4th month following the end of the taxpayer’s taxable year. You should note that the new system is not available for any other taxes administered by a municipality, such as employee withholding or individual income tax returns.
There are lawsuits currently underway, filed by a group of Ohio cities and municipalities, seeking to kill this new tax law reform, but the OSCPA is confident the laws are constitutional as enacted, and that the initiative will proceed as planned.
You should consult with a tax professional familiar with these issues to assist you in making the best decision for your business. To sign up or for more information, visit the Ohio Department of Taxation’s website at www.tax.ohio.gov or give them a call to request a paper form at 1-844-238-0403.
Tom Cooney and Crystal Faulkner are partners with MCM CPAs & Advisors, a CPA and advisory firm offering expert guidance and beyond the bottom line thinking for today’s public and private businesses large and small, not-for-profits, governmental entities and individuals. Crystal Faulkner serves on the OSCPA Executive Committee. For additional information, call 513-768-6796 or visit us online at www.mcmcpa.com.