Ohio Municipal Tax Reform Passage A Must For Small-Business Owners

Date: November 14, 2014

The 2014 elections have concluded and the 130th Ohio General Assembly is back to work.  During the “lame duck” session of the Ohio Legislature there are still important issues left unfinished at the
Statehouse.  One key piece of legislation
is House Bill 5 (HB 5), municipal income tax reform.  This bill passed out of the Ohio House in 2013 and is currently having hearings in the Ohio Senate Ways and Means Committee.

It is important HB 5 pass the Ohio Senate and have an opportunity for the Ohio House of Representatives to concur with any changes before the end of the legislative session.  Ohio operates on a biennial legislative calendar, and any
bill that does not pass by the end of December will need to be reintroduced in
2015, and the process recommenced. A lot of hard work and many hours have gone into this bill that will help to simplify and make compliance easier in regards to Ohio’s cumbersome municipal income tax system.

Ohio is the only state that permits its
municipalities to construct their own set of rules for municipal taxation.  With nearly 600 different municipalities
levying an income tax on individuals and net profits, the cost of compliance
can quickly become burdensome.   It is
long overdue that Ohio simply the system and establish as uniform a system as
possible.  

The Columbus Dispatch has joined the coalition in encouraging the Ohio Senate to finish the job of reforming the Ohio municipal income tax system: http://www.dispatch.com/content/stories/editorials/2014/11/13/1-time-is-short-to-legislate.html

NFIB/Ohio Legislative Director Chris Ferruso offered testimony on behalf of the passage of HB 5 on the morning of November 13, 2014.  In the following afternoon session, two members of NFIB/Ohio Lisa Crosley, owner of EnviroControl Systems from Dayton and Albert Macre, owner of Albert F. Macre & Company, as well as several other businesses, in the Steubenville area both offered a business owners perspective on how the bill would benefit all of Ohio. Both members have been longtime participants in NFIB/Ohio’s Area Action Council program in Ohio.

 

Lisa Crosley’s testimony focused on the amount of time and cost of compliance it takes to meet the needs of the 59 municipalities that her company does business in.  Tax returns filed for 39 of those municipalities through her CPA cost up to $150 and many of the returns indicated the business had a tax obligation of less than a few dollars, one was for only 22 cents. In addition to the business having to file numerous returns, her employees also receive a number of W2 forms for all of the jurisdictions they work in during the year and have hundreds of dollars, in some cases, of fees to complete their taxes as well, showing that this is not just a problem for the business owner.   

Lisa also presented several charts detailing the amount of steps and the time involved in tracking employees for the purposes of remitting the proper municipal income tax.  The proposed changes offered in HB 5 will not necessarily lessen the overall tax burden due in dollars. It will simplify the steps and make the tracking and remittance of the taxes easier for small-business owners like her with 15 employees who do not have the ability to have a dedicated staff member solely for this purpose and it just becomes another hat the owner must wear in the state of Ohio.

Click on the graphic below to read her testimony:

Albert Macre from Steubenville delivered his testimony from the perspective of a licensed CPA and owner of several additional small businesses. His testimony focused on the the provision of the bill covering Net Operating Loss carry forward. His testimony on how standardizing this issue would benefit the business community and help businesses in those years where, due to possibly some outside economic impact, they were not profitable.  

Albert also referenced the state of Ohio’s economic comeback over the past several years and how HB 5 could help add to the ability of the state to continue to attract outside businesses to relocate here and hold onto those already in the state if this were to become law. You can read Mr. Macre’s testimony at the link below:
  

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