Chamber, CPAs endorse income tax uniformity legislation
TIFFANY L. PARKS
Special to the Legal News
Published: November 8, 2012
The Ohio Chamber of Commerce and the Ohio Society of CPAs has lauded the introduction of a House bill that would amend state law governing income taxes imposed by municipal corporations.
The measure, House Bill 601, would set uniform rules for withholding and taxation among all Ohio cities.
Daniel Navin, Ohio Chamber assistant vice president for tax policy and economic development, said the proposal would make the state’s business climate more competitive.
“Ohio’s current municipal tax system is one of the most complicated in the country,” he said, adding that thousands of businesses prepare and file tax returns with multiple cities every year and, in many instances, incur more in administrative costs than the amount of tax actually paid.
“Ohio businesses unnecessarily spend millions of dollars on record-keeping, computer programming and expert advice in order to comply with the different requirements of all the cities in which they do business. This is not only time consuming and costly, but also highly inefficient.”
The proposed legislation, which landed in the House earlier this week, is jointly sponsored by Reps. Cheryl Grossman, R-Grove City, and Michael Henne, R-Clayton.
A statement from the Ohio Society of CPAs described HB 601 as the culmination of more than a year of collaboration between the Municipal Income Tax Uniformity Coalition, the Ohio Municipal League and various representatives of Ohio municipalities.
“Creating a more uniform municipal tax code in Ohio has been one of OSCPA’s top legislative priorities for over 20 years,” said OSCPAs President and CEO Clarke Price.
“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.”
In addition to a host of provisions related to determining the amount of time an employee spent working in a single day and the duty days of professional athletes, HB 601 states that the municipal tax policy board may, by rule, prescribe uniform requirements as to the keeping of records and other pertinent documents related to the liability of any individual for a municipal tax.
Price said Grossman and Henne led a series of meetings to develop consensus on provisions that would simplify Ohio’s unique municipal income tax structure.
Like Navin, he said the current set up is “costly and burdensome for business and individual taxpayers.”
Price also said Rep. Peter Beck, R-Mason, the chair of the House Ways and Means committee, hosted interested party meetings throughout the state this spring and summer to give stakeholders an opportunity to present their concerns.
“HB 601 represents the collective efforts of these meetings, and presents much needed reform to spur additional job growth in Ohio,” he said.
Navin said Ohio is the only state that allows each of its municipalities — nearly 600 of them — to create its own definition for employee withholding, its own rules as to what is taxable for individuals and businesses, its own regulations for calculating penalties and interest and its own forms.
By establishing a single set of tax rules and regulations that apply to all Ohio cities that impose business and individual income taxes, the proposed legislation is expected to reduce business compliance costs and administrative burdens on employers, Navin said.
“Our complicated municipal income tax system with its lack of uniformity hurts Ohio’s economic competitiveness,” he said. “But HB 601 will make Ohio a more inviting and attractive place for new investment and jobs.”
In addition to Ohio being the only state to allow municipalities to create their own definition of income and set their own rules and regulations, Price said Ohio is one of only 10 states where municipalities are allowed to assess an individual and business income tax.
He said enacting HB 601 would “eliminate this patchwork approach and help to create a more efficient system that will save business and individual taxpayers time and compliance costs. This bill will make Ohio more attractive to existing and potential job providers and help our state drive economic development. It is the right move for Ohio’s future.”
Navin urged lawmakers to pass the proposal before the end of the year.
The bill is awaiting a committee assignment.
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