OSCPA staff report
Centralized collection of business net profits tax as proposed in House Bill 49 would save costs and still allow cities to retain direct control of 86% of their income tax revenue.
That was the testimony March 7 of Megan Durst, CPA, chair of OSCPA’s State and Local Tax Committee.
“The centralized collection proposal in HB 49 applies solely to the business net profits tax, estimated by the Ohio Department of Taxation (ODT) to produce on average just 14% of total municipal income tax collections,” Durst told the House Ways & Means Committee. “As a result, the typical municipality would retain direct control over the remaining 86% of their income tax revenue, usually derived from employee withholding.”
Speaking on behalf of OSCPA, Durst said Gov. Kasich’s budget proposal will simplify the filing process by allowing businesses file and pay once online through the Ohio Business Gateway.
“While the amount of tax they owe will not change, centralized collection will significantly cut down on the paperwork burden, allowing business owners to devote the significant time and money now spent on compliance with multiple different cities instead to growing their business,” she said. “Further, having the ODT administer the net profits tax for cities and villages will ensure consistency and predictability of treatment.”
Later in the week, Tax Commissioner Joe Testa told the House Ways & Means Committee that centralized collection of the municipal net profits tax would save cities more than $9 million annually in local administrative costs. He also shared a study of how the change would impact 96 Ohio cities; all but four would pay less under HB 49.
Under the plan, the Ohio Department of Taxation would administer the taxes for a 1% fee. The commissioner told OSCPA he hoped the department could eventually reduce the cost further.
Numerous legislators have indicated they are hearing plenty of concerns from Ohio cities and villages, but not much from area businesses. They need to hear directly from Ohio businesses about their current filing challenges to better understand the filing and payment challenges they face. The time to speak up is NOW to help this hotly debated issue move forward. It’s easy to contact your state representative and state senator by phone, letter, email or in person. For additional assistance, contact the OSCPA government relations team at 800-686-2727.