Opt-in centralized collection gains favor

OSCPA staff report

Plans for an opt-in approach for centralized municipal net profit tax administration are gaining momentum in the Statehouse as the Ohio Senate deliberates over the state’s biennial budget.

That became more clear this week as Ohio Tax Commissioner Joe Testa spoke before the Senate Finance General Government and Agency Review Subcommittee.

The House-passed version of the budget – HB49 – largely maintains the status quo for net profits filings through the Ohio Business Gateway, though efforts are under way to pursue an alternative opt-in approach.

During testimony May 6, Testa said his department is dropping a proposal for mandated centralized municipal net profit tax administration in favor of allowing businesses to opt in. The proposal is a response to municipalities that have said some business prefer local tax administration.

ODT’s funding requests initially totaled $141.4 million in fiscal year 2018 and $145 million in FY 2019. However, the budget as passed in the House provides $133.8 million in ‘18 and $133.4 million in ‘19, which Testa said is partially because of removal of the municipal net profits administration proposal.

Testa said that ODT plans to offer the Senate a revised proposal on municipal net profits with a related increased appropriation request.

“The revised proposal significantly reduces compliance costs for businesses that opt-in, takes advantage of economies of scale leading to a more efficient and streamlined tax system, is less costly than third-party administrators and improves compliance by cross-checking with other data that can be accessed by ODT, thereby increasing revenue for the municipalities,” he said.

We’re urging lawmakers to strengthen the House-passed language for optional centralized collection of net profits tax, and we need your help. For the huge percentage of OSCPA members who, for years, have clamored for centralized collection of municipal taxes: you need to speak up NOW! Doing so is as easy as leaving a phone message with your state senator or sending a letter or email, and will have a meaningful impact. Need help? OSCPA’s government relations team is standing by to help.

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