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Lawmakers unanimously approve municipal tax cleanup bill

Written on Oct 28, 2021

OSCPA staff report 

The Ohio Legislature on Oct. 27 approved H.B. 228, OSCPA-backed legislation that will update the centralized collection process for levying municipal income taxes based on a business’s net profits. 

First the Senate approved House Bill 228 31-0, then on a 96-0 concurrence vote, the House sent the legislation to Gov. Mike DeWine’s desk for his signature.  State Rep. Bill Roemer, CPA (R-Richfield) provided key leadership throughout the process as the bill’s lead sponsor. 

Earlier this fall OSCPA Tax Policy Director Greg Saul, CAE, Esq., offered proponent testimony on the bill, saying that two provisions are especially helpful to taxpayers: 

  1. Extending the date that a taxpayer may opt in or out of the state-administered tax from the first day of the third month after the beginning of the taxpayer’s fiscal year to the 15th day of the fourth month of that year- April 15 for calendar year-end businesses 

  1. Requiring the state – rather than the taxpayer – to notify cities when a taxpayer has opted in or out. 

The bill also allows pass-through entities to deduct pensions or benefits paid to retirees for municipal tax purposes. 

Centralized collection of municipal net profits taxes, which allowed businesses to either continue reporting and remitting these taxes separately to each taxing municipality or (beginning in 2018) elect to report and remit all municipal net profits taxes to the Ohio Department of Taxation, was an OSCPA priority and was enacted in 2017 in the 132-HB49 budget bill. For those who choose ODT, the department then ultimately directs that revenue to the appropriate taxing authorities. 

H.B. 228 also codifies a portal established by the Ohio Department of Taxation to exchange information with municipalities, including notifying municipalities through the portal when taxpayers have opted in or out of paying the municipal tax via ODT. The bill also syncs the new opt-in date with the normal tax deadline of April 15 for taxpayers whose fiscal year is a calendar year.