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CPAs must prepare for tricky muni tax environment

Written on Dec 16, 2021

OSCPA staff report 

Businesses that have leaned on the 20-day occasional entrant exemption when it comes to municipal tax withholding need to be especially careful in 2022. 

“It’s very important for people to understand that in a hybrid work environment that 20-day test does not apply,” said OSCPA member and former Ohio Tax Commissioner Tom Zaino, CPA, JD, on Dec. 14 at the Society’s MEGA Tax Conference. 

In a session on legislative issues, Zaino and Barbara Benton, CAE, the Society’s Vice President of Government Relations, took a deep dive on issues including the state budget, business relief from pandemic-related lawsuit abuse, and numerous bills on which OSCPA has made the accounting profession’s voice heard among lawmakers. 

On the municipal income tax witholding issue, Zaino said that starting in January employers must begin tracking actual work locations. 

“It’s not going to be easy for a lot of folks, but it’s important to remember that you can no longer simply withhold at the place of business,” he said. 

To help members better understand the unique challenges of municipal tax withholding in a hybrid work environment, OSCPA has developed a comprehensive FAQ document. The Q&A Guide is meant to provide a general understanding of municipal income tax provisions impacting typical hybrid work arrangements. Practitioners and users must carefully review the ordinances, facts and circumstances of each municipality and situation before making any recommendation or decision about actual municipal income tax compliance.