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Tax Law

Income Tax Reform Tensions Vex Ohio Cities, Businesses

All compliant taxpayers know that wrestling with tax liabilities involves far more than how to pay for them. Ongoing challenges are manifold – Taxpayers must all plan to control and minimize taxes; divine tax amounts payable; and pay timely. Problems and compliance efforts multiply proportionally with the number of jurisdictional entanglements.

Consider Ohio business concerns, for example. Aside from federal, state and potential international tax exposures, many such businesses – even small ones – need constantly to monitor and remit local sales taxes. The same dynamics apply to local income taxes.

In efforts to tackle the local income tax problem, the Ohio General Assembly is trying to meld simplicity with local revenue needs.* The Columbus Dispatch reports that businesses in the Buckeye state must deal with a matrix of 600 cities using more than 300 forms. This is more than just an academic curiosity for businesses with an extensive presence across many local jurisdictions – It’s a burdensome, costly, and annoying chore. Ohio H.B.5 is being advanced to mitigate this administrative nightmare and simplify life for corporate tax departments. The sponsor of the bill asserts that businesses in the Buckeye state deal with “the most complicated and unfriendly tax system in the entire nation.”

But the legislative formula required for H.B. 5 to satisfy local revenue needs, as well as business interests, is complicated. Legislators recognize that a one-size-fits-all approach can’t work. For example, businesses favor the proposed uniform net operating loss carry forward provision. But some cities don’t have such provisions. Also, many cities with such NOL provisions have different carry forward periods.

So legislators are trying to fine-tune the NOL angle, along with a couple of other uniformity issues that are inclined to create “winners and losers.”

Staying tuned for further developments.


* LEXIS users can view the latest related news developments reported in "Ohio House Republicans Unveil New Municipal Income Tax Streamlining Bill," taxanalysts® State Tax Today, October 25, 2013.

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