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Bill seeks to simplify Ohio muni income tax system
By Marc Kovac
COLUMBUS
The Ohio House has concurred on controversial legislation aimed at simplifying the state’s municipal income-tax system.
The chamber approved Senate amendments to HB 5 on a vote of 57-31 Tuesday, sending the law changes to Gov. John Kasich for his expected signature.
The legislation would take effect for tax year 2016 and thereafter, said Rep. Cheryl Grossman R-Grove City, a primary sponsor.
HB 5 would synchronize filing extensions, penalties, due dates and code definitions for Ohio’s various municipalities, replacing a system in which tax-filing rules and requirements are different from city to city.
Backers say the bill will mean uniform tax-filing forms and rules in place statewide, though municipalities would continue to set their own tax rates and collect their own filings.
The legislation does not call for the centralized collection of municipal income taxes.
Proponents say the bill is an attempt to update and simplify municipal tax-filing requirements in a state where nearly 600 municipalities are using about 300 different forms to collect income taxes.
Some businesses have to file two dozen or more local forms annually.
“The basis for good tax policy should include simplicity and predictability,” Grossman said. “Neither is currently found in Ohio’s municipal income-tax code. It is important to remember that this bill is critical not only for businesses but also for the individual employees.”
The Ohio Municipal League and representatives of cities and local governments have opposed the bill, saying it will lead to less local control and potential reductions in tax collections.