OUR VIEW: Simplifying tax filing in Ohio makes sense; Taxpayer-friendly House Bill 5 opts for clarity over confusion

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There are almost 600 municipalities in Ohio levying local taxes, using about 300 different tax forms with varying deadlines, penalties and codes.

That poses needless headaches for taxpayers and employers as well as the municipalities themselves.

House Bill 5, which was approved this past month, aims at simplifying the state's municipal tax filing system, not by creating a centralized collection system but by establishing uniform rules on due dates, filing extensions, penalties and code definitions. That promises to be an improvement over the existing system in which each municipality sets its own tax-filing rules and requirements.

"Ohio has the most complicated and illogical local income tax system in the country," said Rep. Cheryl Grossman of Grove City, the primary sponsor of House Bill 5, which cleared the House by a vote of 56-39 and now heads to the Ohio Senate. "The basis for good tax policy should include simplicity and flexibility. Neither is currently found in Ohio's municipal income tax code."

For Ohioans who live and work in the same municipality, filing a local income tax is relatively simple. But for those who live in one municipality and work in another, that may not be the case. Households with wage earners working in different cities may find themselves filing three or four local income taxes, depending on reciprocity rules, with varying tax deadlines, penalties and other requirements.

Simplifying tax regulations with an eye toward making them more uniform is a taxpayer-friendly move as well as a business-friendly one. Small businesses in particular now face considerable challenges juggling tax requirements for multiple municipalities.

Opponents of House Bill 5, including the Ohio Municipal League, warn about a loss of local control and potential reductions in local tax collections. We question that.

Making it easier to file a tax return is a common sense solution. We hope the Senate agrees.

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  • Let's set the record straight, shall we?   All municipalities accept a generic tax form, as required by the Ohio Revised Code Section 718.   Municipalities provide a form for the convenience of their taxpayers (hence, the multiple forms).  Using this as a talking point against municipal tax is nonsense.   This new bill takes the current Ohio Revised Code (which dictates municipal income tax law at the STATE LEVEL) and changes it from the current 23 page document to 145 pages.  I challenge any tax preparer to read this document and tell me that it is easier to comply based on what has been drafted.  This legislation does not change anything for "those who live in one municipality and work in another".   If you are an employee, you will still only be required to file with your municipality of residence (if that municipality HAS a tax).  To lead readers to believe that all people who work in multiple taxing jurisdictions must file in each one is simply not stating fact.  The opponents of this bill are opposed to the revenue reducing, special interests parts of this bill, bought by the members of the Business Coalition, to reduce their tax burden and create special carve-outs for those elite, highly compensated individuals.   The opponents of this legislation ARE TOTALLY IN FAVOR of the uniformity aspects of this legislation, and HAVE PROPOSED MOST OF THE UNIFORMITY changes that are contained in this bill.    While we know that the newspapers are a part of the Business Coalition (the group getting the BIG CARVE OUTS), I would hope that you would still attempt to do some research and actually interview opponents of this bill to find out why they are opposed, instead of just saying "we question that."   Next time, try for some facts.