Frustrated with the municipal tax structure? Tell your employer and clients

February 2, 2012

By James D. Gottfried, CPA, Chair, The Ohio Society of CPAs

As we enter another tax filing season, I can’t help but dread the frustration I know I will experience when dealing with Ohio’s municipal income tax system. Based on the numerous calls OSCPA has received in recent years expressing concern – and sometimes even outrage – I know many of you feel my pain.

The problem isn’t paying what is necessary and fair to provide essential local services. Certainly Ohio’s constitution allows each jurisdiction’s voters to determine the appropriate rate. Instead, it comes down to the administrative compliance nightmare we all experience: Ohio is one of very few states where cities impose a personal income tax and a business tax. With almost 600 municipalities assessing this tax, the resulting crazy quilt of diverse definitions of income, varying filing processes and procedures and wide range of penalty and interest rates is enough to frustrate any business owner and taxpayer – and also the CPAs charged with keeping their clients or employers in compliance.

OSCPA’s top legislative priority this year is achieving meaningful, common sense reforms to Ohio’s municipal income tax system. Specifically, we are pushing hard to have Ohio adopt a single definition – while staying as revenue neutral as possible to the bottom line of both cities and taxpayers – for taxable income for withholding and taxes due. Uniformity among rules and regulations is also critically important. Further, we are pursuing some form of centralized collection, whether by adding another line to the state tax return or creating a mandated regional approach for collection. I think I speak for almost every Ohio CPA when I say the current system is badly broken and needs to be fixed.

The time to act on this critically important issue is now. Ohio taxpayers have a good opportunity this year to see some meaningful, common sense changes to the administration of Ohio municipal taxes. A growing number of Ohio legislators are beginning to understand the very real economic burden the current process is placing on Ohio’s individual and business taxpayers, and the damage it is doing to our ability to drive economic development. We hope to see much greater attention paid by the Ohio General Assembly to this important issue in the coming months, and this is where you can help.

For those of you in public practice, make it a point to explain to your clients how much it costs them just for you to calculate their municipal tax liability. Point out to business clients the withholding and filing burden in terms of complexity and cost. Help taxpayers understand how they can move the needle on reforming our state’s municipal income tax collection process by sharing their concerns with their state legislators, or allowing you to do so for them. For those of you working directly for companies, please consider doing the same on behalf of your employer. You understand better than anyone the unnecessary monetary and personnel costs involved with complying with this regulatory burden.

Be sure to check the next issue of CPA Voice for more details, and don’t hesitate to reach out to the OSCPA governmental affairs team at any time for more information or to find out how you can best discuss this issue with your colleagues, clients and legislators. Working together, we can help Ohio take this important step toward making ours a more attractive state in which to run a business and raise a family.

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