Municipal tax reform: Are you in or out?

Scott D. Wiley, CAE
President & CEO
The Ohio Society of CPAs

The past two years have been a battleground in the fight for municipal income tax reform. On one side: representatives in many of Ohio’s nearly 600 municipalities fighting to preserve a costly and inefficient system that’s stunting business growth in Ohio. On the other: a number of forward-thinking state legislators and 30 organizations in the Municipal Tax Reform Coalition. Led by The Ohio Society of CPAs, Ohio Chamber and NFIB-Ohio, this group is pushing for a more equitable system that eliminates inefficiencies and red tape in return filings and spurs business investment.

It would be an understatement to say it’s been anything but an uphill climb the entire way.

While we had hoped for a truly collaborative process, it’s resembled more of a negotiating tug of war with opponents waging an all-out misinformation campaign, and painting an exaggerated picture in the media of Ohio post municipal tax reform. Despite that, we believe we’ve landed on a piece of legislation, H.B. 5, that will help improve Ohio’s local tax compliance climate and therefore our state’s economic development attractiveness.

The substitute version of H.B. 5 will require every city and village to follow the same definitions for not only filings, appeals, audits and assessments, but also NOLs (five years), partnerships (taxed at the entity level) and occasional entrants (moving from 12 to 20 days – with withholding in the “other” city starting on day 21), reporting to a single city per day and eliminating tracking for employers earning $1 million or less in gross receipts. Simplifying the system will also help to cut compliance costs for governments.

We knew it wouldn’t be an easy row to hoe when we set out to form a coalition and drive for reform. But we did so knowing we had the strong support of a majority of our members. In a survey last year, 90% of respondents agreed that adopting more uniform rules governing Ohio’s municipal tax structure was critical.

We’ve worked hard to keep you informed and engaged in the process. A small group of CPAs worked with the coalition to draft and revise legislation, taking cities’ concerns into account. Others provided testimony during nearly 40 hours of hearings held over the past year.

Despite progress made, we need many, many more voices in the chorus. We’ve reached a critical juncture and we need hundreds of members to speak out publicly to help counter the howls of opposition coming from dozens of city officials across the state.

H.B. 5 is very close to a vote in the Ohio House – we may well see a House committee vote in early October, hopefully followed by a floor vote soon thereafter. But there are still many legislators on the fence about municipal tax reform.

It’s not for lack of education by OSCPA and our Coalition partners.

But it’s difficult to rise above the din of a consistently vocal opposition. Legislators have told us time and again that they hear plenty from municipalities on why H.B. 5 is bad for cities and bad for Ohio. But they aren’t hearing the other side of the story from local CPAs and businesses.

If you think municipal tax reform is important, you can’t afford to sit back. Don’t expect your peers or someone else to make the contacts required to help pass this bill. Speak up now. We have a short window to make an impact—just a few weeks. With 21,000 CPAs, I know we can move this bill out of the House and on to the Senate.

Call or write to your local legislators today to ask for a yes vote on H.B. 5. OSCPA can give you all the tools you need to get your message delivered.

It matters to Ohio’s future. Are you in or out?

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