Recent Court Ruling Ensures Centralized Municipal Tax Collection Can Continue

February 21 was a good day, in fact it is a great day. It comes with a huge victory for the taxpayers of Ohio. Franklin County Common Pleas Court Judge David E. Cain made a judgement in favor of the state of Ohio in a case brought by about 160 municipalities. Several earlier blogs posted on November 11, 2017 and January 17, 2018, explain what was happening.

The decision of the court basically stated that all of the provisions of HB 5 and HB 49 that deal with municipal taxation are clearly within the authority of the Ohio Legislature. Remember that they included a provision that allows businesses to opt-in to a centralized collection process through the Ohio Business Gateway. If chosen, administration and auditing of the taxes and returns would be done by the Ohio department of Taxation. This allows businesses to file one return instead of 20, 50 or more than a hundred. Savings in the compliance costs to businesses are projected to be in the hundreds of millions by the Ohio Department of Taxation.

The other reform to be kept is the removal of the throwback provision. Throwback is the name of the practice by which cities unfairly tax businesses on sales made to customers not located in that or any other Ohio city.

In the decision, Judge Cain wrote “The Court has found that the general assembly has the power to enact Collection Provisions and that it did not violate the single subject rule. With these determinations being made, all of Plaintiff’s other arguments lose merit. Everything comes down to whether the general assembly has the power, or it doesn’t. In this case, the general assembly has the power.” With those words, a victory for simplification and common sense was declared.

The Ohio Chamber of Commerce has been heavily involved throughout in cooperation with other business groups and the Ohio Department of Taxation. Commissioner Joe Testa and his staff are to be commended for their efforts to help bring a sense of fairness to what has been one of the most difficult municipal tax systems in the country.

Even with this good news, we aren’t done. The plaintiffs could file an appeal, although the decision is very straightforward. Time will tell if that is to happen.

With the simplified filing assured, the March 1 deadline to register to participate in online tax filing is quickly coming. A recent blog explains how to register.

So, rejoice in fairness and simplicity, the right thing does happen sometimes.