The House Passes House Bill 157 – Municipal Income Tax Update

In March of 2020, the business community identified the complexity of municipal income tax withholding as an issue that needed to be addressed in light of the developing health pandemic. The legislature did hear the concern and added Section 29 (temporary language) to HB 197 while it was pending in the Senate during the 133 General Assembly. This language was seen as a temporary solution tied to the duration of an executive order. Fast forward 14 months, and the pandemic is still with us and business community employers are just beginning to put in place new work arrangements for a post pandemic workforce.

Sub. HB 157 provides a firm stop date for Section 29 language. Without Sub. HB 157, the provisions in Section 29 of HB 197 are subject to an uncertain end-date. However, the executive order that sets in motion the end of the provisions in Section 29 may face a challenge once SB 22 becomes effective. Some commentators place the end of Section 29 provisions as early as August 2021. Sub. HB 157 recognizes that to end tax reporting requirements in the middle of a tax reporting period creates confusion and unneeded administrative burden for tax professionals and sets an end-date of December 31, 2021. 

Yesterday, the House approved this piece of legislation and sent it to the Senate for review. The Senate has a companion bill pending in that chamber’s Ways & Means Committee. That bill, Senate Bill 97, also extends the provisions of HB 197 Section 29 to December 31, 2021. It is unclear if either piece of legislation will be sent to the governor before the provisions of SB 22 take effect in July. There is some hope that the withholding extension will be added to the budget bill.

The Ohio Chamber will continue to update its member companies as this issue moves through the legislative process.