Ohio Municipal Income Tax COVID-19 Case Reviewed by Court of Appeals

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There has been an ongoing fight in Ohio since the first stay-at-home order was issued: Should commuters pay income taxes to towns where they no longer physically worked?

The cities said yes. A conservative group called the Buckeye Institute said no. And now three judges from the Tenth Ohio District Court of Appeals will decide who is right.

Ohio law allows local governments like cities to tax people who live and work within their borders. The idea being that the people who work there should help pay for the services they use like sidewalks, roads, police and ambulances.

And cities are quite dependent on this type of tax.

For example, the six largest cities in Ohio (Cleveland, Columbus, Cincinnati, Akron, Toledo, and Dayton) derive about 88% of their income from income tax, a substantial portion of which comes from commuters.

“Cities across the state stand at risk of losing a huge amount of tax revenue,” Columbus City Attorney Zach Klein said in a statement when first filing the complaint in July 2020.

That’s why state lawmakers passed a bill during the shutdown that allowed municipalities to continue collecting taxes from these former commuters until the governor ends the state of emergency. from Ohio.

They then changed their minds and decided that Ohioans could get reimbursements for the days they worked from home in 2021 but not in 2020.

The big legal question

The Buckeye Institute was happy with the legislature’s decision on 2021, lawyer Jay Carson said. But he still believes thousands of Ohioans owe money for 2020.

“We believe that if the General Assembly is to help cities, there are many constitutional avenues they could take to do so,” Carson said.

But letting cities tax people who don’t live or work within their borders is not one of them. He argued that what lawmakers passed in March 2020 violated the state’s constitution and should be struck down by the court as a matter of principle.

“The city has to have some sort of jurisdictional hook,” Carson said.

A Franklin County judge disagreed.

“Put simply, the Ohio General Assembly has a long history of regulating municipal tax authority,” Justice Carl Aveni wrote in his April ruling.

And that’s the point made by Diane Menashe, lawyer for Columbus City auditor Megan Kilgore.

She argued that state lawmakers simply extended a concept existing in state law that allows employees to work away from the main workplace during certain periods while paying municipal income taxes.

“It was aimed at maintaining the status quo during a time of chaos,” Menashe said.

What is happening now?

The three judges who heard the case on Wednesday will have to render a decision, which could be made next week or next year.

“Usually it takes about three to six months,” Carson said. “But you never know.”

Both sides have made it clear that they will appeal if the decision goes wrong with them, which could mean this case is headed to the Ohio Supreme Court.

It is also not the only ongoing trial in the system. The Buckeye Institute appealed a similar case in Hamilton County. And he has two more pending in other parts of the state.

In other words, anyone looking for a refund of their 2020 municipal income taxes should be prepared to wait.

Anna Staver is a reporter for the USA TODAY Network Ohio Bureau, which serves Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal, and 18 other affiliated news organizations across Ohio.


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