ohio house bill 601, as introduced, proposed revisions to municipal income tax

OHIO HOUSE BILL 601, AS INTRODUCED, PROPOSED REVISIONS TO MUNICIPAL INCOME TAX

PROPOSED HOUSE BILL OVERVIEW

Sidney has a NEGATIVE revenue impact of about $95,000.

Other cities who do not permit a net operating loss (NOL) carryforward will see a more severe impact on revenues. (proposed 5 year NOL)

Circumvents local control

Challenges Home Rule Authority

POSITIVE IMPACT ON TAX REVENUE

Broaden definition of taxable gambling winnings. Sweepstakes, gambling, sports winnings, games of chance, prizes & awards would be taxable net any related deductions

Approximately $3,600 (gross winnings)

Employee business expenses (reported on Form 2106) would no longer be an allowable deduction

Average of $11,000

Increase minimum tax due and refund amount to $5.00

Revenue neutral

NEGATIVE IMPACT ON TAX REVENUE

Proposed “20 day rule” verses the current “12 day rule”

Approximately $86,000

Interest rate at Ohio annual certified interest rate

Calculated roughly $15,000

Late filing penalty for individuals is $25

Nearly $1,200

Late payment penalty for maxed at 10% of tax due

Possibly $6,100

IMPACT ON PROCEDURES

Semimonthly withholding reporting for employers > $11,999 per year

Federal extensions not required at original due date of return.

Governor appointed municipal tax policy board

7 members Create forms, reports, schedules and attachments required

HB 601 SUMMARY

HB 601 is complicated and confusing piece of legislation

Not revenue neutral Indicates loss of about $95,000 per year

Loss of local control (“Home Rule”)

Other cities have adopted resolutions of opposition

QUESTIONS!