ABC of Ohio announced that the Ohio Supreme Court declared the law to allow the permissive centralized filing of municipal net operating income taxes Constitutional, but the state’s attempt to recover a 0.5% fee is not.
According to Hannah News, the Court ruled “Lawmakers were within their rights to create a state collection system for municipal net profits taxes in the FY18-19 biennial budget, but violated the constitution by authorizing the state to keep half a percent of collected revenues to cover its administrative costs.”
ABC of Ohio was a chief architect of the cost saving plan passed in Governor Kasich’s final budget (2017). Allowing businesses, who work in multiple Ohio jurisdictions throughout the year, to file a single municipal tax return is a great administrative cost savings for contractors. A state budget analysis estimated the law would save Ohio businesses over $800 million annually, when fully implemented.
Once the city of Athens and others sued, ABC of Ohio joined with Ohio business organizations, to file an amicus brief in support of the law last November.
The Court News explained the ruling, “Writing for the majority, Justice Michael P. Donnelly stated that the municipalities have the power under home rule to levy income taxes, but that two other provisions in the Ohio Constitution authorize the Ohio General Assembly to limit local taxation. The constitution allows state lawmakers to enact a set of rules governing how to assess, collect, and distribute the business income taxes, which are known as net-profits taxes.”
To view the opinion on Athens v. McClain, visit this link: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2020/2020-Ohio-5146.pdf.