At a press conference at the Ohio Statehouse, State Representative Gary Scherer (R-Circleville) today joined fellow members of the House Republican Caucus in unveiling the substitute bill of House Bill 5, legislation to revise laws governing the municipal income tax.

Among other provisions, Sub. H.B. 5 will:
• Consolidate tax returns to improve Ohio’s competitiveness and reduce the cost of compliance and administration by reducing unnecessary returns
• Codify 11 common-law elements of the domicile test and permits the tax administrator and taxpayers to use other facts to show residency
• Amend the law pertaining to the apportionment of income to mitigate negative revenue impact to municipalities and reduce costs
• Create uniform audit and appeal procedures to ensure fair, local enforcement of municipal tax
• Enhance current LGF reporting of tax amounts collected each calendar year for publication in an effort to increase transparency
• Establish uniform due dates for all municipal tax returns and uniform withholding requirements for all employers
• Establish standard interest rate and penalty provisions to prevent imposition of usurious interest rates
• Create a single layer of tax by specifying that only a city of residence can tax an individual partner, while all other cities must tax partnership at the entity level
• Treat S-Corp owners the same as current law

“As a CPA for over 35 years, I have first hand experience with the problems created by Ohio’s lack of uniformity in the municipal income tax law,” said Rep. Scherer. “This bill addresses some, but not all, of those issues. I look forward to continued work on this bill and future legislation to simplify the cumbersome and often unfair current system.”

Currently, Ohio has the most complicated local municipal income tax system in the nation, with more than 600 different municipalities utilizing more than 300 different tax forms. This system creates a high cost of compliance for Ohio’s businesses, which hinders economic growth, discourages companies from locating in Ohio, and causes some businesses to relocate outside of Ohio. International site selectors rank Ohio’s municipal income tax system as one of the main factors discouraging location to Ohio.

Sub. H.B. 5 is currently undergoing consideration in the House Ways and Means Committee.

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