As taxpayers across the country scramble to meet the annual Tax Day filing deadline, two Ohio lawmakers, along with business owners across the state made their case for reforming Ohio’s municipal tax system.

State Representatives Cheryl Grossman (R-Grove City) and Mike Henne (R-Clayton) today joined Jack Buschur, president of Minster-based Buschur Electric in Auglaize County, at a press conference on House Bill 5, legislation that strives to make Ohio’s municipal income tax system simple, fair, predictable, and more cost-effective for businesses.

“Ohio stands alone as the state with the most complicated municipal income tax system in the nation,” said Representative Grossman. “It continues to be a major impediment to attracting small businesses – and the jobs they bring – to the state of Ohio.”

“I hear nearly every day from businesses both inside and outside Ohio that our municipal tax system is a significant obstacle, and they’re excited about the proposed reforms in House Bill 5,” said Representative Henne. “Businesses and individual taxpayers face compliance burdens they wouldn’t in any other state in the country. It’s time to make reasonable, common sense reforms to an overly-cumbersome system.”

Grossman and Henne are joint sponsors of House Bill 5, which unifies the way Ohio cities and villages impose their municipal income taxes. Ohio is one of only 10 states where municipalities impose an income tax. Moreover, Ohio is the only state that permits its more than 600 cities and villages to create their own definitions of what is taxable and/or withholdable, mandate use of their own forms, assess varied amounts of penalties and interest, and impose different reporting timetables for tax returns and other tax-related information.

Ohio’s lack of uniformity is costly for Ohio businesses, which spend millions of dollars on record-keeping, computer programming and consultants to track and comply with multiple and varied requirements of the cities in which they do business. For some companies, the cost to prepare and file a tax return is often more than the amount of tax owed.

Jack Buschur explained how Buschur Electric is one example of how the system hurts businesses. For tax year 2011, Buschur filed one federal return, one state return, and 39 municipal returns. His annual cost to comply with municipal tax requirements is approximately $15,000 to $17,000. “I pay an average of $150 to prepare and file each tax return; for the majority, I owe less than $5 in taxes,” Buschur said. “When it costs more to file than what I actually owe, something needs to change.”

Specifically, key provisions of House Bill 5 include:
• Extending occasional entry rule (requiring companies to withhold for employees not working in the principal place of business city) from the current 12 days to 20 days
• Creating uniform treatment of filing requirements
• Creating uniform net operating loss carry-forward period of five years
• Creating consistent taxation of pass-through entities
• Defining “day” to correspond with an employee paying the city where he or she spends the “preponderance of the work day”
• Defining “resident” to eliminate the requirement that someone can be a resident of an Ohio city without being a legal resident of the state of Ohio

House Bill 5 has received the support of numerous associations and business groups, including the Ohio Society of CPAs, Ohio Chamber of Commerce, Associated General Contractors of Ohio, National Federation of Independent Business, Associated Builders and Contractors, Ohio Home Builders Association, Ohio Manufacturers’ Association, Ohio Restaurant Association, Ohio State Medical Association, Ohio Insurance Institute, Ohio Trucking Association, Ohio Realtors Association, Ohio Contractors Association, Ohio State Bar Association, and Ohio Produce Growers & Marketers Association.

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