Local income tax collection may centralize under Kasich proposal

Feb 21, 2012

Sep 08, 2011

Kasich administration officials have floated the concept of centralizing municipal income tax collections in Columbus. Some local officials worry such a move would lower revenue and increase red tape.

State Tax Commissioner Joe Testa and Lt. Gov. Mary Taylor, CPA both have confirmed that centralized collection of local income tax is under consideration because of the efficiencies and savings that could be gained.

OSCPA last year recommended as part of its Ohio Budget Advisory Task Force Report that the state look into centralizing local tax collections, possibly by piggybacking them on state tax returns, to ease the burden on taxpayers providing goods or services in multiple Ohio locations.

Gary Gudmundson, spokesman for the Ohio Department of Taxation, said the concept is only being explored at this point.  If such a project were undertaken, Ohio would take over in the approximately $4 billion in local income taxes collected by the state’s municipalities.

Gudmundson said Ohio’s current system of collections is burdensome on business taxpayers because the municipal income tax codes vary from city to town to village, a potential roadblock to attracting new business to the state. There are currently over 570 municipalities that assess a municipal income tax in our state.

Local government officials are concerned about additional revenue loss on the heels of cuts from the state’s budget enacted in June. Some city leaders fear the state would charge excessive fees for collection and/or not return all off the tax dollars due to them.

“For people who live and work in the same city, it’s no big deal. But if you live in one place and work in another, or more importantly if you’re a business with operations in multiple cities, the local tax structures can be a big mess,” OSCPA Past Chair Matt Yuskewich, CPA said.

For more information, contact Amy Mignogna, OSCPA director of tax policy.