Debate on Ohio Tax Fix Plan Begins; Action Likely in 2013
News from the Ohio Association of REALTORS…The effort to establish uniformity in Ohio’s municipal income tax system will extend into the new year, as an initial hearing on House Bill 601 last week revealed divergent positions between groups backing a streamlined tax collection system and cities concerned that changes will decrease revenues.
Earlier this year, the Ohio Association of REALTORS joined a broad-based coalition of state and local entities — which includes the Ohio Society of CPAs, Ohio State Bar Association and Ohio State Medical Association, among others — seeking to create uniformity among the nearly 600 taxing authorities that exist within the state, each with their own tax forms and penalty schedule. Ohio is one of only 10 states where municipalities assess and collect individual business income tax. All of the states, with the exception of Pennsylvania, have eight or fewer cities.
“The very nature of a real estate professional’s business practice, where homes are sold and businesses leased in different locales, presents a record-keeping and tax filing headache on an annual basis,” says Paul Glass, OAR’s director of public affairs. “By selling multiple homes in multiple cities in any given year, REALTORS need to file multiple tax returns on the portion of the commission earned.
“We, like every other organization in our coalition, are happy to pay our fair share of taxes owed…it’s just that the varying rules, tax forms and regulations are unnecessarily burdensome,” Glass continued. “In many cases, the cost of filing the multiple returns can exceed the taxes due.”
During last week’s hearing before the House Ways & Means Committee, the sponsors of HB 601 stressed that the intent is to create a simpler system that is largely revenue neutral for the local governments.
Those assurances didn’t satisfy the Ohio Municipal League, which is leading opposition to the bill. The group presented a letter during the hearing saying its membership is supportive of the concept of streamlined tax policies and procedures, but believes revenues will decline.
“As you are aware, local governments and municipalities in particular have experienced significant budget reductions due to funding cuts that were part of HB 153, the last biennial budget,” OML stated. “Our municipalities agree that there should be greater uniformity in the municipal income tax but our members can not sacrifice the safety and economic stability of our communities to achieve what many fear is just a chance for certain taxpayers to lower their overall tax obligations.”