Ohio Municipal Income Tax Issue Continues in Courts

by J.D. Davidson


An Ohio organization that has fought cities collecting income taxes from people who had not worked in specific cities during the COVID-19 pandemic has filed an appeal in a Cincinnati case that was dismissed in June.

The Buckeye Institute, a Columbus-based think tank, recently filed its appeal with the First District Court of Appeals on behalf of Josh Schaad, who lives in Blue Ash but is employed in Cincinnati. The case was dismissed four months after it was filed.

Schaad worked remotely from home but still had to pay Cincinnati income tax.

“The Buckeye Institute is confident that the Court of Appeals will follow recent Ohio Supreme Court precedent and recognize that when it comes to taxing nonresidents like Mr. Schaad, cities can only tax work that was actually performed within their borders,” said Jay Carson, senior litigator for The Buckeye Institute and Schaad’s attorney. “Simply put, due process applies, even during a pandemic.”

The Ohio General Assembly passed legislation at the beginning of the pandemic that kept the state’s income tax laws as is, allowing cities to continue to collect taxes from workers even though they worked remotely in another city rather than working in the city where the employer was located.

It was an effort to stabilize revenues for municipalities, and, in particular, larger communities, where larger employers are based.

The House passed a bill in June that keeps requires employees to pay income taxes in the city where they work. If work is done at home, then that community benefits, rather than where the traditional workplace is located.

Sen. Kristina Roegner, R-Hudson, introduced a bill in February that returns the state’s income tax law to pre-pandemic regulations, meaning most employees pay taxes in the city they live and the city they work.

Senate Bill 97, still in committee, repeals a pandemic stopgap passed by the Ohio Legislature last spring that allowed cities that are the home to businesses to continue to collect income taxes from employees who worked from home in another community.

“After a couple of months (of the pandemic), you set up a situation where I believe is unconstitutional,” Roegner said earlier this year. “You have people paying taxes to a city the people have not set foot in in months.”

The Buckeye Institute has filed suits in four other similar cases. One was settled, another is on appeal and two others have yet to have a decision issued.

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An Ohio native, J.D. Davidson is a veteran journalist at The Center Square with more than 30 years of experience in newspapers in Ohio, Georgia, Alabama and Texas. He has served as a reporter, editor, managing editor and publisher.
Photo “Income Tax” by stevepb.






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