Municipal Tax Reform Comes to Schneider Downs

Ohio Municipal Tax Reform, Schneider DownsThe Ohio Municipal Tax Reform Coalition, made up of a broad partnership of organizations representing thousands of individual business owners and workers across the state of Ohio, held a press conference demonstrating the need for municipal tax reform in the offices of Schneider Downs, Monday, April 15. State Representatives Cheryl Grossman (R-Grove City) and Mike Henne (R-Clayton), the primary sponsors of House Bill 5, and Jack Buschur, president of Minster-based Buschur Electric spoke on the need for reform to Ohio’s municipal tax system to make the state a better place to work and run a business. The Bill is intended to provide more uniformity and simplicity in filing Ohio’s municipal tax returns.

“Ohio stands alone as the state with the most complicated municipal income tax system in the nation,” said State Representative Cheryl Grossman. “It continues to be a major impediment to attracting small business – 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 State Representative Mike Henne. “Businesses and individual taxpayers face compliance burdens they wouldn’t in any other state. It’s time to make reasonable, common sense reforms to an overly-cumbersome system.”

Jack Buscher, president of Minster-based Buscher Electric describes one example of how he says the system hurts business. For tax year 2011, Buscher 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 $5.00 in taxes,” Buscher said. “When it costs more to file than what I actually owe, something needs to change.”

Schneider Downs Tax Shareholder Mark Cobetto believes changes proposed in HB5 address issues of fundamental fairness to the taxpayers, including:

  • Creating uniform due dates, extensions and interest and penalty charges for late payments and filings. Some municipalities currently charge exorbitant rates.
  • Creating a uniform NOL carry-forward period of five years. Currently, many municipalities do not allow an NOL carry-forward.
  • Eliminating the sales apportionment “throwback rule.” The throwback rule discourages companies from locating in Ohio.

“At Schneider Downs, we do thousands of municipal tax returns every year. Creating uniform rules would eliminate uncertainty in many areas, reduce our time in research and responding to notices and thus reduce the overall cost of tax compliance for our clients.” Mark said.

For more information about Ohio’s Municipal Tax Reform Coalition, visit Follow the coalition on Twitter at @OHMuniTaxReform.

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter

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