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City Watching State-Level Income Tax Proposals

Stow mayor, finance director providing input on proposed changes to statewide income tax collection

Stow officials are watching a conversation in Columbus closely about proposals to change the way communities in Ohio collect income tax.

Stow Mayor Sara Drew and Stow Finance Director John Baranek also are providing input about Ohio House Bill 5. The proposed legislation would change the way communities collect income tax and also effects business owners.

"What we’re trying to do is we’re trying to enlighten some of the legislators through the Ohio Municipal League and meetings with our local representatives, Rep. Roegner and State Sen. LaRose," Baranek said. "They propose this as being a revenue neutral legislation for the municipalities. And it really isn’t, depending on how your local income tax ordinances are set up."

Ohio legislators are in the midst of hearings on the proposed legislation.

Some changes the legislation, if adopted, would make include changing the occasional entry rule — the time period when municipalities start collecting income tax for temporary workers — from 12 days to 20 days.

That change alone could cost Stow thousands each year, Baranek said.

"Right now there’s a 12-day period that if they come in and they’re in Stow working for eight days (the state) considers that a casual time period, so (workers) don’t have to pay Stow local tax for those eight days," Baranek said. "But if we have a construction company that comes in … and they work 12 days, maybe 15 days, then we’re allowed to tax those 12 or 15 days of wages for city tax purposes and they have to pay us for those days that they’re in here."

The proposed legislation also would mandate that Stow sends notices to taxpayers regarding liability via certified mail.

"Where before we could send things out … by regular mail," Baranek said. "So we’d have a lot of postage costs involved in sending a lot of letters out."

Another proposed change would be to create a uniform net operating loss carry-forward period of five years.

"Many communities in the state of Ohio don’t recognize the state has a five-year carry forward," Baranek said. "So if I have a loss this year I can carry it forward and use it up over the next five years against that income I have. Many municipalities have a shorter term.

"That one alone will effect a lot of communities," he said. "If they have to extend that out, they’ll lose tax revenue over that."

That proposal is one change that wouldn't hinder Stow, as it already adheres to the state's five-year period.

The first hearing in Columbus on the proposed legislation was held Feb. 13. Stow officials may travel to the state capital to testify on the proposed legislation.

Drew said their hope is that whatever final version of the legislation is adopted includes no mandates that increase income tax collection costs for cities.

"We're really working hard to make sure it's a revenue-neutral program," she said.

James Thomas February 24, 2013 at 03:59 PM
I live in Stow and use Stow Services but I work in another city. It kills me that THAT city gets my income tax dollars. My wife also works in another city and not only do they get her dollars, they charge a higher withholding rate which we have NO AVENUE OF REGAINING. Most people would consider it extortion to be charged a fee just because of where you work. Is rectifying situations such as this part of the discussions in Columbus because if it isn't it should be.
Dev February 24, 2013 at 05:14 PM
Check with your Accountant/Tax guy/gal. I live in Stow, but work for an out of state company. I make quarterly income tax payments so Stow get the ~2% out of my earnings. Now with reciprocity and other complex tax schemes in Ohio its hard to say what/who/how much you should paying. Cheer up...You could be like me/others like me. Paying more than average City/Property taxes and not using hardly any city services (except for a paved road to Rt 8 mostly paid for by gas taxes) because our/my kids go to private catholic schools in Akron and Police/safely services never been to our houses (since we live boring/legal lives.. and don't play with matches.... well not carelessly). We have alarm systems and weapons/dogs to keep the increasing number of meth-heads/criminals away.....so far. Taxes are like buying soup/services.. some pay $0 .. some people pay $3.00.. some people pay $4.00..and some people pay $5.00 and get "no soup for you".
James Thomas February 25, 2013 at 12:01 AM
Dev, You have a point. Although I may not like it, the money I pay in taxes has kept the various taxing entities out of my private life, if not my wallet. In some ways paying to be left alone might be the best bargain I could make. Like you I also am more self reliant than most.

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