Next year, when the tax man cometh, companies that do work in many cities in Ohio will have a much shorter stack of paperwork.
Provisions of Substitute House Bill 477 take effect Jan. 1 and create uniformity for municipal tax filings across the state.
“[Under current law] it’s not unusual for a small contractor to have to fill out 40, 50, 60 returns – in addition to your federal income tax return and your state income tax return,” says Donn Ellerbrock, vice president for governmental affairs for Associated General Contractors of Ohio.
Luther Liggett Jr., a law partner with Columbus-based Bricker & Eckler LLP, explains that current law requires employers to withhold tax and file forms for any employee working within a municipality’s limits, even if neither the employee nor the employer reside in that city.
Contractors who, for example, go into a subdivision for a day or two of repairs may end up owing only a few dollars, says Liggett, who also is a legislative agent for a variety of construction associations, such as the National Electrical Contractors Association.
“Interestingly enough,” says Ellerbrock, “before 477, frequently firms would have to spend more to comply than they owed.”
The new law’s benefits, effective Jan. 1, 2001, include:
- A city cannot tax income if an individual performs services on 12 or fewer days in the calendar year and neither the employee’s residence nor the company’s principal place of business are in the municipal corporation.
That individual’s employer will not have to count such compensation in payroll factors used to report the business’s income to the municipal corporation.
In addition, the law says no municipality may require any nonresident employer to deduct and withhold income taxes “unless the total amount of tax required to be deducted and withheld for the municipal corporation on account of all the employers’ employees … exceeds $150 for a calendar year beginning on or after that date.”
- All municipalities must accept any generic tax form from a taxpayer, provided it contains all the information necessary for filing. Rules and tax forms must be available through the Internet by 2002.
“If you work in 60 different suburbs in Cleveland, you’ve got to go get 60 different forms under the current law,” Liggett says.
- Municipalities must have an appeals process by which an employer can contest payments.
“Because of the size of some of these returns, it didn’t behoove the contractor to fight claims by municipalities,” says Ellerbrock, noting that often the municipalities did not have an appeals process, forcing the business to go to court to battle disputes. “If they say you owe $100 and you say you owe $50, how much time are you going to spend fighting it? You can’t justify the cost.”
The new law sets up appeals guidelines — and requires municipalities to establish boards of appeals. A taxpayer will have 30 days to appeal a tax administrator’s decision, and appeals boards must schedule hearings within 45 days of the appeal.
The board must issue a decision within 90 days after the final hearing and send a notice of its decision to the taxpayer within 15 days. How to reach: Luther Liggett Jr., Bricker & Eckler LLP, (614) 227-2399. Details and links regarding the new law are available on the firm’s Web site at www.bricker.com/legislation/HB477.asp. For the full text of the law, go to www.legislature.state.oh.us/bills.cfm?ID=123_HB_477 on the 123rd Ohio General Assembly’s Web site.
Joan Slattery Wall ([email protected]) is asociate editor of SBN Columbus.
