Business income tax collection remains with the city for now

By Rick Palsgrove
Southeast Editor

The state legislature has backed off, for the time being, from a proposal to place business income tax collection under the state’s centralized control rather than keeping it under local municipal control.

Groveport City Administrator Marsha Hall said the state’s proposed centralized collection of income tax was removed from the budget bill currently being debated at the Ohio Statehouse. She said that, instead,  $24 million was inserted into the budget to upgrade the state’s Ohio Business Gateway system, which already allows businesses to submit taxes through the system.

“This re-built system is scheduled to be completed by January 2019,” said Hall. “In all probability, centralized collection will be re-visited once the re-built system is up and running.”

On Feb. 26, Groveport City Council approved a resolution opposing the state’s proposal for the centralized collection of business income taxes because:

•the city perceives the state’s proposal as “a clear attack” on the home rule powers granted to municipalities by the Ohio Constitution;

•the proposal would adversely affect municipalities with tax revenue from warehouses, distribution centers, and businesses providing online sales;

•municipalities have been hit with revenue losses due to reductions in the Local Government Fund, elimination of the estate tax, and the phase out of state reimbursement for revenue losses due to the repeal of the tangible personal property tax;

•municipalities can better ensure prompt and proper auditing of local tax returns; and

•that the municipal income tax is the  largest revenue source for the city and helps provide for essential city services.

On the other hand, the state believed the centralized state collection of business income taxes would promote uniformity and simplicity for tax filing.

According to Hall, the Ohio Business Gateway system is a computer system that allows businesses to file their state and local taxes, and other state permits and licenses, online, as well as providing resource information to businesses and explaining laws and regulations.

When asked what the potential repercussions would be for the city of Groveport with the rebuilding of the Ohio Business Gateway system, Hall said, “The system has been criticized for being difficult to use. The state admitted this during the budget bill testimony.  They are going to attempt to make it more user friendly. I can’t say what this will mean for Groveport, it depends on how many of our businesses would file using the improved system. We feel we have a good handle now on assuring that Groveport businesses are filing correctly.”

Hall said some businesses around the state already use the Ohio Business Gateway system, but she is not aware of any businesses in Groveport that use the system.

Hall said the removal of the centralized collection of income taxes from the state budget bill means it will be business as usual regarding income tax collections for the city of Groveport and its businesses, at least until 2019.

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