On December 3, 2014, the Ohio Senate passed Am. Sub. H.B. 5 and sent it back to the House for the consideration of a number of amendments that were added by the Senate. In the event the House concurs with the amendments, the bill will be sent to the governor for his signature prior to the end of the year.

Ohio has over 600 municipal corporations that have enacted some sort of municipal income tax. Although revisions to try to make the provisions more uniform have been made in recent years, municipal income tax laws remain a patchwork of provisions. The bill began as an effort to streamline efforts, but cracks between the interests of businesses and those of municipalities, which were based primarily on fiscal issues associated with the proposed changes, appeared early on.

The bill provides greater uniformity in filing and payment dates, assessment procedures, and the conditions for filing combined returns. A number of provisions were added to the bill in the Senate, including:

  • Adoption of 25 common-law factors to be used to determine residency;
  • Increasing the threshold for making estimated tax payments from $100 annually to $200;
  • Providing for a 5-year period for net operating loss carry-forwards;
  • Appling a 20-day casual entrant rule instead of the existing 12-day threshold and requires tax withholding beginning with the 21st day without going back to day 1;
  • Removing a provision that required employers to supply municipalities with a list of names of employees who worked within the municipality fewer than 20 days;
  • Reinstating the current law “throw-back” rule with respect to sourcing revenue from sales of tangible personal property delivered to customers outside the municipality; and
  • Creating a “Taxpayers’ Bill of Rights” modeled after the state’s legislation.

Should the House disagree with the amendments, the legislation will likely die with the end of the current session in December; there is likely not enough time to convene a conference committee to address the differences in the bill as passed by the two houses.