Municipal Tax Reform -- HB 477

The Ohio Chamber scored an important business victory in early 2000 as legislators approved municipal income tax uniformity legislation. Passage of Sub.HB 477, sponsored by Rep. Don Mottley (R-West Carrollton), was a good first step toward easing the compliance burden for business taxpayers, especially those that do business in multiple jurisdictions.

Governor Bob Taft signed the bill into law on April 25, 2000. Most of the reforms are effective for tax years beginning on or after January 1, 2001.

The municipal tax structure took root in the mid-1940s when local governments started using Ohio's broad "home rule" authority to impose their own unique income tax on both individuals and businesses. But that exercise of municipal discretion since then has been combined with a state income tax on individuals and businesses to create an overall tax system that is a millstone around the neck of many business owners.

Today, Ohio businesses encounter more than 500 separate municipal tax systems with myriad local requirements on items such as employer withholding, filing extensions and thresholds, forms, tax payment procedures and appeals of assessments. These unique tax ordinances impose a non-productive and expensive compliance burden for businesses operating in several municipalities.

For the past few years, the Ohio Chamber has concentrated on crafting reform legislation that reduces the business community's frustrations with Ohio's complex municipal tax system. While the need for additional reforms will remain on the Chamber's agenda, this legislation includes several important changes that will make the system more uniform.

Read our summary