Ohio residents working from home tax refund
CLEVELAND (WJW)– New efforts are underway in the Ohio Legislature to require cities to refund certain income taxes paid by employees who have not commuted to an office in the municipality during the pandemic.
The proposals would create changes for Ohioans who have paid income taxes to the city where their company has an office even if they have been working from home elsewhere. Instead, they would owe income taxes based on the community where they live.
A measure passed by the Ohio House last week and now before a Senate committee would revoke a law passed last year allowing cities to collect taxes from commuters when offices closed due to the pandemic. It would also refund such taxes dating back to January 1, 2021.
Meanwhile, the Ohio Senate is also considering separate language in the state budget that would refund such municipal income taxes dating back to the start of the pandemic.
“There may be an opportunity for them to seek a refund for all or part of those taxes they paid when they were working outside the city,” said attorney Jay Carson, senior litigator for The Buckeye Institute.
The think tank has filed lawsuits on behalf of four taxpayers across Ohio, including one in Cuyahoga County, challenging the constitutionality of taxes levied on commuters who did not work in city limits.
“A municipality only has jurisdiction to tax people who live there or work there,” Carson said. “They don’t have jurisdiction to reach outside their city and tax people who aren’t working there.”
Cities, including Cleveland, oppose the new legislation, which could cost them hundreds of millions of dollars in tax revenue.
Cleveland reported $410 million in 2020 income tax revenue, with a staggering 85 percent of that coming from commuters who lived outside city limits.
Several mayors in the Ohio Mayors Alliance told reporters at a Thursday press conference that retroactively taking away tax revenue cities counted on to provide services would be devastating.
“I still have to pave the roads, pay the police and fire,” Youngstown Mayor Jamael Tito Brown told reporters Thursday. “Some of those amenities and assets you enjoy, I have to provide.”
Findlay Mayor Christina Muryn said Ohio’s mayors understand the income tax system needs to be adjusted moving forward.
“What we can’t do is change the rules of the game after the score has already been counted,” Muryn said.
Critics of the ongoing commuter taxes note losses from refunds would be offset by federal relief funds cities are receiving through the American Rescue Plan. The City of Cleveland has been allocated more than $500 million in federal funding.
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