Cities Raise Protest Over Plan To Bring State Into Business Tax Filing Process

Feb 22, 2017

Gov. John Kasich’s budget includes a plan that would have businesses file a specific tax through the state, instead of through the municipality where they’re located. The state says it will save money, but communities say it’ll do just the opposite.

The plan would have businesses file their net profits taxes through the state, which would then send back quarterly distributions to municipalities. State tax commissioner Joe Testa says the proposal streamlines the process by which thousands of businesses would file their net profits taxes, having them use the state’s Ohio Business Gateway. “It handles large volumes now. We have 400,000 CAT tax filers, sales tax filers, all come in through the Business Gateway to the tax department now. We can do this.”

Testa says the Ohio Business Gateway is being upgraded now to prepare for the volume. He says the plan could save cities $9 million a year.

But the Ohio Municipal League says the state’s fees could be more than what some communities are paying now and that cash flow could be stalled as cities wait for the state’s quarterly checks. And the League’s Kent Scarrett compares the governor’s proposal to the federal government offering to come into Ohio and take over a process usually done by the state. “And you’ll be good with that because we’ll do a better job – we have ways to make sure those dollars are coming back and you’ll actually get more dollars back. I think the governor and the leaders of the legislature and every Ohioan would probably stand up and say, ‘Over my dead body.'"

Testa says the cash flow concerns shouldn’t be an issue, since the state already distributes sales tax to communities without complaints. Scarrett says communities are also concerned about losing the interest that comes from their deposits of the business profits tax. But Testa said that’s a budget office issue and he can’t address that.