Oxford will be joining a growing list of Ohio communities preparing to sue the state for a change in the way local business taxes are collected.
Council voted 5-0 at the Nov. 7 meeting on a resolution to to become part of an effort to questioning the constitutionality of a change that would start in January.
Under the new rules, businesses will have the option of filing net-profit-income-tax returns through a portal administered by the Ohio Department of Taxation. The tax revenue would then be distributed by the state to the local governments, as opposed to local tax collection offices administering and distributing the funds.
It’s an effort to streamline the tax collection process for businesses, particularly when they must file their information with multiple local jurisdictions each year. The state would keep a half-percentage point of the taxes collected as a service fee.
“If a municipality does not adopt these provisions by January of 2018, they risk losing its authority to collect any taxes at all,” City Finance Director Joe Newlin wrote in a staff report.
About 112 municipalities have already passed resolutions to be part of the potential lawsuit, which is being prepared by the law firm Frost Brown Todd, according to Kent Skarrett, executive director of the Ohio Municipal League.
“There’s a great concern that the state won’t have the same diligence for auditing and accountability,” Skarrett said. “The overarching impact (to cities) is the loss of control of that portion of their revenues … It’s a universal unifying issue for our membership.”
The action is being initiated by the Ohio Association of Public Treasurers, which voted in October to pursue the effort. Cities are asked to join the coalition, contributing funds toward the lawsuit based on their population.
Oxford’s contribution will be $4,000.
Newlin and members of Oxford City Council expressed satisfaction with the income tax services of Regional Income Tax Agency, which administers the income tax for Oxford and many other municipalities.
Newlin said RITA provides cross checks for its collection efforts and makes payments to the city bi-monthly. He said the state plans to take over collection, take a bigger cut of the money and take longer to pay money to the city, delaying the city’s ability to use the money to pay its bills.
“This action is essential,” Oxford City Council member Steve Dana said of the state’s effort to take over collection of the city income tax. “It’s unconstitutional, but also injurious to Ohio’s municipalities.”
Oxford City Council member Edna Southard encouraged the other members to approve the resolution.
“It makes sense to join forces with other communities,” she said.
This article contains previous reporting by staff writer Richard Wilson.