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Tax Tip of the Week | No. 308 | Court Decisions Impact Ohio Muni Tax Law June 24, 2015

Posted by bradstreetblogger in : General, tax changes, Tax Tip, Taxes, Taxes, Uncategorized , add a comment

Tax Tip of the Week | June 24, 2015 | No. 308 | Court Decisions Impact Ohio Muni Tax Law

Here is another municipal tax update courtesy of the Ohio Society of CPAs

Ohio’s new municipal income tax law is in place and ready to make life easier for taxpayers starting next year, but court decisions continue to make an impact on the law. A Society member with connections to two of those cases discusses them with us in the latest episode of OSCPA Spotlight.

In one such case, the Ohio Supreme Court struck down on Constitutional grounds the way the City of Cleveland was levying municipal income tax on visiting professional athletes. The court ordered the city to refund back taxes to Hunter Hillenmeyer, formerly of the Chicago Bears, and Jeff Saturday, formerly of the Indianapolis Colts.

The city had levied municipal income tax on athletes based on game days – 1/20th of their salary – as opposed to their service days, which for NFL players is 150-170 days per year. The court ruled that scheme violated the Due Process Clause of the Fifth and Fourteenth amendments to the U.S. Constitution.

“I think that we now have, at least in Ohio, a uniform method for how we’re going to tax professional athletes,” said Tom Zaino, CPA, JD, former Ohio Tax Commissioner and chair of OSCPA’s Executive Board.

In another recent case, MacDonald v. Shaker Heights, the 10th District Court of Appeals made clear that Supplemental Executive Retirement Plans (SERPs) are considered pensions, and therefore exempt from city taxes.

Zaino said that the Ohio Board of Tax Appeals in Nationwide v. City of Columbus BTA, recently reaffirmed that holding, both of which are in alignment with earlier drafts of HB 5, the municipal income tax law.

“The cities have said that (SERPs) qualify as taxable income, while most cities exempt pensions,” Zaino said. “The court of appeals made the distinction saying that the SERP in that case was a pension for city tax purposes and therefore is exempt.”

More updates on Ohio’s municipal tax law changes will be coming in future Tax Tips.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 307 | Amazon Collecting Sales Tax in Wake of JobsOhio Deal June 17, 2015

Posted by bradstreetblogger in : General, tax changes, Tax Tip, Taxes, Taxes, Uncategorized , add a comment

Tax Tip of the Week | June 17, 2015 | No. 307 | Amazon Collecting Ohio Sales Tax in Wake of JobsOhio Deal

Here is a recent article form the Ohio Society of CPAs….

Well, that was fast!

On Friday, May 29, Amazon announced it was building three data centers in central Ohio.

On Monday, June 1, the online retail giant began collecting sales tax on Ohioans’ purchases. The move, which retailer groups and others have requested for years, will bring in between $150 million and $300 million in tax revenue to the state annually, the company said.

Without Amazon collecting Ohio’s 5.75% sales tax, the state had to rely on the honor system, with taxpayers reporting their untaxed Internet or mail-order purchases. In 2012, that translated to 50,000 of Ohio’s 5-million-plus taxpayers voluntarily handing over just $3 million.

As part of a deal with JobsOhio announced Friday, Amazon said it will create data centers in Dublin, Hilliard and New Albany, creating more than 1,000 jobs. In exchange, the Ohio Tax Credit Authority gave Amazon about $81 million in tax exemptions over 15 years. Amazon has said it collects sales tax in states where it has made big investments, which is about half of the states. (Meaning Amazon now has a “brick-and-mortar presence in Ohio.)

Ohio retailers and retail associations have spent years trying to persuade Congress to pass laws requiring online retailers to collect and remit the same state sales taxes that brick-and-mortar stores do. For the third time lawmakers have introduced The Marketplace Fairness Act to close the loophole.

“Amazon deserves a lot of credit, not only for bringing all those jobs and investment to Ohio, but also for voluntarily agreeing to collect sales tax,” Ohio Tax Commissioner Joe Testa told the Cleveland Plain Dealer. “It’s a great gesture of support for Ohio, and for all the local governments and transit authorities that benefit from sales tax collections. Given the prominence of Amazon in the industry, this decision to voluntarily collect sales tax may lead other remote sellers to collect and remit tax as well.”

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 306 | Ohio Municipal Tax Reform June 10, 2015

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Tax Tip of the Week | June 10, 2015 | No. 306 | Ohio Municipal Tax Reform

High court decision in Maryland case could impact Ohio

Ohio cities could see fallout from a U.S. Supreme Court decision last week rejecting the way Maryland double-taxes income earned outside the state.

The court ruled 5-4 that Maryland’s tax scheme violates the dormant Commerce Clause. Maryland will reportedly have to refund millions in claims to thousands of taxpayers who generate income in other states. Justice Samuel Alito called the rule “inherently discriminatory.”

The ruling could place Ohio cities at odds with the Supreme Court, and it goes back yet again to our state’s crazy quilt of municipal income tax laws. Because they call their own shots when it comes to taxpayer credits, Ohio cities are not required to give credit for income tax paid to another city.  This lack of reciprocity causes double taxation on Ohioans – they are often forced to pay municipal income tax to both their nonresident and resident cities, i.e. when working in one city but living in another.  For example, The City of Xenia only allows a 1.5% credit for taxes paid to another city; the City of Springboro only allows a 1% credit.  So if you live in one of these cities and work in a different city, you would pay an additional .75% (Xenia) or .5% (Springboro) in city taxes.

Ohio’s state income tax won’t be affected because it provides full credit for taxes paid on income earned outside the state.

The Associated Press reports that the ruling could affect nearly 5,000 cities in Ohio, Indiana, New York and Pennsylvania.

We will have more updates on Ohio’s municipal tax reform throughout the year.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 305 | Ohio BWC Credit Opportunity June 3, 2015

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Tax Tip of the Week | June 3, 2015 | No. 305 | Ohio BWC Credit Opportunity

Employers could miss out on $1.2 billion Ohio BWC credit

About 11,000 businesses and other employers insured by the Ohio Bureau of Workers’ Compensation (BWC) could lose their share of the statewide $1.2 billion premium credit in the pending switch to prospective billing if they don’t bring their accounts current by July 1.

Starting July 1, private employers will be able to pay their annual workers’ compensation premiums in two, four, six or 12 installments. BWC is now sending Ohio employers notices with their projected amount due. This notice is NOT a bill. Instead, employers are encouraged to review the amount and contact BWC if they think the figure is inaccurate.

Even if your business’ workers’ compensation coverage has lapsed because you’ve fallen behind on payments, you are still eligible for the premium credit if you contact the BWC and set up a payment plan by July 1.

To receive the premium credit, employers with lapsed policies must take the following steps:

–    Report unreported payroll for currently lapsed payroll periods.
–    Pay any outstanding premium, late fees and penalties for assessed premium.
–    Request a payment plan for any premium amounts that cannot be paid in full.

Under the new prospective billing system, businesses will be billed prior to coverage instead of the current practice of billing employers in arrears. The first payment for private employers under prospective billing is due Aug. 31.

If you have employees, give us a call if you have any questions.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.