Municipal Income Tax
Recent Changes in Ohio Tax Law Create Need to Update City Income Tax Ordinances
Ohio Amended Substitute House Bill 95 made sweeping changes to Ohio Revised Code Chapter 718, which governs municipal income taxation. These changes create uniform net profits, wage withholding and employee compensation bases for municipal income tax purposes. They also mandate uniform return and extension due dates, and review and appeal procedures. These H.B. 95 changes are in addition to other recent changes made to Revised Code Chapter 718 regarding the municipal income tax treatment of pass-through entities and S corporations. Finally, the Ohio Supreme Court held in Bosher v. Euclid Income Tax Board of Review, 99 Ohio St. 3d 330 (2003), that while a municipality may tax lottery and gambling winnings, it may do so only by an express provision covering such winnings in its tax ordinance or rules and regulations.
Squire Sanders has substantial experience in advising municipalities on amending income tax ordinances. Please contact us if you need assistance updating your income tax ordinance.
Confused About Port Authorities?
A recent Ohio court of appeals decision illustrates the confusion that exists about the legal status of Ohio port authorities. Although the decision may be of interest (see note below), the commentary is revealing.
For example, the court stated that R.C. Section 4582.58(B) is a "regurgitation" of R.C. Section 4582.091, and the court questioned the reason for two identical provisions in the Ohio port authority law. The reason for the two provisions is historical. Most port authorities created prior to July 9, 1982 are governed by R.C. Sections 4582.01 through 4582.20 and are often referred to as "front-half" port authorities. All port authorities created after July 9, 1982 are governed by Revised Code Section 4582.21 through 4582.56 and are often referred to as "back-half" port authorities. Thus, to provide both front-half and back-half port authorities with identical exemptions from the Ohio public record law, the exemption was enacted twice. (Notably, Squire Sanders participated in the drafting of the statutory provisions in order to protect the confidentiality of certain records submitted to port authorities in connection with economic development projects. Squire Sanders has successfully represented a port authority's use of the exemption.)
Also, the court referred to a port authority as a "quasi-public agency." A port authority is a public body created by one or more Ohio political subdivisions. Once created, a port authority is a separate political subdivision for most purposes under Ohio law. Port authorities do not need to operate an airport, a seaport or any other traditional port authority facility. The Ohio port authority law provides a port authority with significant powers, especially in the area of economic development.
To learn more about Ohio port authorities, the powers they enjoy and how they may be of assistance in economic development or other community activities, please contact Bruce Gabriel (email@example.com, 216.479.8746), Stephen Grassbaugh (firstname.lastname@example.org, 614.365.2715) or Bruce Jones (email@example.com, 216.479.8516), each of whom frequently represents port-authorities.
Note: The court's decision provides that issues regarding records related to a port authority escrow account created pursuant to an order of the federal Surface Transportation Board are to be resolved exclusively by the federal Surface Transportation Board - a very narrow and fact-specific exemption to the jurisdiction of Ohio public records law.
Recent Legislation of Interest
New Contract Certification - House Bill 95
Effective Jan. 1, 2004, before a state agency or political subdivision awards a contract for goods, services or construction to be paid for in whole or in part with state funds, it must first check to make sure that there is no unresolved finding for recovery by the state auditor against the proposed contracting party. For this purpose, the state auditor has created a link on its Web site (currently located at www.auditor.state.oh.us/ffr) to a database of findings for recovery. If a search of the database reveals no unresolved findings for recovery against the proposed contracting party, a certification to that effect is available on the Web site and may be printed for record purposes. If there is an unresolved finding for recovery, the contract may not be awarded until such time as the finding is resolved by the attorney general.
Tax Incentive Review Council - House Bill 127
Effective March 11, 2004, each Tax Incentive Review Council (TIRC) must submit its annual recommendation with respect to tax abatement and tax increment financing projects by Sept. 1, 2004, even for those projects which were granted exemption prior to July 22, 1994. Further, legislative authorities must consider the TIRC's recommendations within 60 days after receipt.
Concealed Weapons - House Bill 12 (Signed By Governor Taft Jan. 8, 2004)
This bill specifies requirements for a sheriff to issue licenses to carry concealed weapons and pre-empts local legislation. Rules must first be adopted before licenses will be issued.
Recent Decisions of Interest
City could not take by eminent domain another city's park land located within the city for public cemetery purposes. Worthington v. Columbus, 100 Ohio St. 3d 103.
Candidate's nominating petition rejected due to lack of original notarized signature on statement of candidacy. State ex rel. Rust v. Lucas Cty. Bd. of Elections, 100 Ohio St. 3d 214.
City did not intentionally delay acting on initiated ordinance to place measure on the November ballot because it acted more expeditiously than required by the city's charter. State ex rel. Commt. v. Lakewood, 100 Ohio St. 3d 252.
Cities as governmental aggregators of electricity are not "public utilities" under the Ohio Constitution and not exempt from state regulation. Maumee v. Pub. Util. Comm., 101 Ohio St. 3d 54.
Because indemnification clauses in a proposed contract do not meet requirements set forth in 1999 Op. Att'y Gen. No. 99-049 (specification of maximum dollar, certificate of availability of funds, and assurance of sufficient consideration to support obligation) they cannot be agreed to by a political subdivision. 2003 Op. Att'y Gen. No. 2003-035.
Position of education board member and employee of library trustees board subject to the jurisdiction of that board of education are incompatible. 2004 Op. Att'y Gen. No. 2004-001.
At its December meeting, the Ohio Ethics Commission adopted a resolution dealing with non-profit corporations and financial disclosure:
- As a matter of public policy, the Ohio Ethics Commission strongly believes that officials in non-profit corporations that are contracted to conduct significant public functions of government and expend substantial sums of public money have a duty to file financial disclosure and comply with the provisions of Ohio's ethics laws. This disclosure and compliance with Ohio law (1) protects against the occurrence of conflicts of interest by officials or employees contracting with public agencies to perform important public services, and (2) promotes the accountability of non-profit corporations that expend considerable public funds in serving citizens.