Ohio income tax collection change ‘a solution in search of a problem’

A state change would weaken local oversight in collecting business taxes and, according to Miamisburg’s city manager, is a “solution in search of a problem.”

Miamisburg is looking to join other cities and villages across Ohio in challenging the constitutionality of a change that would allow the state to collect local taxes as means of streamlining the process.

The Miamisburg City Council tonight will consider joining more than 100 cities and villages that are part of a coalition planning a lawsuit questioning the change, according to the Ohio Municipal League.

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State involvement in local taxes – among other issues – would undermine a system that is working well while allowing the state to “chip away” at local autonomy, Miamisburg City Manager Keith Johnson said.

“We feel like we like we can do a much better job of collecting income tax than the state of Ohio can,” he said. “Our staff is extremely professional and there are people who come downtown just to pay their taxes.

Centerville and Riverside are local cities which have already passed resolutions to support the lawsuit, according to Brian Humphress, executive director of the Greater Dayton Mayors and Managers Association.

“The problem with allowing a portion of that to be collected in Columbus, the level of service for businesses and residents drops,” Johnson added. “Because if you’ve got a question you need an answer to you either have to drive to Columbus to take care of that or deal with someone over the phone. We certainly feel better equipped to do that.”

RELATED: Income tax collections boosting Miamisburg budget

“We deal with hundreds of businesses a year, and all without a hitch,” he continued. “There’s absolutely no problem with the level of service, helping any companies with problems they might have.”

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 net-profit taxes account for about 10 percent of income taxes collected in Miamisburg, according to Johnson.

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.

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It’s an effort to streamline the tax collection process for businesses, particularly when some firms must file their information with multiple local jurisdictions each year, according to state officials. The state would keep a half-percentage point of the taxes collected as a service fee.

But there’s nothing stopping the state from increasing that fee in the future, Johnson said.

“Once you put it in place, they don’t have to come back and get our approval to increase it,” he said. “Our cost of collecting tax, we don’t charge (for) that. It’s just part of what we provide.“

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