ENGLEWOOD — With the Ohio General Assembly enacting House Bill 5 in December 2014 all municipalities in the state must amend its codified ordinances regarding municipal income tax.
Englewood Council passed an ordinance at its November 10 meeting to comply with the state mandate. The ordinance included changes mandated by the new Ohio Revised Code Chapter 718 and one option that the city chose to implement.
Mandated changes include:
- The annual interest rate (in 2016 will be 5 percent annually rather than 18 percent)
- Penalty underpayment or nonpayment of taxes for business and individual accounts will be a flat 15 percent rather than beginning at 10 percent and rising to a maximum of 50 percent
- Penalty for the late filing of returns for business and individual accounts will be $25 per 30 days late with a maximum of $150 rather than a flat $25 penalty
- Penalty for late withholding payments will be a flat 50 percent of the amount unpaid rather than beginning at 10 percent and rising to a maximum of 50 percent
- Changes in the due dates for estimated tax payments
- Changes in the due dates for withholding payments
- Changes in the filing requirements and withholding tax liability for businesses within Englewood that occasionally work
- Business Net Operating Loss Carry Forwards will be 5 years and will be phased in beginning in 2018
Option added by Englewood (Section 881.30 of the new tax ordinance)
- The annual reporting of tenants for property owners who are landlords
Also included in the ordinance was an amendment Title Four – Taxation, Chapter 880 Earned Income Tax.
- Changing the title of the chapter from “Earned Income Tax” to “Municipal Income Tax”
- Adding a subtitle which states that this chapter is regulating taxable years prior to January 1, 2016
- Changing the refund minimum amount issued to $10 rather than $5 (to match the new Ohio Revised Code Chapter 718)
- Changing the minimum amount collectible to $10 rather than $5 (to match the new Ohio Revised Code Chapter 718)
- Terminating the Board of Adjudication effective January 1, 2016 (so as not to conflict with the Local Board of Review mandated by the new Ohio Revised Code Chapter 718)
- Terminating the Board of Tax Review effective January 1, 2016 (so as not to conflict with the Local Board of Review mandated by the new Ohio Revised Code Chapter 718)
“There are two parts to this ordinance. The first part adopts a new ordinance or text beginning January 1, 2016 as the result of the state passing House Bill 5, which establishes numerous policies that affect local jurisdictions,” said City Manger Eric Smith. “The Ohio Municipal League created a model ordinance that is being largely adopted throughout the state that collect income tax so that there will be great deal of consistency. The other part of the ordinance amends certain sections to update filers from December 31, 2015 backwards. The reason for that is that those people are not necessarily affected by the new regulations in House Bill 5.”
Council Member Judy Gerhard asked Smith if the city had come up with a ballpark figure regarding the loss to the city in terms of dollars the new legislation would cause.
Smith said the city finance department came up with an estimate before HB 5 was enacted that was purely an estimate.
“That whole issue has the ability to have a tremendous impact,” Smith noted. “Whether it will or not remains to be seen. We won’t know that for at least year and probably two years. It’s not going to do us any good, that’s for sure.”
Council passed the legislation on the first reading.
Ron Nunnari can be reached at 684-9124, via email Rnunnari@civitasmedia.com or on Twitter @Englewood_Ind