House Advances Bill to Change COVID-19 Rules for Local Income Tax Collection

Ohioans working from home in 2021 could end up paying taxes to the city where they live – not where their company has an office – if House Bill 157 becomes law. This week, the House Ways and Means Committee advanced the measure for consideration by the full House.

Before the vote, the OMA testified in support of a new substitute bill. As originally introduced, HB 157 would have immediately repealed a temporary provision that currently allows municipal income tax withholdings to be based on an employee’s principal work location, not where he/she is working remotely during COVID-19.

The sub-bill made several changes, including:

• Extends the temporary withholding provision through the end of the year (Dec. 31, 2021).
• Provides employers a “safe harbor” by waiving penalties and interest for employers that withheld municipal income tax on employees’ wages in accordance with the temporary provision.
• Includes language prohibiting a municipality, as a condition for processing an individual’s request for a refund, from requiring an employer to provide any documentation other than a statement verifying the number of days an employee worked at their principal work location.

For the latest information on this bill and other tax-related legislation, join the OMA’s Tax and Finance Committee meeting on Wednesday, June 2 from 10 a.m. to noon. Register here. 5/20/2021