The battle of Ohio municipal tax is here: Will common sense prevail?

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By Adam L. Garn, J.D., CPA, MT – Associate, Zaino Hall & Farrin LLC

Am. Sub. H.B. 49 (the “Bill”), Ohio’s biennial budget bill, enacted significant new features to assist taxpayers in complying with Ohio’s onerous municipal income tax system. As we discussed in a previous SALT Buzz, Major Changes for Ohio Municipal Income Tax in 2018: Centralization and Elimination of Throwback, for taxable years beginning on or after Jan. 1, 2018, the Bill created an elective method of centralized collection and administration for certain net profit taxpayers. The collection and administration of the tax will be overseen by the Ohio Tax Commissioner for those that elect into the system. Some Ohio municipalities have joined together to challenge the new centralized collection and administration system in filing two separate lawsuits. The City of Columbus is also threatening that taxpayers will forfeit eligibility for previously negotiated incentive agreements if the taxpayer elects into the centralized collection and administration system administered by the Ohio Tax Commissioner, while some others are taking such position on future economic development agreements.

Lawsuit #1 – City of Athens, et. al. v. Testa, et. al.

In November 2017, over 130 municipalities joined together to file a civil lawsuit in the Franklin County Court of Common Pleas to challenge the constitutionality of the centralized collection and administration system, as well as challenge certain changes made under Sub. H.B. 5 of the 130th Ohio General Assembly. In this lawsuit, the municipalities have alleged the following:

  • The provisions of the Bill violate the Home Rule Amendment of the Ohio Constitution by diverting net profit tax revenues away from municipalities, requiring municipalities to file reports with the state, and removing the audit and refund review powers of the municipalities.

  • The provisions of Sub. H.B. 5 violate the Home Rule Amendment of the Ohio Constitution by dictating the exercise of administrative, procedural, and enforcement powers rather than the power of taxation.

  • The provisions of the Bill violate the single subject rule of the Ohio Constitution.

  • The provisions of the Bill impair the obligation of contracts which violates the Ohio Constitution.

  • The provisions of the Bill allow the state to illegally convert (i.e., steal) municipal net profit tax away from municipalities.

  • The provisions of the Bill violate a municipality’s property interest in municipal net profit tax without providing just compensation.

  • The provisions of the Bill violate a municipality’s property interest in municipal net profit tax without a remedy by due course of law.

This lawsuit seeks a preliminary and permanent injunction to prohibit the Tax Commissioner from implementing the centralized collection and administration of the municipal net profit tax that was enacted under the Bill. The lawsuit also seeks a preliminary and permanent injunction to prohibit the State of Ohio from taking any actions to enforce certain provisions of Sub. H.B. 5, a law that was signed by Gov. Kasich in 2014.

Thus far, two municipalities have withdrawn from the case. Ohio Treasurer Josh Mandel and the Director of Ohio Office of Budget and Management Timothy Keen have been dismissed as defendants. Currently, the hearing on the temporary injunction is scheduled for Feb. 12-13, 2018.

Lawsuit #2 – City of Elyria, et. al. v. State of Ohio, et. al.

In December 2017, 22 RITA municipalities joined together to file a separate civil lawsuit in the Lorain County Court of Common Pleas to challenge the constitutionality of the centralized collection and administration of the municipal net profit tax adopted by the Bill. Specifically, this lawsuit alleges:

  • The provisions of the Bill violate the Home Rule Amendment of the Ohio Constitution by interfering with a municipality’s local self-government authority to administer, collect, receive, and audit net profit taxes and by requiring reports other than reports of a municipality’s financial condition and transactions.

  • The provisions of the Bill violate the Home Rule Amendment of the Ohio Constitution by usurping local police powers.

The State of Ohio and the Tax Commissioner filed a motion to transfer venue to Franklin County. The court has previously delayed the hearing on the temporary injunction to give it time to rule on the motion to transfer venue. Currently, the hearing for the temporary injunction is scheduled for Jan. 26, 2018.

Threatened Elimination of Incentives

Recently, Columbus has started to send letters to taxpayers that have existing economic incentive contracts for locating or expanding within the municipality. The correspondence indicates that if the taxpayer elects into the centralized collection and administration system, the taxpayer will forfeit eligibility for the previously negotiated economic incentives. Of course, this seems to be violative of those pre-existing contracts. Other municipalities have indicated that they intend to condition future grants of economic development incentives on taxpayers not opting into the statewide system.

Reminder: Registration is Due March 1, 2018 for Calendar Year End Taxpayers

A taxpayer electing into the centralized collection and administration must do so by the first day of the third month after the beginning of the taxpayer’s taxable year (March 1 for calendar year taxpayers). The ability to elect to file on a centralized basis is available at http://www.tax.ohio.gov/MunicipalTax.aspx or by filing Form MNP R. A taxpayer electing into the statewide system must also notify each municipal corporation in which the taxpayer conducted business during the previous taxable year. Notification of the election should be made by filing Form MNP MN with each municipality. New businesses that elect into the centralized collection system are the only taxpayers that are not required to notify any municipal corporations of its election.

Summary

The significant new features that will assist taxpayers in complying with the onerous Ohio municipal tax enacted by the Bill have been threatened by the two lawsuits filed by the municipalities. Based on the lawsuits and other actions of the municipalities, it is clear that the municipalities are attempting to hinder any progress that has been made to simplify the complex and burdensome municipal income tax structure. In any event, registration is due March 1, 2018 for calendar year end taxpayers.

Reprinted from Zaino Hall & Farrin LLC SALT Buzz (Jan. 11, 2018)

Tags: politics

Coaching Corner: Go on…try it!

By “Coach” Marilou Butcher Roth

Its a new year! Will this year be like last year, and the year before? It is so easy to just fall into patterns of how we have always done things. Have you had thoughts of activities you want to participate in? Or a trip you have wanted to take? Maybe you have always wanted to take an art or dance class. I’m not talking about new years intentions necessarily, I am talking about that thing or things that have been put on the back burner for one reason or another. Or, it might actually be something you haven’t ever considered. This might also be a family activity.

Take a moment right now — take a deep breath. Ask yourself “what would I like to try/do this year?” You may get an immediate response, or perhaps not — do not worry. This is a question that you can continue to ask. You may find that something shows up for you — it might be something someone says, or maybe you see something on TV that peaks your interest.

Be bold! Live your life from your fullest place! Try something new! Have fun!

 

Marilou Butcher Roth is the owner of The MBR Group, a coaching and training company working primarily with REALTORS who have a desire to work and live from a more inspired place. She is also the Broker/Owner of Group REALTORS in Cincinnati.

Marilou is a member of the Ohio REALTORS Board of Directors and past chairman of the organization’s Communications Committee. Feel free to contact Marilou to see if coaching is right for you: Marilou@mbr-group.com

 

Tags: Coaching Corner, training

Listings: Do you have the right signatures?

contracting signing

By Peg Ritenour, Ohio REALTORS Vice President of Legal Services/Administration

When listing a property for sale or lease it is important to make sure you have the signatures of all of the necessary parties. This is crucial to avoid any issues as to the validity of your listing and to protect your right to a commission. But equally important, you want to make sure that you are in compliance with Ohio license law.

Ohio license law requires licensees to obtain the knowledge and consent of the owner or the owner’s authorized agent before marketing or offering property for sale or lease. While the statute doesn’t mandate that such consent be in writing, of course that is the best practice to document that consent has been given.

In the case of  multiple owners of a property, the Division of Real Estate and Professional Licensing interprets the license law to require the consent of all owners of the property. Therefore, when the property is owned by spouses or joint owners such as heirs or multiple investors, the signatures of all of the property owners should be obtained to document that they consent to you listing and offering the property for sale or lease and to also confirm that they are in agreement with the sale price and other terms on which the property will be marketed. In the case of property titled in the name of one spouse only, technically you are only required that you obtain that spouse’s signature. However because under Ohio law the other spouse has dower rights, obtaining that person’s signature on the listing will assure that they are aware of the listing and will serve as an indicator that they will waive their dower rights at the point of sale.

In some cases it is also prudent to take steps to establish that the person listing the property has the authority to do so. Examples of such situations include divorcing spouses, persons with a power of attorney, REO properties, properties in an estate, or properties owned by a legal entity such a an LLC or a corporation. While most listings contain language stating that  the person signing the listing has the authority to do so, it is advisable to confirm this to avoid potential issues. Below are steps to take to assure you have the right signatures:

  • Divorcing spouses. If one spouse claims the court has authorized him/her to handle the sale of the property, ask for a copy of the court order.
  • Power of attorney. If a person purports to have power of attorney to sign for another, a copy of that power of attorney should be obtained for your files.
  • Property in an estate. The individual signing the listing should be either the executor or the attorney for the estate.
  • LLC. Determine if the person signing the listing is the managing member of the LLC or otherwise authorized in the operating agreement to sign documents for the LLC.
  • Corporate owned property. Obtain documentation that the person signing is an officer or duly authorized employee of the corporation.
  • Banked owned property. Obtain confirmation that the bank has title to the property. If the deed hasn’t been recorded yet the Division will allow the licensee to list the property if the sheriff’s sale has been confirmed by the court. In this instance, ask for a copy of the court order confirming the sale.

 

Legal articles provided in the OAR Daily Buzz are intended to provide broad, general information about the law and is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney. 

Tags: legal

Coaching Corner: Make your plan!

By “Coach” Marilou Butcher Roth

How many of you made new year’s resolutions last year? How did it go for you? Were you able to meet the intentions you set? And, how many of you made resolutions for this new year? Are they the same as last year?

Here’s the thing…many people take time each year to determine how they want to make changes in their lives, with the hope of getting themselves to a better place. Often, these resolutions, so carefully made, fall short early on, only to bring about self judgement and frustration. What happens? Why aren’t we always able to accomplish what we set out to do?

A lot of it comes from not having clarity around why we want what we want. If your intention for the year is based upon something you feel you “should” do, there is a high probability that it will not come to fruition.

Let’s start fresh. Look at the different areas of your life — for example, health, wealth, career, family, friends and please do not forget to include YOU as one of the categories. Please add any others that come to you.

Once you have the areas, identify what you want in that area. Then ask yourself why you want that specific thing. What is important about it? How would your life be different if you had it? How do you feel when you think about having it?

If you still feel good (and hopefully excited) about the accomplishment of this item, begin to make your plan. What action steps will you take to reach your desired destination? Be as specific as you can and make sure you have your “whens” plugged in as well.

You may want to buddy up with someone to keep you accountable, or perhaps you find that just having your plan and referring back to why this is important to you, will keep you motivated and moving where YOU want to go!

Enjoy!

 

Marilou Butcher Roth is the owner of The MBR Group, a coaching and training company working primarily with REALTORS who have a desire to work and live from a more inspired place. She is also the Broker/Owner of Group REALTORS in Cincinnati.

Marilou is a member of the Ohio REALTORS Board of Directors and past chairman of the organization’s Communications Committee. Feel free to contact Marilou to see if coaching is right for you: Marilou@mbr-group.com

 

Tags: Coaching Corner, training

We Want You! Be a part of the Ohio REALTORS’ new political program

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By Scott Williams, Vice President of Public Policy

Ohio REALTORS has launched a new political initiative in 2018, one designed to strengthen the industry’s voice in the Ohio Statehouse. The program will pair REALTOR members directly with Ohio Senators to keep them up-to-date on the profession’s issues and concerns.

What happens at the Ohio Statehouse has real world consequences. Our new State Political Coordinator (SPC) program is intended to put a human face on the issues that affect our industry and let our lawmakers know that the choices they make impact the lives of their constituents. The facts, ideas and industry information that our SPC’s will share with state lawmakers will help them make more informed decisions so they can more effectively legislate on REALTOR issues in the General Assembly.

The new SPC program will enhance our already strong grassroots engagement and provide momentum to help achieve the legislative and regulatory goals of the REALTOR community. As an expert on real estate issues, and because of the relationship you foster, lawmakers will want your insight on how various issues will affect their district. SPC’s will become an integral component of the Ohio REALTORS political advocacy efforts.

To learn more about the duties and responsibilities of a SPC, please click here.

Tags: politics

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