COLUMBUS, Ohio (AP) - A legislative proposal aimed at simplifying local income-tax collections around Ohio isn't sitting well with some officials who believe it would add to financial strains faced by cities and villages.
The nearly 600 municipalities in Ohio use more than 300 forms to collect local income taxes, The Columbus Dispatch reported. Municipalities in Ohio can assess an individual and business income tax, and it's the only state where each entity can set its own rules and definition of income.
That can make it more complicated and costly for some business owners, especially when working in multiple jurisdictions. Chris Ferruso, legislative director for the National Federation of Independent Businesses in Ohio, pointed to one Mentor electrician who needed to file 41 municipal income-tax returns.
"Our members aren't trying to get out of any tax liability," Ferruso said. "Just tell us what the rules are so it's easy to understand and the compliance costs go down."
Republican Reps. Cheryl Grossman of Grove City and Michael Henne of Clayton have introduced a bill to help create uniformity in local income-tax collections. It would provide standardized business-tax regulations while allowing municipalities to continue setting their own tax rates.
"By far, Ohio is the most challenging state to deal with," Grossman said. "Every opportunity I have to meet with companies across the state about what we're doing right and what we need to give attention to, this is always in the top two."
The idea drew praise from the Ohio Chamber of Commerce and Ohio Society of CPAs but has some municipal officials worried it would add to the financial challenges for cities and villages coping with state funding cuts. The Ohio Municipal League opposes the legislation.
Columbus tax administrator Melinda Frank suggested the measure would hurt city revenue by millions of dollars.
"The bill itself is poorly written, cumbersome and confusing," she said. "It surely has not simplified the local tax."
One point of concern is a requirement that cities let businesses carry forward net operating losses for five years, to reduce future tax liability. About 170 Ohio municipalities don't currently allow that.
Frank said she's also concerned about a proposed change that affects cities' ability to tax certain sales made outside their limits, such as Internet sales.
Supporters of the proposal contend municipalities would benefit from better compliance as companies better understand the tax law.
Discussions on the bill are expected to continue into next year.
Information from: The Columbus Dispatch, www.dispatch.com
Copyright 2012 The Associated Press.