The Ohio House unanimously passed Republican-backed legislation that aims to streamline tax reporting requirements for remote workers.
House Bill (HB) 121 sponsored by State Representatives Monica Robb Blasdel (R-Columbiana County) and Adam Mathews’ (R-Lebanon) looks to modernize the municipal net profits tax filing requirements for remote workers and allow employers to designate qualifying reporting locations to consolidate their filings to a single central business location.
Under current law, a business’s net profits are apportioned among municipalities according to the property, payroll, and gross receipts attributable to each municipality in which the business operates.
The lawmakers say that although this technique worked successfully in the past, the recent popularity of remote work has made submitting business taxes more challenging. A corporation may now have personnel working remotely from different parts of the state, as opposed to the great majority of enterprises formerly operating out of a single site or a small number of locations. The Representatives say this has led to an excessively complicated tax system that can call for separate apportionment’s to each municipality where work is being done.
According to Mathews, with the increase in remote work, the process of paying taxes has become unduly complicated and expensive, often costing more than the actual tax liability. The Representative claims that this legislation streamlines the procedure to lessen these responsibilities and avoid submitting a lot of needless and unnecessary tax returns.
“Our aim is to simplify our tax code and reduce unnecessary administrative burdens on Ohio businesses. We want Ohio to be the most business-friendly state in the nation, and this legislation is an important step to ensure that our businesses can operate efficiently and attract new workers from across the state,” Mathews said.
HB 121 aims to streamline and update the municipal net profits tax reporting procedure in light of remote work. It will enable companies to allocate remote employees’ net profits to their main office or another eligible location.The same company with its major offices in Columbus may combine the net profit tax burden to that region rather than necessitating separate apportionment. If passes it would ensure that businesses in Ohio could continue to recruit and hire remote workers anywhere in the state as they see fit, while also streamlining the tax filing process and lowering unnecessary compliance costs on them.
According to Robb Blasdel, embracing tax simplification and supporting business growth will build a stronger economy in Ohio.
“By streamlining tax filings, reducing administrative burdens, and providing a simplified method for businesses to calculate their tax liabilities, we enable companies to allocate resources more efficiently. This will foster reinvestment in their operations, drive economic growth, and create new opportunities for job seekers,” Rob Blasdel said.
The lawmakers say that the legislation has no bearing on how a municipality taxes the income of its citizens; it only pertains to the local net income tax on a company’s property, payroll, and gross revenues. Businesses have the option to opt into the former apportionment method if it meets their needs because this measure is permissive rather than required for them.
Robb Blasdel said that the majority of the testing for the measure came from a clause in HB 197 from the 133rd General Assembly, which Representative Derek Merrin (R-Monclova) co-sponsored. It also had a temporary law for the Covid-19 pandemic that permitted companies to see remote work as coming from their main location of business. While it was in place, the lawmaker notes that the clause worked well and revealed a chance to make this pro-business legislation a permanent part of the law.
According to the Representatives, they look forward to “Advocating for it (HB 121) in the Ohio Senate.”
The legislation is now under review in the Ohio Senate.
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Hannah Poling is a lead reporter at The Ohio Star and The Star News Network. Follow Hannah on Twitter @HannahPoling1. Email tips to [email protected]
Photo “Monica Robb Blasdel” by Ohio House of Representatives. Photo “Adam Mathews” by The Ohio House of Representatives. Background Photo “Ohio Statehouse” by General Ization. CC BY 3.0.
