Ohio municipal income tax refund rules create reporting burdens for employers

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February 2021


Ohio provides temporary withholding relief for municipal income taxes imposed on employees. During the COVID-19 emergency and for 30 days after the conclusion of that period, an employee generally is deemed to perform services at the employee’s principal place of work regardless of where the employee actually works. This results in simplifying employer withholding at the location of the principal workplace even when employees are performing their services elsewhere. 

Employees may seek refunds to the extent they reside in cities with a lower effective tax rate than where they normally work. The Regional Income Tax Agency (RITA), which represents over half of Ohio cities, recently issued policy guidance on the employer reporting burdens relative to these refund claims.

Ohio employers may need to take actions to comply with these additional reporting requirements.

The takeaway

Ohio employers will need to provide assistance with employee refund claims, creating additional reporting burden for payroll and/or human resource departments. By understanding these requirements and proactively working with employees, employers can better navigate this reporting issue.

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Peter Michalowski

State and Local Tax Leader, PwC US

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