NWOTCA

MEETING DATE: 3/7/07

Call to Order

The meeting was called to order at 9:30 a.m. at the Municipal Building in Whitehouse, Ohio.

Updates on legislation/OML news

Legislation

• There has been a proposal to change the section of ORC 718 that relates to the makeup of a municipality’s Board of Appeals and would no longer allow any city employee to be a member of the Board. This proposal is currently under discussion.
• The City of Akron has a tax rate of 2.58% on the May ballot. Their current rate is 2.25%.
• In the Federal government, H.R. 6167 was introduced, which dealt with withholding taxes on the state level. Basically, it would have meant that a resident of one state who is working in another state can only be taxed by the other state if they spend more than 60 days during the calendar year in that state, a day being defined as at least 50% of the workday. Currently, the number of days is twelve. This bill died.
• An article was distributed that discussed the state of New York’s policy for dealing with home offices.
• The proposed legislation mentioned by Janet (Fremont) at the last meeting regarding a deduction for self-employed individuals paying into health savings accounts now has a name—HB24. It is still under discussion at the state level. It would not be a mandated policy, but optional for cities to allow by ordinance. Our group agrees that this will just create more nonconformity, which will lead to more confusion and frustration on everyone’s part.
• There is legislative discussion on making the filing dates of municipalities agree with the federal filing dates.
• Representative Latta has introduced House Bills 3 and 4, estate tax bills, which could affect the amount municipalities receive. HB3 would reduce the portion we receive. HB4 is a compromise in which cities still get the full amount, but would require legislation by the municipality in order to retain the tax. Governor Strickland is opposed to both of these bills.
• Also under discussion—SB50 would require cities receiving more than $100 million per year in tax year to provide a 10% tax reduction for non-residents.
• HB11 would clean up language in ORC 715 relating to board membership for municipalities with Joint Economic Development Zones. This bill would change the membership to having one representative each from the municipality, business, and employee sectors.

OML

• The annual OML tax seminar will be held at the same location as last year, the Marriott Northwest, in Dublin, on July 11-13. The new State Tax Commissioner will be there.
• At one of the OML meetings, the group discussed the mailing of tax forms for 2006/2007. Some cities had a problem with bulk rates versus first class rates, which is related to the number of pieces of information that appear on the form. If there is more than one piece of individualized information, some post offices are requiring first-class postage. For example, if a person’s account number and social security number both appear on the pre-printed form, it would warrant first-class postage.

OBG Update

Joe Zapotosky from Ohio Business Gateway was at the March meeting. When OBG begins reporting withholding information, that data file will be separate from the net profit file, but any money collected from either withholding accounts or net profit accounts on a daily basis will be grouped together in one file. That means a municipality could receive up to five files per day:

• Machine-readable net profit report
• Human-readable net profit report
• Machine-readable withholding report
• Human-readable withholding report
• Money file

OBG is still making a lot of changes to the net profit portion of the website. They are getting calls from some municipalities who say that the information on the return or extension is not complete.

Businesses will be able to reconcile their withholding accounts on OBG beginning in 2008.

Administrator/Staff Seminar

Discussion continued on the administrator/staff seminar. It was agreed that there is sufficient funding in our account to pay for the entire seminar and that we need to schedule a full day, pick a central location, and get an estimated head-count in order to determine the size of the meeting room.

Workshops for Commissioners

Members agreed that the February workshop in Oregon devoted exclusively to sharing tax problems and solutions was helpful to those who attended. We decided to try scheduling two or three of this type of workshop every year. The next meeting of this type is set for Thursday, June 14^th at 10:00 a.m. in Findlay.

New IRS Legislation

Based on the total population of all the cities it represents, RITA has gotten approval from the IRS that will allow them to receive the same sort of federal taxpayer information that the City of Toledo gets. The minimum population requirement is 250,000. As a group (including RITA and Toledo), NWOTCA would be able to meet this requirement. It was agreed that we would wait to see how things go for RITA before we consider the feasibility of such a venture.

Information exchange/problems & questions

• IRS Form 2555 (Foreign Earned Income) was discussed. In the case of civilians working in Iraq, even though Medicare wages in Box 5 does not have an amount listed, the wages earned while working in Iraq as a civilian are taxable to municipalities. It is not an IRS 3121 (a) or (b) exclusion, which is what gives us the right to tax it.
• As an FYI, it was noted that the State of Ohio did not withhold any local tax on group life insurance for their employees in 2006.
• Changes in municipal tax rates include: Bettsville is now 1% with full credit, Bryan is 1.8%, Eden is 1.5%, and Antwerp is 1% with 50% credit. Whitehouse is holding a Public Hearing to discuss reducing the credit they give from .75% to .25%, beginning January 1, 2007 and no credit beginning January 1, 2008. They will also discuss adding a charge for refuse collection to the water and sewer billing.

Next Meeting

The next regular meeting will be held on Wednesday, May 16th at 10:00 a.m. in Port Clinton.