Income tax

Ohio judge clears municipal income tax challenge

A judge ruled that a lawsuit challenging the city of Cleveland’s ability to collect income tax from a doctor who had not worked in the city during the pandemic could go ahead.

Dr. Manal Morsy’s lawsuit, one of many lawsuits brought against cities in Ohio by the Buckeye Institute, tests state law that was changed during the COVID-19 pandemic to continue to allow cities to collect taxes from workers who did not work in these cities.

Judge Dick Ambrose of the Cuyahoga County Court of Common Pleas dismissed Cleveland’s motion to dismiss on Wednesday.

“Today’s ruling allows the Buckeye Institute case to move forward and ensures that Dr. Manal Morsy will have his day in court to challenge the City of Cleveland’s unconstitutional attempt to impose a extraterritorial municipal income tax to people who don’t live in Cleveland – or even live in Ohio in Dr. Morsy’s case – and did not work in the city during the pandemic, ”said Jay Carson, litigation lawyer principal at the Buckeye Institute. “This type of exaggerated government violates fundamental principles of fairness recognized by the Ohio Supreme Court.”

Morsy, a Pennsylvania resident who works in Cleveland, had not worked in Cleveland or the state for over a year, but continued to pay municipal income tax in the city.

Morsy lives in Blue Bell, Pennsylvania, a suburb of Philadelphia, and traveled to her workplace in Cleveland before the pandemic. She spent the week working in Cleveland and returned home on the weekends. As of March 2020, however, she has been working exclusively from her home in Pennsylvania.

Throughout this time, Cleveland continued to collect its income taxes.

The Buckeye Institute filed an appeal earlier this month in a similar case against Cincinnati that was dismissed in June. He has filed lawsuits in three other similar cases. One has been settled, another is under appeal, and another has yet to render a decision.

The Ohio General Assembly passed a law at the start of the pandemic that kept the state’s tax laws as they were, allowing cities to continue to collect taxes from workers even if they were working remotely in a another city rather than working in the city where the employer was located.

It was an effort to stabilize the revenues of municipalities, and in particular large communities, where the largest employers are based.

The House passed a bill in June that requires employees to pay income taxes in the city where they work. If the work is done at home, it is the community that benefits rather than where the traditional workplace is.

Senator Kristina Roegner, R-Hudson, introduced a bill in February that brings state tax law back to pre-pandemic regulations, meaning most employees pay taxes in the city where they are live and the city where they work.

Senate Bill 97, still in committee, repeals a pandemic palliative passed by the Ohio legislature last spring that allowed cities that host businesses to continue to collect income taxes from employees who worked from home in another community.

“After a few months (of the pandemic) you have created a situation which in my opinion is unconstitutional,” Roegner said earlier this year. “You have people paying taxes in a city that people haven’t set foot on for months.”

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Key words: News, Ohio, State

Original author: JD Davidson, The Central Square

Original location: Ohio judge clears municipal income tax challenge

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