Ohio Budget Bill Adopts Municipal Net Profits Tax Safe Harbor Statute

Published in Issue 1 of The Ohio SALT Chronicle

By: David Froling

Companies that have individuals (whether an employee or an owner) that work out of their home now have the choice of filing a net profits tax return with that individual’s city of residence.  In brief, if the company chooses to not file a net profits tax return with that individual’s city of residence, then the company’s property, payroll and sales associated with that individual are assigned to the company’s office location.  The statute is not a model of clarity, so companies are well advised to study the associated procedural rules very carefully.  The statute is effective for tax years ending on or after December 31, 2023. 

Vorys understands the General Assembly may amend this statute’s effective date to make it effective for tax years ending on or after January 1, 2022.  Companies should monitor further legislative developments accordingly.