14-Feb-3 Municipal Tax Reform Discussions Resume in Senate (HB5) 

After a hiatus over the holidays, the legislative debate over much-needed municipal tax uniformity and reform will likely resume this month in the Ohio Senate. The 30 business organizations that comprise the Municipal Tax Reform Coalition strongly support House Bill 5 and urge the General Assembly to pass the bill before it recesses in May. To that end, they have been meeting with Senators and hearing their concerns about the House-passed version of the bill.

As was the case in the House, the major issue members have expressed concern about is the provision that all cities must allow a five-year period for business taxpayers to offset current year income with prior-year net operating losses (NOLs). Currently, two-thirds of Ohio cities have an NOL and the average among those cities is five years, while federal law allows a 20-year NOL. Therefore, the Coalition believes it is undeniably fair to establish a five-year NOL carry- forward period under the bill. It will improve Ohio businesses’ competitiveness and reduce unfair taxes, particularly for companies who are just becoming profitable after years of losses.

HB 5 tries to further accommodate the concerns of municipalities by delaying the new five-year NOL requirement until 2017 and limiting the NOL deduction to 50 percent through the year 2021. In addition, the Net Operating Loss Review Committee would evaluate the potential future impact of the five-year NOL requirement and report back to the legislature by May 2015, so that adjustments can be made in the FY 2016-17 state budget that must be passed by June 30, 2015.

The Ohio Chamber of Commerce believes HB 5 as passed by the House strikes a fair balance between the concerns of business and individual taxpayers to reduce the cost of municipal tax compliance and those of cities to protect their revenues.


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