Sweeping changes to Ohio’s tax code will need to be adopted by every city and village in the state by Jan. 1 — including Wellington.
Village council members learned Sept. 21 about some of the major changes in the new tax code in a presentation by finance director Karen Shaw.
Under the new state law, businesses can get a tax break for five years to help pay off startup costs before registering a profit. Under the old law, they were only allowed three years.
Another provision that will likely cost the village some revenue is the “small employer” definition.
“We’ve never had a definition for a small employer,” Shaw said.
Any business in Wellington making less that $500,000 a year is considered a small business. Those that fall under this definition will only have to withhold and remit income taxes for employees who work in the village.
Rules about pass-through workers such as pavers, roofers, and electricians who only work a few days each year inside the village limits will also change.
Now they’ll be able to work up to 20 days before having to pay Wellington income taxes. Before, they could only go 12 days before paying into the village coffers.
Other noticeable changes include what’s considered in determining where a person lives when they have more than one house, how much an employer should withhold and how often they pay the village, and when an employer must file an annual tax reconciliation.
“I don’t think the average taxpayer is going to notice it,” Shaw said. “I don’t think it’s going to affect the village in a big time way.”
The Regional Income Tax Agency handles tax collections for the village. Shaw said the bill for last year came in under $40,000, but that might go up with all the added provisions.
But even if the cost were to go up, Shaw doubts it would be more than what it would cost the village to process taxes in-house. She said the cost of that was close to $60,000.
Shaw said it’s impossible to calculate how much these changes and others in the new state tax code will cost the village.
“Nobody can even say for sure what all this would cost a big city,” she said. “It’s one of those wait and see situations.”
But her counterparts in Amherst and Oberlin have done those calculations, telling our sister publications they expect revenue losses of up to $290,000.
Kelsey Leyva can be reached at 440-647-3171 or @TWE_KelseyLeyva on Twitter.
Kelsey Leyva | Wellington Enterprise
Wellington finance director Karen Shaw goes over some of the changes the village will see once the new tax code is passed.