On February 5, 2018, the Ohio Department of Taxation (Department) announced that the ability to register for centralized Ohio city net profits tax filings and administration through the Ohio Business Gateway (OBG) is now open.¹ This is a follow-up to the Department's opening up of registration last October (see Tax Alert 2017-1761).² The deadline for "opting in" to this elective centralized registration is March 1, 2018.

Details regarding this new system, which applies to business entities of all types (e.g., corporations and pass-through entities) are discussed in Tax Alert 2017-1761.

The Department has developed the format of the various forms that will be used by taxpayers using the system. Implementation of the system, however, will require upgrades to the OBG. These upgrades are in process and must be completed, by law, by January 1, 2019.

Taxpayers should be aware, however, that coalitions of Ohio municipalities are pursuing legal challenges to the system. In November 2017, approximately 130 municipalities filed suit in the Franklin County (Ohio) Common Pleas Court seeking an injunction against the implementation of the system until the court determines whether the system is constitutional. A similar lawsuit by 22 other municipalities, all members of the Regional Income Tax Agency, was filed in the Lorain County Court of Common Pleas in December 2017. These cases are pending and have not affected the implementation of the centralized system at this time.

Implications

EY will continue to monitor developments in this area. Taxpayers should consider the ramifications of electing into the centralized system, particularly given that the election is required before the OBG system upgrades are fully implemented.

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ENDNOTES

¹ See this website.

² See this website.