On February 21, 2018, the Franklin County Court of Common Pleas (court) denied a request for a preliminary injunction to block the implementation of an elective centralized administration of Ohio's city net profits taxes ( see Tax Alert 2018-0297). In addition, the Court issued a final appealable judgment in favor of the State of Ohio, upholding the constitutionality of the 2017 law that authorized the centralized system. The Court determined that the Ohio General Assembly has the ability to impose limits on city taxation under Ohio Revised Code Chapter 718 and that the law did not impinge on cities' right to home rule. It is unknown at this time whether the Ohio cities will appeal this decision.

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. That matter is still pending and has not affected 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 into the centralized system must be made by March 1, 2018.

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