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December 10, 2021

Ohio appeals court upholds dismissal of challenge to city's income tax withholding rules of remote workers

In Buckeye Inst. v. Kilgore, the 10th District of the Ohio Court of Appeals (appeals court) affirmed the trial court's dismissal of a complaint filed by The Buckeye Institute asserting that Section 29 of 2020 Ohio House Bill 197 (HB 197) violated the Ohio and U.S. Constitutions (see Tax Alert 2021-0912).1 The appeals court held that Section 29 of H.B. 197 did not violate the limit the due process clause places on a municipality's jurisdiction to tax. HB 197 deems remote work performed by an employee working from home during the COVID-19 pandemic to occur at an employee's principal place of business for the purpose of determining Ohio local income taxes.

This holding comes amid other challenges to Section 29 of HB 197 and other similar Ohio laws as well as legislative efforts to modify these provisions.

HB 197 and HB 110

HB 197 was enacted in March 2020 following Governor Mike DeWine's COVID-19 emergency orders issued in response to the COVID-19 pandemic. Section 29 of HB 197 provides that:

Notwithstanding section 718.011 of the [Ohio] Revised Code, and for the purposes of Chapter 718 of the [Ohio] Revised Code, during the period of the emergency declared by [Ohio Governor DeWine's] Executive Order 2020-01D, issued on March 9, 2020, and for thirty days after the conclusion of that period, any day on which an employee performs personal services at a location, including the employee's home, to which the employee is required to report for employment duties because of the declaration shall be deemed to be a day performing personal services at the employee's principal place of work.

Section 29 of HB 197 was intended to alleviate the administrative burden on Ohio employers of withholding and remitting Ohio municipal income tax to each employee's municipality of residence and, instead, allow the employer to continue, during the COVID-19 pandemic emergency, to withhold based on the employee's principal place of work. Section 29 of HB 197 did not expressly address whether employees' wages are subject to municipal income tax based on their principal place of work or residence, which resulted in direct employee challenges, such as those made by The Buckeye Institute.

Earlier this year, 2021 Ohio House Bill 110 (HB 110) decoupled the Ohio municipal income tax withholding provisions under Section 29 of HB 197 from the Ohio Governor's emergency declaration; consequently, they will sunset after December 31, 2021. HB 110 also allows employees working remotely to claim refunds of tax paid to the principal-place-of-work municipalities for days that the employee worked elsewhere during the year. These provisions, however, do not expressly apply to the 2020 tax year.

The Buckeye Institute challenge

On July 2, 2020, The Buckeye Institute, an independent research and educational institution, filed a lawsuit2 in the Franklin County (Columbus, Ohio) Court of Common Pleas (trial court) seeking a declaratory judgment that HB 197 violates the Fifth and Fourteenth Amendments to the US Constitution (i.e., due process clause) and that the Ohio Constitution does not authorize the Ohio General Assembly to expand the taxing power of the state's municipalities beyond established limits. The Buckeye Institute alleged that prohibiting the plaintiffs from working from their offices in Columbus and then deeming that they are working within Columbus for Ohio city income tax purposes, "offends the basic principles of equity, and the Due Process requirements of the US and Ohio constitutions."

Court of Common Pleas decision

In dismissing The Buckeye Institute's complaint, the trial court first noted the precedent for HB 197, citing existing law3 allowing an employer to withhold Ohio local income tax for the employee's principal-place-of-work municipality for the first 20 days that the employee works in another municipality. The trial court also noted that enactments by the Ohio General Assembly enjoy a presumption of constitutionality. The trial court then turned to The Buckeye Institute's substantive arguments, the first being that municipalities may tax only income earned by residents or income earned by nonresidents who work within their borders. In support of this argument, The Buckeye Institute cited Ohio Supreme Court decisions in Hillenmeyer v. Cleveland Bd. of Rev., 144 Ohio St.3d 165, 2015-Ohio-1623 and Willacy v. Cleveland Bd. of Income Tax Rev., 159 Ohio St.3d 383, 2020-Ohio-314, both of which restricted the cities' ability to impose their taxes on certain nonresident individuals. The trial court determined that reliance on earlier cases was misplaced as they involved interstate taxation of nonresidents. The court said that "[n]either Hillenmeyer nor Willacy address the Ohio General Assembly's longstanding power to tax Ohio residents wholly within Ohio's borders, or to set appropriate coordinating limitations between Ohio municipalities for an efficient, organized and coordinated intrastate taxing schema." The trial court also rejected the argument that HB 197 impermissibly expanded4 municipal taxing powers, saying that HB 197 "is an express limitation on municipal latitude in taxation, providing uniform rules regulating the circumstances in which municipalities can and cannot tax."

Ohio appeals court affirms

The appeals court affirmed the trial court's dismissal, noting that judicial review of legislative enactments does not include judgments on policy but focuses on whether the legislature's exercise of its power is constitutional. The appeals court also noted that legislative enactments have a "strong presumption" of constitutionality.

The appeals court rejected the appellants' reliance on Hillenmeyer and Willacy, saying those cases did not address the issue of whether, from a due process perspective, "remote work of an employee could be reasonably associated with the activity of an employer's office to support imposition of a municipal tax, particularly in the context of a public health crisis."

The appeals court concluded that HB 197 was within the legislature's authority. The appeals court focused on the "exigent circumstance of the COVID-19 pandemic" in concluding that the HB 197 was a permissible temporary measure structuring municipal income taxation in Ohio to mitigate the economic impact of the pandemic on Ohio municipalities.


It is unknown at this time whether The Buckeye Institute will appeal this decision. The Ohio legislature's express allowance of refunds for 2021 mitigates this issue for that year. The question remains open, however, whether Ohio municipal taxpayers may claim refunds for the municipal taxes they paid in 2020 to their primary work location as opposed to their city of residence (where the work may have been performed). That question might also require resolution by the courts.


Contact Information
For additional information concerning this Alert, please contact:
Indirect Tax / State and Local Tax
   • Bill Nolan (
Workforce Tax Services - Employment Tax Advisory Services
   • Fred C Branditz (
   • Debby Salam (


1 Buckeye Inst. v. Kilgore, 10th Dist. Franklin No. 21AP-193, 2021-Ohio-4196 (Nov. 31, 2021).

2 The Buckeye Institute has also filed at least two other complaints on similar issues on behalf of affected individual taxpayers in the Franklin (Columbus) and Hamilton (Cincinnati) County courts of the Ohio Court of Common Pleas. See e.g., Denison v. Kilgore et al. and Schaad v. Alder.

3 Ohio Rev. Code 718.011.

4 Article XVIII, Section 13 of the Ohio Constitution provides that the General Assembly may limit the power of municipalities to levy taxes and incur debts.