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April 5, 2022

Ohio Supreme Court declines to hear appeal of challenge to city's income tax provisions for remote workers

On March 29, 2022, the Ohio Supreme Court, in a 4-3 decision, declined to review the appeals court decision in Buckeye Institute v. Kilgore affirming the trial court's dismissal of a complaint claiming that 2020 Ohio House Bill 197 (HB 197) violated the Ohio and U.S. Constitutions (see Tax Alert 2021-2227). This is one of several cases that Buckeye Institute employees have filed in various counties in Ohio challenging HB 197, which 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 purposes of determining Ohio local income taxes.

HB 197 background

HB 197 was enacted in March 2020 in response to Governor Mike DeWine's COVID-19 emergency orders. HB 197 included Section 29, which deems employees to be performing personal services at their principal place of work, even though their employer requires them to perform those services at another location, such their home, because of the COVID-19 emergency. This provision was intended to mitigate the administrative burden on employers of withholding and remitting tax to each employee's municipality of residence and, instead, allow the employer to withhold based on the employee's principal place of work. Section 29 did not expressly address whether employees' wages are subject to municipal income tax by their principal place of work or place of residence.

In 2021, the Ohio legislature enacted 2021 OH House Bill 110 (HB 110), which allows employees working remotely to claim refunds of tax paid to the principal-place-of-work municipalities, including tax that was withheld by their employers, for days that the employee worked elsewhere during 2021. The employee personal income tax refund provisions of HB 110, however, do not expressly apply to the 2020 tax year.

Buckeye Institute challenge in Franklin County

On July 2, 2020, the Buckeye Institute, an independent research and educational institution, filed an action in the Franklin County (Ohio) Court of Common Pleas seeking a declaratory judgment that HB 197 violates the U.S. Constitution and the Ohio Constitution. The trial court dismissed the complaint, noting that HB 197 was not unprecedented, citing existing law allowing an employer to withhold 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 General Assembly enjoy a presumption of constitutionality.

Turning to the substantive arguments, the trial court determined that relying on 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 was misplaced as both involved interstate taxation and did not 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 court also rejected the argument that HB 197 impermissibly expanded municipal taxing powers.

The court of appeals affirmed the lower court's analysis, first noting that judicial review of legislative enactments focuses on whether the legislature's exercise of its power is constitutional and that legislative enactments have a "strong presumption" of constitutionality. The court of appeals distinguished Hillenmeyer and Willacy, as those cases were decided on due process grounds and did not address the question of whether an emergency measure enacted by the legislature violates due process. The appeals court also noted that remote work of an employee could be reasonably associated with the activity of an employer's office to support imposition of a municipal tax. Finally, the court of appeals concluded that HB 197 was within the legislature's authority, focusing on the "exigent circumstance of the COVID-19 pandemic."


While the Ohio Supreme Court's refusal to accept the Buckeye Institute's Franklin County challenge concludes this case, it is one of several filed by The Buckeye Institute in other Ohio counties. One of those cases, Schaad v. Adler, Appeal No. C-210349; 2022-Ohio-340, also involved the dismissal of a similar complaint by a Hamilton County (Cincinnati, Ohio) court. On March 24, 2022, the Buckeye Institute petitioned the Ohio Supreme Court for review of this decision. The Ohio Supreme Court's jurisdiction is discretionary in this appeal, so it is unknown at this time whether it will accept the case for review.

HB 110 clarified that employees may seek refunds from the principal-place-of-work-cities for taxes withheld for days worked remotely for 2021. HB 110 specified that a city may only require an employer to certify that it has not refunded the tax to the employee and provide the number of days worked at the primary workplace. Refunds for 2020 were unaddressed by HB 110 and some Ohio cities are simply denying such refund claims while others will hold the refund claims in abeyance while the litigation continues.


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 (