Ohio lawmakers are considering a measure that could allow business owners to shift their tax burden for remote workers. Proponents of the idea argue it’s a way to simplify tax filing. But it could also make it easier for businesses to reduce their tax burden.
State law allows municipalities to levy income taxes on businesses operating within city limits. Businesses determine how much they owe through a formula weighing payroll, sales and property.
But remote work has thrown a wrench into that calculation. The sales and payroll that businesses previously attributed to one office could now be spread over as many cities as they have employees. Ohio Chamber of Commerce general counsel Tony Long explained that presents an administrative nightmare for small businesses.
“Employers would need to track remote work locations of employees determine if the employee was using company property and if sales were generated from that remote location,” he said, adding employers would “potentially face filing requirements to municipalities that they do not conduct business in or have property located in but for the remote worker.”
Long and others noted the potential expense of filing those returns could exceed the amount of tax they owe. To address the problem, businesses could apply their remote workers to a “qualifying reporting location” for the purposes of calculating taxes.
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