Ohio Supreme Court to decide if cities owe commuters tax refunds for 2020 shutdowns

One of Ohio's unanswered questions from the COVID-19 pandemic is whether people who worked from home should have paid commuter income taxes while their offices sat empty.

State lawmakers gave cities permission to collect those dollars in 2020, but a conservative group called the Buckeye Institute said that violated the state's constitution. Now, the Ohio Supreme Court will decide who is right.

The case is called Schaad v. Alder, and it's one of five municipal income tax cases that challenged Ohio’s temporary change to its tax system.

Here's what happened.

Ohio law lets cities tax commuters because they drive on city roads and presumably use other city services. But downtown offices emptied when the pandemic hit, and cities, which rely heavily on income taxes, worried whether major layoffs were looming.

The exact amount cities could have lost was hard to estimate because it's a refund people have to request, but the Greater Ohio Policy Center estimated Ohio’s six largest cities could lose $306 million annually.

State lawmakers passed a package of legal changes, including one that let cities tax former commuters as if they were still coming to the office.

Groups like the Ohio Mayor's Alliance said this emergency measure was critical.

But Josh Schaad, a Blue Ash resident whose office is in Cincinnati, said the change cost him money. He worked offsite multiple days per week in 2020 and says in the lawsuit that his income tax bill increased – even though he spent less time in Cincinnati than the prior year.

“For more than 70 years, the Ohio Supreme Court has recognized that the constitution prohibits local governments from taxing the income of individuals who neither live nor perform work in the taxing city," Buckeye Institute President Robert Alt said in a statement. "And, yes, the constitution applies even during a global pandemic.”

But a Franklin County judge saw things differently when he dismissed a similar lawsuit in April 2021.

"Simply put, the Ohio General Assembly has long regulated municipal taxing authority, both temporarily and geographically, even before the exigent circumstances of the COVID-19 pandemic," Judge Carl Aveni wrote.

The outcome of this case will only apply to income taxes paid in 2020. State lawmakers already let Ohioans seek refunds for the days they worked from home in 2021.

More: Ohio commuter tax: Should you file for a local refund if you've been working from home?

The court is expected to hear Schaad's case at the end of 2022 or early 2023.

Anna Staver is a reporter with the USA TODAY Network Ohio Bureau. It serves the Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.

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This article originally appeared on The Columbus Dispatch: Ohio court to decide on commuter tax refunds from pandemic