Ohioans who worked from home during COVID not eligible for tax refund, court rules

The Ohio Supreme Court ruled that Ohioans aren't entitled to refunds of income taxes collected during the pandemic.
The Ohio Supreme Court ruled that Ohioans aren't entitled to refunds of income taxes collected during the pandemic.
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Ohio commuters aren't eligible for a tax refund for time they spent working at home during the COVID-19 pandemic, the Ohio Supreme Court ruled Wednesday.

The court, in a 5-2 decision, ruled that a state law that allowed municipalities to collect income tax from nonresidents in 2020 was constitutional. The decision means cities avoided millions in refunds.

In March 2020, Ohio Gov. Mike DeWine declared a state of emergency because of the COVID-19 pandemic and the Ohio Department of Health directed most individuals to work from home. Shortly after that order, Ohio legislators passed a law allowing cities to collect income taxes even if employees lived outside the city where the business was based.

This money could be collected during the stay-at-home order and for 30 days after.

Josh Schaad, a Blue Ash man who tried and failed to get a tax refund from the city of Cincinnati, filed a lawsuit challenging that law. He argued that the city wasn't entitled to tax the income he made outside the city's limits between June 2020 and December 2020.

Ultimately, the majority of the Ohio Supreme Court disagreed.

"Ohio had a legitimate interest in ensuring that municipal revenues remained stable amidst the rapid switch to remote work that occurred during the pandemic," wrote Justice Pat DeWine, the son of Gov. DeWine. He was joined by fellow Republican Justice Joe Deters and the court's three Democrats.

The Ohio Municipal League and Ohio Mayors Alliance commended the decision.

“The Ohio Supreme Court ruling today avoids what could have been a retroactive fiscal bombshell to Ohio's cities," said Keary McCarthy, executive director of the Ohio Mayors Alliance. "A report conducted in 2021 estimated that remote work could have resulted in a significant loss of revenue to our cities, which could have impacted local public safety."

However, Chief Justice Sharon Kennedy and Justice Pat Fischer, both Republicans, disagreed with the court's decision. Kennedy wrote that Cincinnati did not have the power to tax Schaad, a nonresident, under home rule authority. Fischer concluded that the federal constitution protected Schaad from being taxed in Cincinnati.

“When he worked in Blue Ash, Schaad plainly derived no benefit from Cincinnati. Put simply: no link, no minimum connection existed between Cincinnati and Schaad during the relevant time frame,” Fischer wrote in his dissent.

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The Buckeye Institute, a conservative think tank which argued the case before the court, called the ruling "disappointing."

"Local taxing authorities should be able to tax only within their own jurisdictions — where people live and actually perform the work. There will be other opportunities for the Ohio Supreme Court to recognize those limitations,” Robert Alt, president and chief executive officer of The Buckeye Institute, said in a statement.

Ohio Supreme Court ruling on income taxes for nonresidents by Jessie Balmert on Scribd

Jessie Balmert is a reporter for the USA TODAY Network Ohio Bureau, which serves the Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.

This article originally appeared on Cincinnati Enquirer: Court: Stay-at-home workers in Ohio not eligible for tax refund