“href =” https://www.law360.com/tax-authority/articles/1388793/# “> Abraham Gross ·
A state appeals court should overturn a court ruling confirming an Ohio city’s right under state law to tax employees who work outside of the city during the coronavirus pandemic, a state think tank told the court.
In a letter filed on Wednesday, the Buckeye Institute said the Franklin County Court of Common Pleas was wrong to say refused his claims Ohio Temporary Act HB 197, which provides for remote working at a worker’s head office during the pandemic, is against the constitutions of the state and the United States.
The institute said the court’s decision disregarded the Supreme Court’s precedent. The organization called on the appeals court to reverse the ruling, arguing that Columbus’ authority to tax non-resident income under the Ohio Constitution was limited by state procedural rights for the taxation of non-resident wages realized in the city.
“There is no way to reconcile … HB 197 and the behavior of the city below it with the long line of Ohio Supreme Court rulings that apply the US constitutional due process clause to local taxation.” said the institute.
The court last month upheld Columbus accountant Megan Kilgore and Attorney General Dave Yost’s motion to dismiss the Buckeye Institute’s lawsuit and found the General Assembly had not violated procedural law in regulating taxes within the state.
The court found that the Ohio courts interpreted the state constitution to allow lawmakers to regulate local taxation, including coordination of restrictions between local authorities.
HB 197, issued in March 2020, was a comprehensive calculation passed in response to the spread of the coronavirus, which causes the respiratory disease COVID-19. The law’s local income tax procurement provision will apply until 30 days after Ohio lifts the state of emergency imposed in response to the pandemic.
The Columbus-based institute and its staff challenged the law in June after Kilgore failed to respond to letters from staff requesting refunds of source amounts Columbus believed to have been obtained while working remotely in the city’s pandemic .
In its submission to the Court of Appeal, the Institute reiterated its claims that state and local laws and precedents have imposed restrictions on local income taxes. Municipalities are only allowed to tax income from residents or income from non-residents who work within their borders, the institute said.
The court erroneously ruled that HB 197 did not improperly expand municipal tax powers based on the state legislature’s power to limit municipal tax powers, the institute said because the state power is limited to regulating state and non-municipal taxes within the state.
“The state cannot expand a municipality’s tax authority, and even if it argues that it can, it cannot extend the local tax authority beyond what is permitted by due process,” the institute said.
The organization also argued that the court’s ruling on the holdings of the 2015 Supreme Court ruling in the Hillenmeyer v Cleveland Board of Review case violated and the 2020 Willacy v Cleveland Board of Income Tax Review decision 
. The court erroneously dismissed these cases as being limited to interstate taxation, the institute said when the tax law in question included non-resident residents and judges did not limit their decisions to non-residents.
“The court’s reduced reading of Hillenmeyer, Willacy and the previous cases finds no support in their texts or in common sense,” the institute said.
The court has also called the expansion of municipal tax powers a “restriction” and incorrectly identified an employer’s withholding tax rule as authorizing municipalities to levy taxes outside their borders, the institute said.
The lawsuit is just one of many similar challenges to the law. In February the institute also did took action against Cincinnati, followed in March through a lawsuit against the cities of Oregon and Toledo, and finally a complaint Appealed against Cleveland In April. Institute officials previously advised Law360 that the case is likely to be considered by the state’s Supreme Court.
The order was submitted to the House of Representatives on the same day passed an invoice Prevent cities from imposing income taxes on remote workers by 2021.
Jay Carson, a senior litigator at the institute, told Law360 in an email that due process is fundamental to any tax power and that the state cannot legislate. The rulings of the state Supreme Court make it clear that due process limits local tax on non-residents to work done in the city, he added.
“The Ohio Constitution allows the General Assembly to” limit “local taxes, but does not contain any provision that would allow the GA to extend the tax jurisdiction of a city, which is the local authority of the municipality, and thus to the boundaries of the municipality is limited, “said Carson.
Kilgore’s attorney declined to comment.
Yost’s office did not immediately respond to requests for comment on Thursday.
The Buckeye Institute and its staff are represented by Jay Carson von Wegman Hessler and the institute’s own Robert Alt.
Columbus Auditor Megan Kilgore is represented by Diane Menashe, Daniel Anderson and Mark J. Richards of Ice Miller LLP.
Attorney General Dave Yost is represented by Julie Pfeiffer, Allison Daniel, and Zachary Holscher of the Ohio Attorney General.
The case is the Buckeye Institute et al. v. Megan Kilgore et al., Case Number 21-AP-000193, Ohio Court of Appeals, 10th Appeal District.
– Additional coverage from Paul Williams and Daniel Tay. Arrangement by Vincent Sherry.
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