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Kresevic v. Chittok |
For media inquiries, please contact:
Lisa Gates, Vice President of Communications
(614) 224-3255 or Lisa@BuckeyeInstitute.org
Background of the Case
Key Question in the Case: Can a city government collect municipal income tax on settlement payments that are based on wages that the taxpayer would have earned if the taxpayer had actually worked in the city?
Karen Kresevic, of Chagrin Fall, Ohio, was a physician assistant working at Akron City Hospital in 2020 during the pandemic. After filing a wrongful termination claim, she and her employer came to a settlement agreement, which the city of Akron taxed as if it were income and as if Ms. Kresevic had worked in Akron. In April 2022, Ms. Kresevic requested a refund on the municipal taxes withheld from the settlement payment, explaining that those payments were not for wages—let alone wages earned for work performed within the city of Akron. On July 11, 2022, the city of Akron—citing the Ohio General Assembly’s enactment of House Bill 197—denied her request for a refund stating that Akron deemed those payments were for work she performed within the city of Akron.
Although courts have allowed municipalities to impose income taxes on nonresidents’ income that was earned for work performed within the municipality’s limits, the rationale for doing so was that the workers were using city resources—police, fire, and other public services—when they were at work. Ohio law does not allow cities to take income taxes from workers based upon “let’s pretend” you performed work in a different city than you actually did, and it certainly does not allow income tax to be taken from monies that are not income.
Ohio’s Orwellian emergency-based local income tax system—where the state forced people to work from home but nonetheless deemed their work to have been performed in the higher-taxed office location—offends the basic principles of equity and violates the due process requirements of the United States and Ohio constitutions. The city of Akron’s actions go even further, seeking to tax income that might have been earned within the city if the taxpayer had not been wrongfully terminated.
Facts of the Case
Current Status
Kresevic v. Chittok is pending with the Summit County Court of Common Pleas.
Case Number
CV-2023-01-0031
Originally Filed
January 5, 2023
Original Court
Summit County Court of Common Pleas
Plaintiff
Karen Kresevic of Chagrin Fall, Ohio
Lawyers
Jay R. Carson, senior litigator, The Buckeye Institute
David C. Tryon, director of litigation, The Buckeye Institute
Claims in the Case
The Buckeye Institute is asking the court to refund Ms. Krezevic’s taxes based on the legal grounds that a city cannot tax nonresidents if the monies the employee receives are not for work performed in that city.
Timeline of the Case
January 5, 2023
The Buckeye Institute files Kresevic v. Chittok, calling for the court to declare unconstitutional an Ohio law allowing the city of Akron to tax income from workers who do not live in and were prohibited from working within the city’s jurisdiction during Ohio’s stay-at-home order.
