Columbus, OH – On Monday, The Buckeye Institute filed its merit brief in Schaad v. Alder outlining why Ohio’s emergency-based local income tax system is unconstitutional. This case, pending before the Ohio Supreme Court, is one of five similar legal cases Buckeye has brought challenging Ohio’s municipal income tax system since the pandemic.

The other four cases are Buckeye v. Kilgore, Curcio v. Hufford, Morsy v. Dumas, and Denison v. Kilgore.

“Time and again, the Ohio Supreme Court has held that cities can tax nonresidents only on work that is performed in the city,” said Robert Alt, President and Chief Executive Officer of The Buckeye Institute, who is Counsel of Record for Mr. Schaad in the case. “In Schaad v. Alder, the Ohio Supreme Court has the opportunity to apply and uphold its prior decisions and reaffirm the commonsense and constitutionally-recognized limitations on local governments’ power to tax nonresidents.”

The Ohio Chamber of Commerce, National Federation of Independent Business, Ohio Society of Certified Public Accountants, and several other groups filed amicus briefs supporting Buckeye’s position and calling on the Ohio Supreme Court to affirm that local taxation of nonresidents’ compensation “must be based on the location of the taxpayer when the services were performed” as the Ohio Supreme Court previously ruled in Hillenmeyer v. Cleveland.

• Ohio Chamber of Commerce (filed August 15, 2022)
• National Federation of Independent Business, Ohio Society of Certified Public Accountants, North Central Ohio Chapter of the National Electrical Contractors Association, Greater Cleveland Chapter of the National Electrical Contractors Association, and the Manufacturing Policy Alliance (filed August 10, 2022)
• National Taxpayers Union Foundation (filed August 15, 2022)
• Independent Women’s Law Center (filed August 15, 2022)
• The City of Lebanon (filed July 25, 2022)

Even before the pandemic, Buckeye’s plaintiff Josh Schaad of Blue Ash, Ohio, worked offsite multiple days per week for his employer and—in years past—requested and received proportional refunds for the work he performed outside of Cincinnati. When the Ohio General Assembly passed House Bill 197 in 2020—which deemed all work performed elsewhere because of the health emergency to have been performed at the employee’s principal place of work for income tax purposes—Mr. Schaad’s Cincinnati municipal income tax bill increased even though he spent even less time at his primary office location in Cincinnati than he had in the prior year.

Steve Stivers, President and Chief Executive Officer, Ohio Chamber of Commerce:
“When Ohio’s stay-at-home order was issued, businesses across the state were faced with the enormous task of changing the tax withholdings of, in some cases, thousands of employees, based on where employees lived. What the Chamber envisioned as a simple question of tax withholding, unfortunately, increased the taxes for countless number of Ohioans as cities refused to refund income taxes—as they always had—for people working from home. This violation of Ohioans’ constitutional right of due process must be corrected.”

Roger Geiger, Ohio Executive Director, National Federation of Independent Business:
“Throughout the pandemic, Ohio’s small business owners and their employees responded to every request their government made of them, but by refusing the refund income taxes to people who were forced to work from home during the pandemic, Ohio’s cities have taken advantage of the millions of Ohioans who normally commute to a different city for work. Most of those workers that were working remotely may have never set foot in the cities that are now refusing to refund their tax dollars. If the Ohio Supreme Court does not act to protect taxpayers, there would be little stopping a future legislature from allowing cities to tax outside of their jurisdictions—and that would be particularly harmful for small businesses and the many Ohioans who work for them.”

Scott D. Wiley, President and Chief Executive Officer, The Ohio Society of CPAs:
“For years, members of the Ohio Society of CPAs have wrestled on behalf of their clients with Ohio’s complex and confusing municipal income tax. They have seen the toll it takes on countless small businesses and the pandemic made a complex tax system even worse. OSCPA has continued to clarify the legal differences between withholding and taxability, culminating in the legislature permitting 2021 refunds. We are hopeful the Ohio Supreme Court will also allow the 2020 refunds.”

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