The Observation Deck

Here is the Ohio Revised Code revised in compliance with HB5:

http://codes.ohio.gov/orc/718

I was hoping for some tax help/insight but I'll slug thru tax code and help my daughter as best a father can. Regarding house bill 5 (HB5), when I discovered this tax code change I immediately emailed my council person and the at large council members as well as state representatives(kudos to those who responded to my weekend email, I was pleasantly shocked). It is very clear from responses that HB 5 had no 'specific' deletion. That is why a Google search still shows City of Brunswick with a college student exemption, my contact with City of Brunswick Chief Tax Clerk made it extra clear that HB 5 had no specific requirement to delete this exemption. Thank you to everyone for your input.

Robert

We have some CPA's that read and comment here. Hopefully, one will see this and join in.

Dan O'Malley

Mr Klann notes here that there ARE communities that still offer the exemption, so your explanation as to why Lakewood dropped it, unannounced, doesn't pass muster.

As Mr Liston noted, it's easy to sneak in an increase and blame another entity - the state. Yet I still see no part of the law that infringes on the locality allowing exemptions as they see fit.

Just as Lakewood did, municipalities updated their tax code to comply with HB5.

Here is Brunswick's:

http://www.brunswick.oh.us/wp-content/u ... 0-2016.pdf

From page 5 of that document:

For purposes of determining municipal taxable income for any taxable year beginning on or after January 1, 2016, an individual shall be exempt from City income tax to the extent that such individual satisfies each of the following: (1) is a dependent for federal income tax purposes of a resident; (2) is enrolled at a post-secondary institution of higher learning located outside the City and lives outside the City while enrolled at such an institution; and (3) earns or receives qualifying wages while living outside the City from an employer not located in the City. Any such individual that satisfies the requirements of the immediately preceding sentence is, however, subject to the annual City income tax return filing requirements set forth in Section 880.06.

The City of Lakewood removed that student exemption from its code when it updated the code to comply with HB5.

Brunswick chose to preserve that exemption and they are in compliance with HB5.

So Dan O'Malley, who told you the state required Lakewood to drop that exemption?

Dan O'Malley said:

Unfortunately the elimination of this exemption was mandated by the state of Ohio. A new Ohio law states that cities are no longer able to create such exemptions that aren't uniformly available in other Ohio municipalities. Since this was the case for the full-time student exemption, it was required to go.

This statement is apparently not correct. May I ask who gave you this information and what made you rely on the quality of that information?

Bridget Conant wrote:http://onelakewood.com/pdf/Tax/05Instr%20-%20L1.pdf

6. Full-time college student – Residents of Lakewood who attend an accredited college or university on a full-time basis and do not reside within the city more than 16 consecutive weeks during the year are exempt from paying Lakewood residence tax. Attach proof such as report cards or billing statements for all semesters/quarters of the taxable year.

What was the process that resulted in this being removed from the list of exemptions? Was there a vote by council? Was it discussed in a council meeting?

Here is Lakewood's new tax ordinance passed by council and it includes the old version and the new. It was passed by Council as an emergency measure to comply with HB5

http://www.onelakewood.com/wp-content/u ... 1-2015.pdf

Funny thing, under exemptions, neither version mentions students not living at home more than 16 weeks per year. However, the actual list of exemptions INCREASED due to HB5, and more forms of income are now exempt from taxation.

Hoping Dan O'Malley can respond!

Bridget Conant wrote:Dan O'Malley said:

Unfortunately the elimination of this exemption was mandated by the state of Ohio. A new Ohio law states that cities are no longer able to create such exemptions that aren't uniformly available in other Ohio municipalities. Since this was the case for the full-time student exemption, it was required to go.

This statement is apparently not correct. May I ask who gave you this information and what made you rely on the quality of that information?

Dan, Did Law Director Kevin Butler advise you to blame the state or was it the Finance Director Jen Pae?

I imagine our city government is trying to compensate for the devastating losses in income tax revenue any way they can... seems astronomical when you consider the most recent losses: Lakewood Hospital, New York Life, Hospice of the Western Reserve, Natures Bin...

Seems to me there is a bigger question:
Why didn't our civic leaders say anything about this change?
Regardless of how it came about, they had a duty to say something about it to the many families in Lakewood who are affected. Instead, as above, crickets.

That's the question every one who will pay higher taxes as a result needs to ask of the mayor and council.

Dan Alaimo wrote:Seems to me there is a bigger question:
Why didn't our civic leaders say anything about this change?
Regardless of how it came about, they had a duty to say something about it to the many families in Lakewood who are affected. Instead, as above, crickets.

That's the question every one who will pay higher taxes as a result needs to ask of the mayor and council.

The updated ordinance was passed in December 2015 to comply with HB5 and be in place for 2016. Filing in 2016 was for tax year 2015 so there was no change last year.

However, that did give Council an ENTIRE YEAR to alert taxpayers to any changes coming up for tax year 2016!

Is is that hard to let residents know that changes were made? They said the estimated payment schedule changed but never said exemptions were eliminated.

They could have used the water bill to notify everybody.

If little Brunswick could ensure maintaining their exemption for college students - Lakewood could and should amend Lakewood's new ordinance.

Just like the hospital ordinance - Council passed it without reading or understanding the tax ordinance. All 86 pages of it.

Marguerite Harkness wrote:

Just like the hospital ordinance - Council passed it without reading or understanding the tax ordinance. All 86 pages of it.

I fear this is exactly what happened. You hand a busy councilperson an 86 page document, tell them it has to be approved quickly (by end of year and it's already December,) and have your tax department assure you it is fine and necessary to meet state requirements, and I bet they never bothered to read it through.

IMO, That's what happened with the hospital debacle. The information was overwhelming, complex, and took some smarts to understand. It's far easier to have the mayor and law director assure you it's all OK and just approve it without digging through.

I wonder if Dan O'Malley asked about the change, was told it was the state, and he assumed whoever told him knew what they were talking about.

In Lakewood, you can't do that. You cannot rely on "officials" to tell the truth.

Just a note, I have heard back from a couple of people at city hall today, in response to questions; I hope to speak with one or two more sources by day's end.

I'm preparing an article for next week's LO, although perhaps I can post what I learn here, sooner, given the keen interest.