Lighthouse

Important Changes to Withholding Requirements

 

Pursuant to the passage of Amended Substitute House Bill 5 in December 2014, new State mandated municipal income tax guidelines have been established, effective with tax returns due for tax years beginning January 1, 2016 and thereafter.

  • Changes in filing due date for employee withholding.
  • ►  Withholding remittance and payment must be received no later than the 15th of the month following the reporting period.
  • Changes in penalty and interest rates.
  • ►  Late filing penalty is $25.00 per return (capped at $150/return).  The penalty is a one-time $500.00 for casino operatiors and lottery sales agents.
  • ►  Late payment penalty is a one-time 50% penalty of the unpaid balance at the time payment is due.
  • ►  Interest will be calculated at the July Federal short-term interest rate plus 5%.  For 2016 returns the monthly interest rate is 0.42%
  • Changes in monthly and quarterly withholding thresholds.
  • ►  Employers must remit MONTHLY if withholding in the previous calendar year exceeded $2,399.00 or if the amount required to be withheld during any month of the previous calendar quarter exceeded $200.00.
  • ►  Employers may remit QUARTERLY if their withholdings are under the thresholds described for monthly filers.
  • Withholding guidelines for employers with transient workers; and for those employers qualified as a "small employer".  
  • ORC 718.011 expands the current occasional entrant exemption from withholding from 12 days to 20 days.  Tax must be withheld for the employee's "principal place of work"(as defined in the Bill) for the first 20 days an employee works in another Ohio municipality ("non-principal place of work municipality").  Withholding is required for the "non-principal place of work municipality: beginning on the 21st day.  Exceptions to the new 20-day rule exist for certain construction and other long-term worksite locations.
  • Small employers (those with less than $500,000 in annual gross receipts as defined in the Bill) are only required to withhold for the municipality in which the employer is physically located.  The $500,000 gross receipts threshold is determined annually based on gross receipts reported on the immediatley preceding year's federal tax return.  the "small employer withholding rule" does not apply to any government entity or agency.
  • ►  Details at the link below to ORC chapter 718.  See Section 718.011.

Chapter 718 of the Ohio Revised Code can be found at: http://codes.ohio.gov/orc/718.   Please reference this document to determine how the new, State mandated, changes affect your business.

The Codified Ordinance will be updated soon.  For access to the approved Ordinance, please click here: cms/files/File/Ordinance 148-15 Chapter 192 Income Tax.pdf

 

***IMPORTANT: QUARTERLY EMPLOYER WITHHOLDING DUE DATES HAVE CHANGED, EFFECTIVE IMMEDIATELY***

City of Lorain income tax quarterly withholding due dates have changed as a result of Ohio Senate Bill 172. Effective with the third quarter 2016, the due dates for QUARTERLY filers is the last day of the month following the end of the quarter.

* April 30th
*July 31st
*October 31st
*January 31st