Substitute House Bill 5 Summary

• Comprehensively revises Ohio's municipal income tax laws effective January 1, 2016, establishing new definitions, apportionment rules, and administration procedures in Chapter 718 of the Revised Code.

• Defines "municipal taxable income" based on income type and residency status; allows nonresidents to deduct only work-related business expenses; permits residents of qualified municipal corporations to use Ohio adjusted gross income as their tax base.

• Establishes withholding requirements based on principal place of work and 20-day threshold; creates exemptions for small employers and allows alternative apportionment methods when standard formulas don't fairly represent business activity.

• Creates local boards of tax review (replacing boards of appeal) with three members to hear taxpayer appeals; specifies procedures for assessments, refunds, and appeals to the Ohio Board of Tax Appeals within defined time limits.

• Standardizes penalties (15% for unpaid income tax, 50% for unpaid withholding tax, $25 per month for late returns up to $150) and interest rates; allows tax administrators to compromise claims and requires specific taxpayer rights notifications during audits.