Athens City Council considers options to boost income tax collections

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ATHENS, Ohio (WOUB) — The city of Athens is considering offering a tax amnesty to residents who have not paid their local income taxes in past years. City leaders are looking to collect all the income taxes they can to help offset the record amount the city is paying out this year in refunds.

Athens City Hall is seen in Athens, Ohio, on Tuesday, June 22, 2021. [Joseph Scheller | WOUB]
Athens City Hall is seen in Athens, Ohio, on Tuesday, June 22, 2021. [Joseph Scheller | WOUB]
If approved by the City Council, the amnesty would apply in June. Delinquent taxpayers could catch up without paying any interest or penalties during that month.

The council is also considering hiring the city of Cleveland to pursue delinquent taxpayers starting in July, after the amnesty ends. Cleveland’s tax department has a side operation in which it contracts with other cities to collect their local taxes.

Both proposals received their first reading at Monday night’s City Council meeting and require two more readings before the council can vote on them.

Not all cities in Ohio have local income taxes, but Athens does. The rate is 1.85 percent and the city is trying to raise that to 1.95 percent through a measure on the ballot in the May 3 primary election. The additional one-tenth percent would be used primarily for construction of a new fire department. 

Athens Auditor Kathy Hecht told the council she believes many residents are not deliberately choosing to not pay their local taxes but are simply unaware the tax exists.

Under state law, local income taxes are withheld from an employee’s paycheck only if the person lives in or works in a community that has a tax.

When the onset of the pandemic two years ago sent so many people home to work, the state adopted an emergency measure that allowed employers to continue withholding local income taxes based on the location of the employer, not where the employee was actually working.

Employers continued doing this last year as the pandemic dragged on.

But included in the budget bill the Legislature passed in September was a provision allowing employees to seek a refund of local taxes paid in 2021 for any period they were not living or working in that community.

Hecht’s office started off with $350,000 to pay refunds, an amount already larger than usual, and then had to ask the council for $200,000 more. And even this might not be enough, she told council members on Monday.

Hecht also cautioned that the city may have to adjust to lower income tax revenue, which is used to pay for police and fire service, the courts, code enforcement and many other public services.

“A lot of people are going to continue to work from home,” she said. “It’s not like COVID is over and all of a sudden everybody’s going to come back into the city to work. So most of this revenue loss moving forward will probably be permanent.”