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Athens auditor requests another $200,000 to pay record income tax refunds

By: David Forster
Posted on: Tuesday, April 26, 2022

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ATHENS, Ohio (WOUB) — The Athens city auditor asked council Monday night for another $200,000 to cover local income tax refunds. This brings the total set aside for refunds this year to $750,000, about half a million dollars more than normal.

The reason for all the extra refunds is so many people working remotely last year because of the pandemic.

Not all cities in Ohio have local income taxes, but Athens does. Under state law, local income taxes are withheld from an employee’s paycheck if the person lives in or works in a community that has a tax.

So, under normal circumstances, if someone is employed by an employer in Athens but is working from home outside the city limits, they do not pay local income taxes.

But 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.

Athens Auditor Kathy Hecht started the year with $350,000 set aside for refunds, $100,000 more than the typical amount in anticipation of paying extra. Several weeks ago, she had to ask the City Council for another $200,000, and now that’s almost gone.

Hecht said she hopes the additional $200,000 she requested Monday will be enough to cover all the refunds still to come.

About 75 percent of the refunds processed so far have been from people who worked remotely last year. Most of those people work for Ohio University, the region’s largest employer.

A big question for the city is how many of these employees at the university and other employers in town will continue to work remotely outside the city. Officials wonder how this will impact revenues from future income tax collections.

Those revenues go into the city’s general fund, which pays for police and fire protection, the court system, code enforcement and other services.

Hecht said she doesn’t know how many people plan to continue remote work outside of city limits. WOUB reached out to Ohio University to find out how many employees are still working remotely but has not yet received a response.

In an effort to collect as much local tax revenue as possible and help offset the refunds, the City Council is considering a tax amnesty in June. This would allow people who owe local income taxes but haven’t paid them to get caught up without facing any penalties.

The council is also looking at contracting with an outside service to pursue delinquent taxpayers and try to get them to pay up.