Crain’s Cleveland Business: TAX TANGLE: Businesses should brace for the possibility of withholdings that follow employees to their homes
Originally published on January 11, 2021
Small businesses may have one more COVID-fueled operational headache coming their way.
Ohio employees currently are regarded as working from their employer’s principal place of business for tax purposes, even if they are really working from home.
That’s thanks to House Bill 197 passed in March. Among a number of pandemic emergency measures, the bill temporarily suspends the state’s “20-day rule,” which requires employers to begin withholding tax for a municipality when an employee has been working in that municipality for more than 20 days.
The rule’s suspension was intended to be a “convenience to employers,” according to Richard Fry, Akron partner in charge and taxation group practice leader at Buckingham, Doolittle & Burroughs. “In effect, Ohio businesses were permitted to withhold the same local income tax rate they had been with- holding before the pandemic forced so many employees to work from home, rather than having to withhold different rates depending on everybody’s residence,” Fry said.