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

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

By: David Forster

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ATHENS, Ohio (WOUB) — The Athens City Auditor asked the council on Monday evening for an additional $200,000 to cover local income tax refunds. That brings the total set aside for refunds this year to $750,000, about half a million dollars more than normal.

Athens City Hall is seen in Athens, Ohio on Tuesday, June 22, 2021. [Joseph Scheller | WOUB]

The reason for all the extra refunds is that so many people worked 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 pay if the person lives or works in a community that has a tax.

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

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

Employers continued to do so last year as the pandemic dragged on.

But the budget bill passed by the Legislature in September included a provision allowing employees to seek reimbursement of council taxes paid in 2021 for any time they did not live or work in that community.

Athens auditor Kathy Hecht started the year with $350,000 set aside for reimbursements, $100,000 more than the usual amount in anticipation of the extra payment. Several weeks ago, she had to ask the city council for another $200,000, and now it’s almost over.

Athens City Auditor Kathy Hecht poses for a portrait
Kathy Hecht, Athens City Auditor [City of Athens, Ohio]

Hecht said she hopes the additional $200,000 she requested on Monday will be enough to cover all future repayments.

About 75% of refunds processed so far are from people who worked remotely in the past year. Most of these people work for Ohio University, the region’s largest employer.

A big question for the city is how many of those university employees and other city employers will continue to work remotely out of town. Officials wonder how this will affect revenue from future income tax collections.

These 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 working remotely outside of the city limits. WOUB has contacted Ohio University to find out how many employees are still working remotely, but has not yet received a response.

In order to collect as much local tax revenue as possible and help offset refunds, the city council is considering a tax amnesty in June. This would allow people who owe local income tax but do not have paid them to catch up without incurring penalties.

The council is also considering contracting an outside service to pursue delinquent ratepayers and try to make them pay.

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