At the October 19 Council Finance Committee meeting, North Royalton Finance Director Eric Dean reported that the temporary COVID-related change that was announced earlier this year by the Regional Income Tax Agency (RITA), will be ending at the end of 2021.
Earlier this year, the Regional Income Tax Agency (RITA) announced the COVID-related changes, which would possibly involve those North Royalton residents who work outside the city. In 2020, when COVID-19 started, many employees started working from home. Those employees may be able to request a refund on the taxes withheld from the city where your employer is located. This scenario is the result of a lawsuit, filed by the Buckeye Institute against the City of Columbus and Ohio Attorney General Dave Yost in July, 2020 (Buckeye v. Kilgore). According to its website, The Buckeye Institute, “ is an independent research and educational institution—a think tank—whose mission is to advance free-market public policy in the states.” It was founded in 1989 and is located in Columbus, Ohio.
The Buckeye v. Kilgore suit asked to invalidate a state law that was approved by the Ohio legislature in March of 2020, that allowed taxes to be collected from the employer’s location during the pandemic, even though the work was performed either at the home of the employee, or elsewhere. The suit stated that it is illegal to tax in a location where the employee does not work or live. That suit was settled in favor of the client in April, 2021. Another lawsuit was filed in April 2021 by the Buckeye Institute against the City of Cleveland regarding the same type of scenario. (Morsy v. Dumas). That lawsuit is still pending.
Dean reported that the Regional Income Tax Agency reported 772 claims have been received as of June, worth $1.7 million in requests and refunds for tax year 2020 on income withheld that was paid to work cities, even though the employees were not working in those cities during COVID. These refunds were for all RITA cities, not just North Royalton. The claims will be held in escrow pending the lawsuit.
According to Dean, “Ohio House Bill 197 passed in July of 2021 allowed for employers to change an employee’s principal place of work and adjust withholdings for Municipal Income tax for those employees who are working from home due to COVID-19. This adjustment only applies to wages earned in 2021. If you are working from home due to the pandemic in 2021, you can now ask your employer to change municipal income tax withholdings to your resident city, where your wages are being earned.” He also noted that if you paid money to the city where the employer is located before making the change, you can claim that on your tax when you file for the 2021 tax year, as an adjustment. Overall, Dean stated that “it is up to the employee to file.”
Dean pointed out that only on the income earned in North Royalton, not the full income is in question. “It would be only that during the time worked in North Royalton,” he said. As an example, “a city of Cleveland worker would owe 2.5% income tax to Cleveland and a North Royalton income tax of .75%. Changing tax withholdings to North Royalton will result in a total Municipal tax bill of 2% to the City of North Royalton. (a 1.25% reduction).” He noted that “that savings potentially could be refunded, if the law suit is successful. If so, some could see a savings of up to $700, dependent upon the amount of income made and the difference in income tax rates between the two cities involved. “I think there’s a really good chance that they would get a refund,” said Dean. The resident can potentially benefit, as well as the City of North Royalton. For those residents who still wish to participate for the 2021 year, the refund paperwork is on form 10A posted on the RITA website, ritaohio.com. If the resident works in a non-RITA community, such as Cleveland, forms from their tax collection service will need to be completed.
RITA officials note that “a refund of the tax withheld for your pre-COVID-19 work municipality in 2020, while you worked from home or another location, may not be available until litigation over this issue is completed.” They went on to say that “should the conclusion of this litigation determine that a refund is allowed, your request for refund will be processed at that time. Should the conclusion of the litigation determine that a refund is not allowed, you will receive a notice that a refund is not available to you.”
Starting in 2022, Dean said that if a resident is working from home, their company has to automatically withhold at the resident city. “It is not an option,” he said, “if you work from home more than twenty days, they are required to withhold income tax to that area where you are earning the income.” He confirmed that this is twenty days per calendar year.
In summary:
For tax year 2020 – This is still pending litigation. A resident who qualifies can file a form, then when they file their 2021 return, can make changes.
For tax year 2021 – For residents who qualify, they should ask their employer to change the withholding status from the business location city to resident city. They can apply for their refund on their 2021 return.
For tax year 2022, all businesses must automatically change the withholding if the employee works more than 20 days at home. So, if a resident qualifies next year, they do not have to do anything for tax year 2022 and going forward.

By GLORIA PLEVA KACIK
Contributing Writer