Haven't paid city taxes in a long time. What should we do?
April 7, 2015 8:03 AM Subscribe
My partner works in one Ohioan city but lives in another. For the past 20 years, his employer has been taking taxes out for his work city, but not his home city. My partner doesn't really think about taxes, so it never occurred to him that he would need to do something extra to pay his city taxes. Consequently, he hasn't paid any city taxes to his home city for 20 years.
I don't know what to do. I guess we should start paying the city taxes, but at this point I'm afraid to call attention to ourselves. I don't want them looking too closely at us and realizing that we owe 20 years of back taxes. If that were the case, we simply couldn't afford to pay them. We do pay the city taxes for where he works, and we pay property taxes for where we live, so maybe that's enough? Not paying hasn't caused any problems so far, so a part of me feels like "If it ain't broke, don't fix it," but I don't want to break the law or do anything that will cause even worse problems down the road. I know YANM Accountant, but do you have any advice?
I don't know what to do. I guess we should start paying the city taxes, but at this point I'm afraid to call attention to ourselves. I don't want them looking too closely at us and realizing that we owe 20 years of back taxes. If that were the case, we simply couldn't afford to pay them. We do pay the city taxes for where he works, and we pay property taxes for where we live, so maybe that's enough? Not paying hasn't caused any problems so far, so a part of me feels like "If it ain't broke, don't fix it," but I don't want to break the law or do anything that will cause even worse problems down the road. I know YANM Accountant, but do you have any advice?
No, property taxes aren't "enough," but if my experience is any guide he probably doesn't really owe anything like 20 years of back taxes. He's probably facing some amount of red tape and digging through his records to reconstruct what happned, which an accountant can help him with.
Are either or both cities members of RITA?
posted by jon1270 at 8:22 AM on April 7, 2015 [1 favorite]
Are either or both cities members of RITA?
posted by jon1270 at 8:22 AM on April 7, 2015 [1 favorite]
but at this point I'm afraid to call attention to ourselves
I can't answer for your particular city, but the IRS (state and federal) is generally very friendly and helpful to everyone actually trying to make good on their payments. Speak with an accountant, find out what your actual tax liability is, and then call your revenue board (or better, let your accountant do it) to make the steps to correct it. Don't be too worried about retribution; the government generally wants to make it a easy as possible for you to give them their money.
posted by phunniemee at 8:29 AM on April 7, 2015 [4 favorites]
I can't answer for your particular city, but the IRS (state and federal) is generally very friendly and helpful to everyone actually trying to make good on their payments. Speak with an accountant, find out what your actual tax liability is, and then call your revenue board (or better, let your accountant do it) to make the steps to correct it. Don't be too worried about retribution; the government generally wants to make it a easy as possible for you to give them their money.
posted by phunniemee at 8:29 AM on April 7, 2015 [4 favorites]
It's possible that your municipality has an agreement with his work town, so that you don't have to pay city taxes. Find out.
posted by chesty_a_arthur at 8:43 AM on April 7, 2015 [5 favorites]
posted by chesty_a_arthur at 8:43 AM on April 7, 2015 [5 favorites]
Seconding zennie--I work in Atlanta and live in a suburb and this has never been an issue.
posted by masquesoporfavor at 8:58 AM on April 7, 2015 [1 favorite]
posted by masquesoporfavor at 8:58 AM on April 7, 2015 [1 favorite]
I am an Ohio tax preparer, if not yours. There will at least be filing requirements in the city where you have residency, if that city is a taxing municipality, and late fees from that. But usually there's some degree of reciprocity: taxes paid for other cities count for at least PART of what you owe for your own city, although often it's only like 85%. (I may be off on the percentage. This is the sort of thing I don't calculate by hand anymore.) I don't know if timely filing impacts the reciprocity in any municipalities. You should probably speak to a CPA or an experienced tax preparer in your city of residence. Usually, you can work out a settlement or a payment plan with any given taxing authority if you genuinely can't afford to pay it all up front. They're more reasonable than people expect.
Ohio does not, like some states, do municipal tax filing consolidated at the state level. Each city has to be filed for separately. Some of them are members of groups (RITA and CCA) that make dealing with taxes between multiple member cities easier, but many are not. To make things even more fun, you can't tell what your taxing city is from just looking at the city on your mailing address; you may have an Akron address, for example, and not actually owe Akron tax. This is why it is a very, very good idea to have your taxes done by somebody else in Ohio, unfortunately. People mess this up a lot.
posted by Sequence at 9:18 AM on April 7, 2015 [7 favorites]
Ohio does not, like some states, do municipal tax filing consolidated at the state level. Each city has to be filed for separately. Some of them are members of groups (RITA and CCA) that make dealing with taxes between multiple member cities easier, but many are not. To make things even more fun, you can't tell what your taxing city is from just looking at the city on your mailing address; you may have an Akron address, for example, and not actually owe Akron tax. This is why it is a very, very good idea to have your taxes done by somebody else in Ohio, unfortunately. People mess this up a lot.
posted by Sequence at 9:18 AM on April 7, 2015 [7 favorites]
Oh, and the other special fun thing we have to deal with is that many (maybe most/all?) of the taxing cities have asserted the authority to tax not only residents but anybody who works there.
Which I guess just overall demonstrates why going to a professional is important: people can offer conjecture that seems totally logical, but the actual tax system does not necessarily run on logic.
posted by Sequence at 9:28 AM on April 7, 2015 [7 favorites]
Which I guess just overall demonstrates why going to a professional is important: people can offer conjecture that seems totally logical, but the actual tax system does not necessarily run on logic.
posted by Sequence at 9:28 AM on April 7, 2015 [7 favorites]
Best answer: I'm guessing it largely depends on which cities in Ohio, but I've had this experience living in Columbus and working in surrounding suburbs.
It doesn't work this way everywhere, I'm sure, so make sure you check your specific location. In Columbus, there is some sort of arrangement with the surrounding areas so that the tax you pay in the city where you work is applied to your Columbus tax for living there. The issue is when the city where you work doesn't have the same local tax rate. For example, my husband works in Dublin where the tax rate is 2.5%, and the rate in Columbus where we live is 3%, so we have to pay that .5% difference each year.
Like your husband, he had no idea about this at first (and neither did I) so we weren't paying his. The city will notice eventually, especially with budgets being cut. Two years ago we got a letter asking for several years of tax returns and W-2s, and we had to pay 5 years of back taxes. That must be some sort of maximum, because he's been working in that office for over 10 years. Coincidentally, it seemed like a lot of people in his office got a similar letter at about the same time, so we wonder if Columbus was just picking some of the larger employers in Dublin and getting them all at once.
posted by thejanna at 11:13 AM on April 7, 2015 [1 favorite]
It doesn't work this way everywhere, I'm sure, so make sure you check your specific location. In Columbus, there is some sort of arrangement with the surrounding areas so that the tax you pay in the city where you work is applied to your Columbus tax for living there. The issue is when the city where you work doesn't have the same local tax rate. For example, my husband works in Dublin where the tax rate is 2.5%, and the rate in Columbus where we live is 3%, so we have to pay that .5% difference each year.
Like your husband, he had no idea about this at first (and neither did I) so we weren't paying his. The city will notice eventually, especially with budgets being cut. Two years ago we got a letter asking for several years of tax returns and W-2s, and we had to pay 5 years of back taxes. That must be some sort of maximum, because he's been working in that office for over 10 years. Coincidentally, it seemed like a lot of people in his office got a similar letter at about the same time, so we wonder if Columbus was just picking some of the larger employers in Dublin and getting them all at once.
posted by thejanna at 11:13 AM on April 7, 2015 [1 favorite]
> I know YANM Accountant, but do you have any advice?
Find a YAM Accountant.
posted by megatherium at 7:16 PM on April 7, 2015
Find a YAM Accountant.
posted by megatherium at 7:16 PM on April 7, 2015
Response by poster: Actually, he lives in Columbus and works in Dublin, just like thejanna and her husband. Dublin is really aggressive about attracting new business, so I guess this arrangement is pretty common. Having to pay an extra .5% doesn't sound so very bad. I guess we'll just have to be proactive and call our city tax bureau. I'm going to consider this question resolved. Thanks!
posted by sam_harms at 3:16 AM on April 8, 2015
posted by sam_harms at 3:16 AM on April 8, 2015
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I think you may need a tax accountant to help you sort it.
posted by zennie at 8:18 AM on April 7, 2015 [4 favorites]