College Students Lose Exemption From City Income Tax

Lakewood students away at college must file city income tax returns, this year, as a result of new policies adopted in late 2015.

Prior to the revised policies, students living in Lakewood for less than 16 weeks of the year could simply file a Declaration of Exemption. Beginning with the 2016 tax year, however, this changed, and the city’s new Declaration of Exemption omits the line for students.

Lakewood’s government points to state legislation as the reason behind this change. The 2014 HB5 measure imposed a number of changes on municipal income tax. Finance Director Jennifer Pae says that Lakewood considered at length what local revisions this required.

“In response to the uniformity changes at the State level, the City of Lakewood reviewed its income tax ordinances during 2015, and using recommended language developed by the Ohio Municipal League, revised the city's ordinances… to be in compliance,” Pae said in an e-mail.

Lakewood’s assistant finance director and income tax department manager, Patricia Chittock, advised that keeping a student exemption to the city’s definition of “resident” would now conflict with provisions of Ohio Revised Code Chapter 718.

“By exempting students as residents, we are in essence making them residents of their college towns,” Chittock wrote, but “Ohio colleges and universities do not consider college students residents.” Remaining compliant with state domicile provisions, she reported, meant losing Lakewood’s student exemption.

Among the city’s decisions was that Lakewood’s old definition of “resident,” with its exemption for college students, didn’t conform to the new law. The revised definition omits the student exemption, and Lakewood’s Declaration of Exemption options reflect this change.

The City of Brunswick has kept a similar exemption to its income tax policies, however, and some Lakewood residents have asked why our city acted otherwise.

The language of Ohio’s Revised Code Chapter 718, as updated by HB5, may offer only limited guidance. It does not include the words “student,” or “college.” The definition of “resident” is simply “an individual who is domiciled in the municipal corporation as determined under section 718.012.” That section, in turn, essentially uses “domiciled” status to define itself: “An individual is presumed to be domiciled in a municipal corporation for all or part of a taxable year if the individual was domiciled in the municipal corporation on the last day of the immediately preceding taxable year…”

The Ohio Municipal League and other officials have said they will look further into what HB5 does or does not require, on this topic.

In the meantime, Lakewood’s public information officer Colin McEwen says the city only drew its conclusions reluctantly, after fighting at length to protect local “home rule” powers from HB5. In 2014, Lakewood and a number of other cities formed Ohio Municipal Advocates to lobby against the bill. More than 100 cities, including Lakewood and Brunswick, passed resolutions opposing HB5.

When a mostly Republican majority of lawmakers approved HB5 anyway—against opposition including Lakewood’s state representative and senator—City Council delayed revising Lakewood’s tax policy until near the law’s deadline. Though all seven council members voted for Ordinance 31-15, its text declared the city reluctant to comply, and disclaimed any provisions that may fail a future legal challenge.

Council approved that ordinance at the same December 21, 2015 meeting as it voted to close Lakewood Hospital, and some Lakewoodites say the city should have done more to alert them, in the year since then. For now, local college students who plan on filling out a Declaration of Exemption will discover that the revised form has no line for them to circle.

Lakewood income tax filings for 2016 are due April 18.

Matt Kuhns

Matt Kuhns is a freelance graphic designer, and occasional author.

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Volume 13, Issue 6, Posted 8:14 PM, 03.21.2017