BY LISA DONOVAN
The Cincinnati Enquirer
This week, Cincinnati's elected leaders worked on making the city's tax system a little less, well, taxing.
City council approved a measure during Wednesday's weekly meeting that Councilman Phil Heimlich said will remedy the cumbersome process of obtaining city tax refunds.
This is particularly true for non-city residents who are anchored to a job in Cincinnati but travel outside the area on assignment. During those absences, suburbanite taxpayers are exempt from paying the city's 2.1 percent income tax. Because the tax is levied against the wages of those who work or live in the city, Cincinnati residents would still have to pay the tax.
Until this week, the job of proving when and where those travels took an employee normally rested with the employer, who had to verify the trips for the taxman. That meant every April 30 - the city's earnings income tax deadline - tax preparers often were scrambling for verification so their clients could apply for the refund.
"I just know I received complaints from people who were at their wit's end," Mr. Heimlich said.
After a number of people griped to him, Mr. Heimlich, along with council members Charles Winburn and Jeanette Cissell, proposed in 1996 to let the employees provide an inventory of their work-related travel.
Council voted 7-2 Wednesday in favor of that motion. Council members Tyrone Yates and Minette Cooper voted against the measure. "By rearranging our tax policy in this way, it opens this up to substantial misrepresentation and fraud," Mr. Yates told fellow council members before the vote on Wednesday.
During the same meeting, Mr. Heimlich added: "If there's one thing I have concluded . . . our tax department could be a little more user-friendly."
Of the 80,000 tax accounts the tax division tracks annually, about 100 complaints come in about out-of-town travel, primarily from employees who are asked for employer verification, said Francis Wagner of the city's finance department.
The tax brings in $225 million a year. The city's tax bureau has 60 employees and a $3.1 million budget.
The tax reforms council passed this week come eight months after Mayor Roxanne Qualls called for reform of the city's tax division and suggested curbing what she believed was overzealous enforcement in some cases.
One of the many complaints included a free-lance photographer ordered to pay six years of back taxes totaling $1.20.
Changes at the tax bureau have been in the works for more than a year. City Manager John Shirey reassigned the tax commissioner and a deputy tax commissioner to other duties after numerous employees complained of poor management and unfair treatment.
Mr. Shirey contracted with a retired IRS employee to run the division on a temporary basis. Joseph Ciaramitaro, who began working with the city in September 1997 and has since left, made a series of changes. Among his accomplishments were reducing the time it takes to process a refund and developing a plan to train employees in customer service.
This week, council passed a handful of tax reforms in addition to non-resident tax exemption:
Payments made after the city's April 30 income tax deadline will now be penalized at a rate of 10 percent annually instead of 18 percent.
The city also will now refund overpaid taxes within 90 days or pay a variable interest rate, currently between 9 percent and 10 percent annually. There was no penalty before.
