If you recently moved to Ohio, you may have heard a neighbor lament about the “RITA Tax.” But what is the “RITA Tax?” You may be surprised to learn that the “RITA Tax” does not exist. RITA, simply put, is a method that some Ohio municipalities use to collect taxes. RITA has no authority to levy taxes, and is not responsible for the rates that a municipality set.
Cities and villages in Ohio have the option to use RITA to collect municipal tax. About one half of the municipalities in Ohio that have a tax utilize RITA. Some RITA municipalities include Maineville, Loveland and Waynesville. However, municipalities are not required to use RITA. Those communities collect their own taxes, and generally have their own tax office. Communities with their own tax office include Mason, Lebanon and South Lebanon.
RITA does have some advantages for the taxpayer. Their website (ritaohio.com) is robust and informative. They provide a mechanism for taxpayers to file and pay online through FastFile. Taxpayers can pay with a credit card, but will incur a 2.75% third party service fee. Many professional tax software programs also allow taxpayers to file their returns electronically through RITA. Taxpayers who pay with a check or by bank withdrawal will not incur a service charge.
So what are the disadvantages of living in a RITA municipality (other than having to pay municipal income tax)? RITA charges municipalities a service charge for the taxes they collect. These charges reduce the local municipalities revenue. Also, RITA is located in Brecksville, Ohio, between Cleveland and Akron. While RITA employees are generally proficient and competent, local taxpayers may find the service distant and impersonal.By contrast, locally administered taxing agencies tend to be more attuned and responsive to taxpayer’s needs. In fact, some local municipalities have employees who will sit down with the taxpayer and prepare their municipal tax forms free of charge.
Regardless of whether you live in a RITA municipality, do not overlook the possibility that you will have to file a municipal income tax return by April 15th. If you receive a letter from RITA or your local municipality, do not ignore it. A trained tax professional can help you navigate the complicated rules of municipal income tax, save you time, and in many cases – money.
The author, Bryan Corcoran, Esq, is a retired Marine Judge Advocate. He earned his J.D. and Masters in Taxation from the University of Akron in 1997. He is currently a Tax Analysts for Heritage Income Tax. The views expressed in this paper are his own, and are not intended as a substitute for professional tax planning or legal advice.
Due to the fees, some municipalities find it more cost efficient to administer their own taxing program.
A review of RITA on the Better Business Bureau’s website indicates a one-star rating from nearly every (unhappy) taxpayer. https://www.bbb.org/us/oh/cleveland/profile/tax-return-preparation/regional-income-tax-agency-0312-20000298/customer-reviews