Income Tax Division
Municipal Tax Law Changes Affect All Employers
The State of Ohio made significant changes to the Ohio municipal income tax laws (Chapter 718 of the Ohio Revised Code) which went into effect on January 1, 2016. Whether you are filing an individual income tax return, business tax return or withholding tax return, please be sure to read the General Information and Instruction sheets that accompany the return you are filing to find out how these changes will affect you
Tax Rate and Interest Rate:
Current Tax Rate: 2.25%
2017 Interest Rate: 6%
2018 Interest Rate: 6%
Monthly: Taxes required to be deducted and withheld shall be remitted monthly to the Tax Division, if the total taxes deducted and withheld or required to be deducted and withheld by the employer, agent, or Other Payer on behalf of the City of Kettering in the preceding calendar year exceeded $2,399.00, or if the total amount of taxes deducted and withheld or required to be deducted and withheld on behalf of the City of Kettering in any month of the preceding calendar quarter exceeded two hundred dollars. Payment shall be made so that the payment is received by the Tax Division not later than fifteen days after the last day of each month.
Quarterly: Any employer, agent of an employer, or Other Payer not exceeding the thresholds stated above shall make quarterly payments to the Tax Division not later than the last day of the month following the end of each calendar quarter.
Monthly Filers: Monthly withholding payments shall be due on or before the 15th day of the month following the end of the withholding period.
Quarterly Filers: Quarterly withholding payments shall be due on or before the last day of the month following the end of the withholding period (April 30, July 31, October 31 and January 31)
Annual Withholding Reconciliation: On or before the last day of February of each year, an employer or other payer shall file an Annual Withholding Reconciliation (Form KW-3) including all corresponding Form(s) W-2 with the Income Tax Division. For more information on filing your Annual Withholding Reconciliation.
Penalties and Interest:
Non-Filing Penalty: A penalty of $25.00 per month (or fraction thereof) shall be imposed for the failure to timely file a city withholding return, (including Annual Withholding Reconciliation) regardless of liability shown. The penalty shall not exceed $150.00 for each failure to timely file a withholding return.
Penalty: A penalty shall be imposed for the failure to timely pay withholding tax and shall be equal to 50% of the unpaid withholding tax.
Interest: Interest shall be imposed for the failure to timely pay withholding tax. The rate is adjusted annually and is based on the federal short term rate, rounded to the nearest whole number percent, plus 5%. The imposition of interest shall be assessed per month or fraction thereof.
Remittance of Tax Withheld:
An employer, agent of an employer or Other Payer is required to make payment by electronic funds transfer to the Tax Division of all taxes deducted and withheld on behalf of the employee for remittance to the City of Kettering if the employer, agent of an employer, or Other Payer is required to make payments electronically for the purpose of paying federal taxes withheld on payments to employees under section 6302 of the Internal Revenue Code, 26 C.F.R. 31.6302-1, or any other federal statute or regulation.
Currently there are three options available by which an employer can electronically remit payment of tax withheld.
• The Webfile Program (ACH Debit) allows an employer to log onto our secure website and initiate a request for an ACH Debit (electronic check) from their bank account to remit payment of employee withholding taxes to the City of Kettering.
• The ACH Credit Program is designed for larger employers to remit payment of employee withholding tax by working directly with their financial institution to initiate a request for an ACH Credit payment from their bank account to be remitted to the City of Kettering. Registration for this program is required. To obtain a copy of the ACH Credit Authorization Form. Upon receipt of the completed form, the Tax Division will provide you with the necessary banking and addenda record information you will need to finalize the process.
• The Ohio Business Gateway provides a vehicle for employers already using the services of the Ohio Business Gateway (OBG) to choose to remit payment of municipal tax withheld. Additional information about the OBG may be obtained by visiting their website at www.business.ohio.gov.
This information is intended to provide a brief summary of filing requirements and does not cover all possible circumstances.
If you have any questions or need additional information, you may contact the Tax Division at (937) 296-2502 weekdays from 8:00 a.m. to 5:00 p.m.