For businesses operating in Ohio, keeping up with payroll taxes can be a little complicated. In addition to state taxes, most Ohio companies are also required to file and pay taxes based on municipality, township, or school district, as well as to any overlapping district or zone. This is because local governments in Ohio have the option to coordinate with each other to allow one district to extend its services to another, without the need to annex or incorporate.
This sharing of territory and services can be coordinated in one of two ways:
- Joint Economic Development Districts (JEDD)
- Joint Economic Development Zones (JEDZ)
What we'll cover
- How does Joint Economic Development work?
- How do I know if my business is subject to JEDZ?
- How do I pay JEDD/JEDZ taxes?
How does Joint Economic Development work?
Every JEDD/JEDZ is a unique agreement between two local governments. It generally begins when a growing city or municipality has enough infrastructure, services, and utilities to accommodate further industrial development, but not enough developable land. If this is a city in Ohio, it may partner with a neighboring township that has an available parcel of land located within reach of the growing city's infrastructure. Rather than try to annex (or take over) this adjacent parcel of land, the city may offer to extend its infrastructure and services (water, power, and waste management, to name a few) into this territory, allowing it to be developed for industry. The neighboring town benefits from job growth, and the corporate taxes are shared between the two local governments.
Unlike reciprocities, which is more of a "kick-back" of taxes from one government to another, JEDDs and JEDZs only apply to entities operating within this specific parcel of land. For example, the Perrysburg/Toledo Joint Economic Development Zone is located within the Township of Perrysburg, in a small region west of I-75.
The land remains part of the Township of Perrysburg, and businesses operating within this JEDZ use services provided by the City of Toledo, so these businesses have tax responsibilities in both jurisdictions. The advantage of this is that the Township of Perrysburg benefits from this enhanced property value and job creation without having to expand its infrastructure, Toledo receives additional income tax revenue to fund the long-term maintenance of the developed zone, and businesses are able to thrive in an area that would otherwise have been unavailable. This is Joint Economic Development.
How do I know if my business is subject to JEDZ?
The best way to know if your business is located in a JEDD or JEDZ is to check The Finder, a service provided by the Ohio Department of Taxation that lets you enter your business address to see if JEDD or JEDZ taxes apply.
You may also see information regareding JEDD/JEDZ when registering your business with local municipalities where you plan to operate. To continue the above example, when registering with the City of Perrysburg Income Tax Division, you'll be asked if you'll be working within the Perrysburg/Toledo Joint Economic Development Zone (see highlighted sections below).
Note: This is just one example of the hundreds of Ohio townships, municipalities, and districts in which JEDD or JEDZ tax may apply. Business registration forms may not always include questions of the type in the above example. Always use The Finder provided by the Ohio Department of Taxation, or consult a tax expert in your area when determining your business entity's tax obligations.
How do I pay JEDD/JEDZ taxes?
JEDD and JEDZ taxes are generally filed and paid directly to the city or municipality providing the infrastructural services, typically on a monthly or quarterly schedule. Because every JEDD and JEDZ partnership is unique, there's no universal standard that applies to them all when it comes to making these tax payments. This generally restricts the ability of payroll service providers like OnPay to make these payments for you in an automated way.
Most Ohio local tax offices, like the Columbus Revenue Information Service Portal (or CRISP) provide a web portal to help you identify your tax obligations, and even file and pay online. The best place to start is by consulting The Finder.
OnPay does not file or pay JEDD/JEDZ taxes at this time.
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