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Municipal Net Profit - Taxpayers
Municipal Net Profit - Taxpayers

Municipal net profit taxes have historically been administered by each municipal corporation that imposes a tax, or a third-party administrator working on behalf of the municipal corporation.  If a business operates in multiple municipal corporations, the business would have to file a tax return for each municipal corporation in which it does business.  Am. Sub. H.B. 49 (the budget bill) of the General Assembly’s 132nd Session provided for a state-administered alternative to such filing.  Under the changes made by the budget bill, a business may elect to have the Ohio Department of Taxation (the Department) administer the business’ municipal net profit tax—meaning the business may choose to file a single return with the Department that covers the business’ total tax liability to all municipal corporations.
Businesses that opt-in to have the municipal net profit tax administered by the Department will file declarations, make payments, and file tax returns with the Department through a state-administered option on the Gateway.  The declarations and returns will include all municipal corporations in which the business is subject to tax and the corresponding payments for the combined tax liabilities will be made to the Department. The Department will distribute tax collections to the municipal corporations thereby eliminating the need for a taxpayer to make individual payments to each municipal corporation in which it is subject to tax.   The Department will also handle all other aspects of tax administration for those businesses opting-in—including billing, assessment, collections, audit, and the appeals process.

By Internet: tax.ohio.gov, then under Contact menu, click on Email Contacts to e-mail your question.
By telephone: 1-844-238-0403
By fax: 1-206-666-4462
By mail: P.O. Box 16158 Columbus, Ohio 43216-6158

Businesses, other than sole proprietors and disregarded entities, may opt-in.  A disregarded entity is a single-member limited liability company, a qualifying subchapter S subsidiary, or another entity if the company, subsidiary, or entity is a disregarded entity for federal income tax purposes.
Taxpayers may opt-in for taxable years beginning on or after January 1, 2018.
Taxpayers must register with the Department and notify each municipal corporation in which the taxpayer conducted business during the previous taxable year of its election to opt-in with the Department.  The taxpayer must register and provide such notification by the first day of the third month of the taxpayer’s taxable year. (e.g., March 1 for calendar year filers).  New businesses need only register with the Department.
Electronic registration is available online through the Gateway.
Upon completion of a registration through the Gateway, taxpayers will immediately receive an account registration confirmation and their account number. Taxpayers will also receive a registration confirmation letter in the mail approximately 14 days after registering.
Registration is free.
You must have a FEIN to register for the municipal net profit tax.  If you do not have a FEIN, please contact the Business Tax Division at 1-844-238-0403.

You must provide written notification that you have registered with the Department to each municipal corporation in which you conducted business during the previous taxable year. The Department prescribed forms MNP MN, Municipal Net Profit Tax Municipality Notification, and MNP MN, Municipal Net Profit Tax Municipality Notification for Tax Preparers, that should be used to comply with this requirement. The forms are available here.

Alternatively, taxpayers may provide either copies of the registration filed with the Department or the registration confirmation letter the taxpayer received from the Department.

Any of these notification methodologies satisfies the statutory requirements to notify a municipality of a taxpayer’s intention to file with the Department.

Click here for address information for municipalities

The election to opt-in is binding for one tax year at a time.  However, the election will automatically renew unless the taxpayer notifies the Department that it is terminating the election.  The taxpayer must terminate the election by the first day of the third month of the taxpayer’s taxable year.
No.  If you register with the Department for the municipal net profit tax, the registration applies to all municipal corporations in which you are subject to the municipal net profit tax.  Only one return will be filed, with the Department, for all municipal corporations and all payments will be made to the Department.

You may enter the full address of each business location in The Finder on tax.ohio.gov or contact the Business Tax Division at 1-844-238-0403.

Payments of estimated taxes (the amount a taxpayer reasonably estimates to be the total amount of its tax liabilities to all municipal corporations for the taxable year) for the current taxable year are due as follows:
  1. 22.5% must be paid by the fifteenth day of the fourth month of their taxable year.
  2. 45% must be paid by the fifteenth day of the sixth month of their taxable year.
  3. 67.5% percent must be paid by the fifteenth day of the ninth month of their taxable year.
  4. 90% must be paid by the fifteenth day of the twelfth month of their taxable year.

If the due date falls on a weekend or holiday, the report or payment is due the next business day.

Month of FY End First Quarter / Annual Return Second Quarter Third Quarter Fourth Quarter
December April 15 June 15 September 15 December 15
January May 15 July 15 October 15 January 15
February June 15 August 15 November 15 February 15
March July 15 September 15 December 15 March 15
April August 15 October 15 January 15 April 15
May September 15 November 15 February 15 May 15
June October 15 December 15 March 15 June 15
July November 15 January 15 April 15 July 15
August December 15 February 15 May 15 August 15
September January 15 March 15 June 15 September 15
October February 15 April 15 July 15 October 15
November March 15 May 15 August 15 November 15
Taxpayers with a short taxable year must pay 90% of their combined tax liability by the fifteenth day of the twelfth month of their taxable year.
A business is required to make estimated payments if the estimated combined tax liability for the year is $200 or more.
You should remit with your tax return any amount of tax shown to be due on the return less the amount of estimated taxes already paid for the year.  If the total amount of tax shown on the return is ten dollars or less, no payment is required.  Note that a registered taxpayer must file a tax return even if no payment is required.
Electronic Filing – Municipal net profit taxpayers are required to file each annual tax return and declaration of estimated taxes electronically through the Gateway at gateway.ohio.gov.  Declarations may be filed on the Gateway beginning in February of 2018.  Tax returns may be filed on the Gateway beginning in 2019.

Electronic Payment – Municipal net profit taxpayers are required to remit each tax payment electronically either by ACH debit through the Gateway or by electronic funds transfer (EFT) through the Ohio Treasurer of State at tos.ohio.gov. Payments may be made beginning in February of 2018.

The tax return must be filed electronically via the Gateway by the 15th day of the fourth month after the end of the taxpayer’s taxable year.  If the due date falls on a weekend or holiday, the report or payment is due the next business day.

Month of FY End

Annual Return

December April 15
January May 15
February June 15
March July 15
April August 15
May September 15
June October 15
July November 15
August December 15
September January 15
October February 15
November March 15
A taxpayer may request a 6-month extension of time to file. The extension request will be granted if it is received by the commissioner on or before the due date of the annual return or if the taxpayer has requested an extension for filing the federal income tax return. Please note, this is an extension of time to file not an extension of time to pay.

 

Yes, a taxpayer that is a member of an affiliated group of corporations may elect to file a consolidated tax return for a taxable year if at least one member of the affiliated group filed a consolidated federal income tax return for that taxable year.  An election to file a consolidated tax return is binding for a period of five years unless a change in reporting is required under federal law.  The election is binding for each subsequent five-year period unless the taxpayer elects to discontinue filing a consolidated tax return on or before the 15th day of the 4th month of the year following the last year of a five-year consolidated tax return election period.
Yes. The binding five-year period created by an election to file a consolidated return or an election to discontinue filing a consolidated tax return is binding on the Department whether the election was made with the municipal corporation or with the Department.  Any elections made with a municipal corporation carry over to the administration of the tax by the Department.
Yes.  The tax return filed with the Department will allow a taxpayer to file a consolidated return in one municipal corporation and on a separate basis in another municipal corporation.  If you wish to pursue this method of filing, please contact the Department at 1-844-238-0403 prior to registering.
A business that operates within more than one municipal corporation must apportion its net profit for tax purposes.  A three-factor apportionment formula based on a business’ property, payroll, and gross receipts is used to determine the portion of net profit attributable to a municipal corporation.
If the three-factor apportionment formula does not fairly represent the extent of your business activity in a municipal corporation, you may request, or the tax commissioner may require, that you use an alternative apportionment method involving separate accounting, the exclusion or inclusion of one or more factors, or a modification of one or more factors. You must request alternative apportionment in writing along with a tax return, timely-filed appeal of an assessment, or timely-filed amended tax return. In the event the Gateway is unable to accommodate your requested alternative apportionment formula, you must file a paper return along with a request detailing your chosen apportionment method and an explanation as to why your method more fairly represents the extent of your business activity in a municipal corporation. Please contact the Department at 1-844-238-0403 for more information.
If you have a formal or informal agreement regarding alternative apportionment with a municipal corporation, it is not binding on the tax commissioner.  You must request alternative apportionment with the filing of your tax return.  The tax commissioner will consider each request on a case-by-case basis.  If a municipal corporation has agreed to allow the alternative apportionment, that will be a significant factor considered in evaluating the request and documentation of such prior agreements should be provided with the request.
A JEDD is a joint economic development district and a JEDZ is a joint economic development zone. Both are considered “municipal corporations” for purposes of the municipal net profit tax. JEDDs and JEDZs are territorial areas created by contract between municipal corporations, townships, and counties to promote economic development.  These districts and zones often impose an income tax on individuals and businesses located within the JEDD or JEDZ, and share the revenue from the tax between the parties to the contract.  For those businesses registering with the tax commissioner, the net profit tax on businesses operating within a JEDD or JEDZ should be reported on the tax return along with all other municipal corporations in which the businesses are subject to tax.
If you change your taxable year, you must notify the Department of the change no later than the due date of the federal short period return. Failure to notify the Department may result in inaccurate billing notices or assessments.
If you are a new business subject to the municipal net profit tax for the first time, you need only register with the Department to opt-in for the municipal net profit tax—you do not need to notify any municipal corporations.
For any tax year for which you have registered with the Department, your municipal net profit tax will be handled by the Department for all municipal corporations in which you are subject to tax.  If you begin doing business in a new city, you should add that city on your next declaration of estimated taxes.

You may request a refund by filing an Application for Municipal Net Profit Tax Refund (form MNP-REF) within three years after the date of the payment of tax.  This form is available here.  If an overpayment is shown on an original tax return, it will be processed as a refund request and no additional form is required to be filed. However, if an overpayment is shown on an amended tax return, you must file an application for refund and provide supporting documentation. Note that the Department may only process and issue refunds for tax years for which you’ve opted-in with the Department and for payments made to the Department and may not process refund requests for payments made directly to a municipal corporation.

The balance of any credit carryforward you have with a municipal corporation will apply to your account with the Department and will be applied to reduce the tax liability for that municipal corporation.  A credit carryforward in one municipal corporation may not be used to offset a tax liability in a different municipal corporation. The credit carryforward will be tracked and carried forward to future taxable years until the balance is used.
If your estimated tax payment is late, interest will accrue on the amount of the underpayment for the period of the underpayment and will be added to the tax due. Note that if your estimated payment is late, the next payment made will be considered a payment of the overdue payment only to the extent the amount paid exceeds the amount due for the next quarter. Additionally, the tax commissioner may impose a penalty equal to fifteen percent of the amount not timely paid.
You are required by law to preserve your tax records for six years following the end of the taxable year to which the records relate.
An assessment is a notice of underpayment or nonpayment of tax.
Full payment is due within sixty days of receipt of the assessment. If a balance remains due sixty days after receipt of the assessment, and you have not filed an appeal, the Ohio Attorney General will begin collection proceedings. To ensure proper crediting, please include the payment stub provided with the assessment when submitting payment and include your tax identification number and assessment serial number on the check.
While you may informally contact the Department to request more information about an assessment, to protect your appeal rights you must submit your objection(s) to an assessment in writing to the Department.  You must file a Petition for Reassessment within sixty days of receipt of the assessment with all applicable documentation to support your objection.  Instructions on filing appeals and payment requirements are provided with the notice of assessment. See Ohio Revised Code section 718.90 for additional information.
No. If you file an appeal, you may choose to forgo a hearing or to have a telephone hearing.  If you do not request a hearing, all your information will be carefully reviewed and considered, but you will not have to participate in a hearing. If you choose a telephone hearing, you will participate in a hearing via telephone and may include your representative, or anyone else you choose, by conference call.  If you choose to have a personal appearance hearing (a face-to-face meeting), you will have the opportunity to present documentation and discuss any questions in person, but the hearing will be held in Columbus.
No, the Department does not plan to offer a voluntary disclosure program for the municipal net profit tax.
Yes, you may request to carryforward a credit when filing your annual tax return. Please note: A declaration of estimated payment form must be filed for the following taxable year prior to a credit being moved forward.
The following are helpful guidelines to consider when filing a declaration:
  • Accurate estimated annual tax liability
  • Proper accounting of state credit carryforwards (CCFs) vs. municipal credit carryforwards (CCFs)
  • Filing with the proper entity (Gateway – Ohio Taxation – Municipal Net Profit Tax)
  • Only removing municipalities mid-year if no estimated annual tax liability
The following are helpful guidelines to consider when filing the annual tax return:
  • Only utilize alternative apportionment if approved by the municipality
  • Only utilize the tax credit lines for refundable and nonrefundable credits (not CCFs)
  • Input the correct “span period” that the return covers
  • Amended returns must include all municipalities, even if no changes to that municipality

The Department has had discussions with a couple of commercial software vendors about building the upload capability in their professional-suite products. Subsequently, the Department has contacted the IRS about participating in Modernized eFiling for the municipal net profit return. This FAQ will be updated when more information is available.

Taxpayers are required to comply with requests for information and respond to bills and assessments that are issued by municipal corporations and third-party administrators for any taxable year prior to 2018 and for any taxable year for which the taxpayer has not opted-in with the Department.  The Department cannot accept returns, payments, or appeals for any tax years for which the taxpayer has not opted-in with the Department. For any taxable year for which the taxpayer has opted-in with the Department, the Department will be the sole administrator of the municipal net profit tax and all requests for information, bills, assessments, and other correspondence for those years will come from the Department.

Additional Resources

Additional Resources