CLEVELAND — A Pennsylvania resident filed a lawsuit against the city of Cleveland asking the court to deem an Ohio law unconstitutional that allows for the city to tax her income, even while she worked from home during the pandemic.
Jay Carson, The Buckeye Institute’s senior litigator, represents Dr. Manal Morsy in the lawsuit.
Before the pandemic, Dr. Morsy used to commute weekly from her home in Blue Bell, Pennsylvania to her office in Cleveland, Ohio.
"When there’s no work that she’s performing in the city and she doesn't live in the city or even the state, we believe that’s an unconstitutional infringement of the city reaching out of its jurisdiction to tax someone," he said.
The argument all centers around Ohio's emergency pandemic relief bill, which was signed into law in March 2020. Section 29 of the bill states:
"...any day on which an employee performs personal services at a location, including the employee's home, to Am. Sub. H. B. No. 197 133rd G.A. 341 which the employee is required to report for employment duties because of the declaration shall be deemed to be a day performing personal services at the employee's principal place of work."
The lawsuit comes after Senate Bill 352 was filed last year, arguing Ohio’s local tax income structure during the pandemic is unconstitutional.
Back in January, News 5 spoke with Cleveland city leaders who said a repeal of Section 29 or any other move by lawmakers to stop the tax dollars flowing into the city would be devastating.
"If our downtown core suffers, you had better believe that's not only going to negatively impact the city but it of course will hurt our suburbs within the region," Ward 3 councilman Kerry McCormack said at the time.
Certified public accountant Larry Yunaska with Baumgarten & Company, LLC fields questions from work-from-home often. He estimates up to half his clients could be impacted by this pending litigation.
"We're advising them there is litigation is in process," he said. "We don’t know what the outcome is and we’re filing the returns as we have in the past."
Yunaska is quick to point out that depending on where you live, the lawsuit could have no impact whatsoever.
"It depends on if you have a resident city that gives you 100% tax credit for Cleveland, [and in that case] there would be no dollar difference to the taxpayer because their resident city is giving them credit." he added. "Other cities, that give very little credit, there could be a significant difference. That would require us amending local tax returns."
In a news release, The Buckeye Institute said they filed four similar cases across the state, including in Franklin County twice, Hamilton County and Lucas County.
"This isn’t essentially going to go away once the pandemic goes away," Carson added.
A spokesperson with the city of Cleveland told News 5 they do not comment on pending litigation.
RELATED: Work-from-home tax breaks: potentially good for your wallet, bad for big cities
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