1. Principal Place of Work What Is It; and Why Do I Care?
Ohio Municipal League
Municipal Income Tax Seminar
July 12, 2019
Amy L. Arrighi, Chief Legal Counsel
Amber E. Greenleaf Duber, Assistant Legal Counsel
Regional Income Tax Agency

2. Why Do I Care?
The definition of the employee’s “principal place of work” is important for our understanding and proper administration of the Occasional Entrant Rule. 2

3. What Is It? What is an employee’s “principal place of work?” (PP of W)
The fixed location in Ohio to which the employee is required to report for duty on a regular and ordinary basis.
A ‘fixed location” means a permanent place of doing business in this state such as an office, warehouse, storefront, or similar location owned or controlled by an employer. 3

4. What Is It? What is an employee’s “principal place of work?”
If there is no “fixed location in Ohio,” then the PP of W is the Ohio “worksite location” to which the employee is required to report for duty on a regular and ordinary basis.
The “worksite location” is “a construction site or other temporary worksite in this state at which the employer provides services for more than 20 days during the calendar year.” 4

5. What Is It? What is an employee’s “principal place of work”?
If there is no “fixed location in Ohio” and if there is no “worksite location” in Ohio, then the PP of W is the location in Ohio at which the employee spends the greatest number of days in a calendar year performing services for the employer. 5

6. What Is It? All employees must have a “principal place of work.”
If there is a tie, the employer, using a reasonable method, must use allocate the employee’s qualifying wages between the “tied” principal places of work.

7. Why Do I Care? The basic Occasional Entrant Rule:
An employee must perform services in a municipality for 20 days before the employer is required to withhold tax for that municipality for that employee.

8. Why Do I Care? The basic Occasional Entrant Rule:
If the 20-day threshold is not exceeded for the employee and if the employee’s PP of W is within a municipality imposing income tax, withhold only for the PP of W municipality for that employee for that day.
If the 20-day threshold is not exceeded for the employee and if the employee’s PP of W is not within a municipality imposing income tax, then no withholding is required for that employee for that day.

9. Why Do I Care? The basic Occasional Entrant Rule:
For the first 20 days that the employee is in the “occasional entrant” municipality, the employer withholds only for the PP of W (no withholding for those first 20 days if PP of W is in a jurisdiction not imposing income tax).
If the 20-day threshold is exceeded, the employer must begin withholding for the employee on the 21st day for the “occasional entrant” municipality.

10. Why Do I Care? The basic Occasional Entrant Rule:
If the employee is not a resident of a municipality for which the employer did not withhold because the employer correctly applied the Occasional Entrant Rule, that income is “exempt income” at the employee level as far as the nonresident, “occasional entrant” municipality is concerned.
The exemption goes away if the employee claims a refund from the PP of W municipality to which the tax withheld on those wages was remitted.

11. Why Do I Care? The basic Occasional Entrant Rule (example 1):
John’s PP of W is in Grove City, he works 18 days in Columbus, and his employer correctly withholds Grove City tax on his wages earned in Columbus.
John is a Bexley resident.
Result: John’s wages earned in Columbus are exempt income as far as Columbus is concerned, unless…

12. Why Do I Care?
Questions
Can John request a “days out” refund from Grove City for the 18 days worked in Columbus?
Can Grove City deny John’s “days out” refund request on the basis that it is the PP of W municipality?
Does a “days out” refund from Grove City change John’s tax obligation to Columbus?
Remember – the PP of W municipality may not be the municipality to which the tax is due.

13. Why Do I Care?
Remember:
The PP of W municipality may not be the municipality to which the tax is due.
PP of W withholding is an administrative courtesy to employers under the Occasional Entrant Rule.

14. Why Do I Care? The basic Occasional Entrant Rule (example 2):
Jane’s PP of W is in Prairie Township, she works 7 days in Columbus, and her employer correctly withholds no tax on her wages earned in Columbus.
Jane is a Bexley resident.
Results: Jane’s wages earned in Columbus are exempt income as far as Columbus is concerned.

15. Why Do I Care?
The big exceptions to Occasional Entrant Rule (PP of W does not apply):
Small employers that have a fixed location in Ohio;
Professional Athletes have no protection under the Occasional Entrant Rule; and
Professional Entertainers paid on a per-event basis have no protection under the Occasional Entrant Rule.

16. Why Do I Care?
The big exceptions to Occasional Entrant Rule (Principal Place of Work does not apply):
Public Figures paid to give speeches or paid to make public appearances have no protection under the Occasional Entrant Rule.
Promoters who had no protection under the old 12-day rule now have protection under the new 20-day rule provided they are themselves not public figures paid to give speeches or paid to make a public appearance.

17. Why Do I Care? The nuts and bolts of the Occasional Entrant Rule:
What is an employee’s “principal place of work?”
The fixed location in Ohio to which the employee is required to report for duty on a regular and ordinary basis.
A ‘fixed location” means a permanent place of doing business in this state such as an office, warehouse, storefront, or similar location owned or controlled by an employer. 17

18. Why Do I Care? The nuts and bolts of the Occasional Entrant Rule:
What is an employee’s “principal place of work?”
If there is no “fixed location in Ohio,” then the PP of W is the Ohio “worksite location” to which the employee is required to report for duty on a regular and ordinary basis.
The “worksite location” is “a construction site or other temporary worksite in this state at which the employer provides services for more than 20 days during the calendar year.” 18

19. Why Do I Care? The nuts and bolts of the Occasional Entrant Rule:
What is an employee’s “principal place of work”?
If there is no “fixed location in Ohio” and if there is no “worksite location in Ohio,” then the PP of W is the location in Ohio at which the employee spends the greatest number of days in a calendar year performing services for the employer. 19

20. Why Do I Care? The nuts and bolts of the Occasional Entrant Rule:
What is an employee’s “principal place of work”?
All employees must have a “principal place of work” in Ohio.
If there is a tie, the employer, using a reasonable method, must use allocate the employee’s qualifying wages between the “tied” PP of W.

21. Why Do I Care?
The Occasional Entrant Rule pop quiz: Given the facts set forth on the following slides, for what municipality or municipalities must the employer withhold if the employer wants to take advantage of the Occasional Entrant Rule? 21

22. Why Do I Care? The Occasional Entrant Rule pop quiz:
ABC Company is not a small employer.
ABC Company has no fixed location in Ohio (a permanent place of doing business in this state such as an office, warehouse, storefront, or similar location owned or controlled by an employer).
ABC Company has no worksite locations in Ohio (a construction site or other temporary worksite in this state at which the employer provides services for more than 20 days during the calendar year). 22

23. Why Do I Care? The Occasional Entrant Rule pop quiz (continued):
One employee of ABC Company worked in Ohio as follows:
First quarter: 5 days in Brecksville and 6 days in Cleveland Heights.
Second quarter: 7 days in Dayton and 8 days in Huber Heights.
Third quarter: 10 days in Bowling Green and 13 days in Toledo.
Fourth quarter: 18 days in Ada and 19 days in Lima. 23

24. Why Do I Care?
The Occasional Entrant Rule pop quiz: Given the facts set forth on the foregoing slides, for what municipality or municipalities must the employer withhold if the employer wants to take advantage of the Occasional Entrant Rule? ANSWER: 24

25. Why Do I Care? The Occasional Entrant Rule pop quiz: Reason:
X is the PP of W: no fixed location in Ohio; no worksite location in Ohio; so, PP of W is the Ohio location at which the employee spends the greatest number of days in the calendar year performing services – in this example, X.
ORC (A) and (C) 25

26. Why Do I Care?
Practically speaking – what is the employer to do if the PP of W is not known until year’s end?
Remember - following the Occasional Entrant Rules is voluntary for the employer.
Employer can withhold for each municipality as the employee works there.
Can Lima object and demand the withholding as the PP of W under the Occasional Entrant Rules at the end of the year?
Some other reasonable accommodation. 26

27. Principal Place of Work Case Law
Tammy J. Aul Jones v. City of Massillon, Ohio BTA Case No
Ms. Aul Jones (“Taxpayer”) is a postal employee assigned to the U.S. Post Office in Massillon (the “City”). Taxpayer is not withheld for the City and is not a resident of the City.
Although Taxpayer is assigned to the post office in the City, Taxpayer spends only 40% of her time working in the City, with the remainder of her work performed outside of the City.
Taxpayer files a tax year 2017 return with the City reporting only 40% of her income as taxable in the City.
City objects and claims that it is entitled to tax on all of Taxpayer’s earnings, regardless of where earned, because it is Taxpayer’s PP of W municipality.

28. Principal Place of Work Case Law
Tammy J. Aul Jones v. City of Massillon, Ohio BTA Case No
City issues an Assessment for tax on all of Taxpayer’s earnings in 2017.
Taxpayer appeals to the City’s Income Tax Board of Review.
Board of Review affirms the City’s Assessment, agreeing that Taxpayer must pay tax to City on all of her earnings related to her employment at the post office.
Taxpayer appeals to the Ohio Board of Tax Appeals.
Ohio Board of Tax Appeals considering the appeal on its small claims docket.
Hearing held by telephone on March 4, 2019.
No ruling as of June 28, 2019.

29. Principal Place of Work Case Law
Tammy J. Aul Jones v. City of Massillon, Ohio BTA Case No
Does PP of W applicable in this situation?
Can the City tax wages not earned in the City because it is the PP of W municipality for Taxpayer?
Law is clear that tax is imposed on the income of nonresidents that is earned in the nonresident municipality.
Nothing in the Occasional Entrant Rules changed this.
A municipality cannot tax income not earned in its municipality by a nonresident by virtue of it being the nonresident’s PP of W municipality.
PP of W is an administrative courtesy for employers, and voluntary for employers – not a determination of where tax is owed.
Employers can decide to simply withhold in the places that wages are earned.

30. Occasional Entrant Rule Help
Need more help with the Occasional Entrant Rule?
See Occasional Entrant Flow Chart available at:
PP of W
Counting Days

31. Questions