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Lawsuit says Cleveland failed to refund taxes within 90 days

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(The Center Square) – Two northeast Ohio residents are lead plaintiffs in a class action lawsuit filed Wednesday against the city of Cleveland, saying the city owes taxpayers interest for not issuing tax refunds within 90 days.

The Buckeye Institute, a Columbus-based policy group, filed on behalf of Kate Wos of Strongsville and David Steffes of North Royalton, as well as all nonresidents of Cleveland who filed a city income tax return and received their refund more than 90 days after filing.

The lawsuit in the Cuyahoga County Court of Common Pleas wants the court to order the city to follow its ordinances and pay those impacted interest.

“Citizens should not be forced to go to court to get the city to follow its own laws,” said Jay R. Carson, senior litigator at The Buckeye Institute. “Cleveland city ordinances are clear: refunds not issued within 90 days are subject to interest. Cleveland officials know this, and the city owes The Buckeye Institute’s clients – and countless other taxpayers – for delayed tax refunds.”

Cleveland’s law says that when the city owes a tax refund, it is subject to interest at the rate of the federal funds rate of nearly 5% plus another 5% if it’s not paid within 90 days after a return is filed.

Ohio House Bill 110 allowed Ohioans to seek municipal income tax refunds for 2020 and 2021, and Wos filed her 2021 city return March 12, 2023, according to the lawsuit.

She received her refund six months later, in September. It did not include any interest.

Steffes filed his return for 2021 for a refund when his employer, Stantec, closed its Cleveland office during the COVID-19 pandemic and was told to work from home.

Steffes received his refund in late 2023, the lawsuit says, also without interest. The suit also says the city did not refund Steffes for his paid vacation days.

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