Cleveland gives up appeal of income tax case

(The Center Square) – A Pennsylvania doctor’s fight to get income taxes back from the city of Cleveland during the COVID-19 pandemic is over.

The city abandoned its appeal and agreed to fully refund taxes illegally taken from Dr. Manal Morsy, and pay interest and court costs, according to The Buckeye Institute, which represented Morsy in the case that began more than three years ago.

The end comes after the city abandoned its appeal of a 2022 decision for Morsy and agreed to the terms.

“Cleveland had no legal authority to tax income Dr. Morsy earned working at her home in Pennsylvania during the pandemic,” said Jay R. Carson, senior litigator at The Buckeye Institute and lead attorney. “By dropping its appeal and agreeing to issue a full refund to Dr. Morsy, with interest, and reimburse her court costs, the city of Cleveland has finally made it right.”

Morsy lives outside of Philadelphia in Blue Bell, Pa., more than 400 miles southeast of Cleveland. Before the pandemic, she commuted to Cleveland, spent the week there and returned home on the weekends.

During the pandemic, according to court filings, she worked exclusively from home in Pennsylvania, as ordered by Gov. Mike DeWine. She paid local income tax in Blue Bell, and Cleveland continued to tax her under a new Ohio law that deemed all work performed at her home in 2020 to have been performed at her office location in Cleveland.

The Ohio General Assembly passed legislation at the beginning of the pandemic that allowed cities to continue to collect taxes from workers even though they worked remotely in another city rather than working in the city where the employer was located. It was an effort to stabilize revenue for municipalities, and, in particular, larger communities, where larger employers are based.

The House passed a bill in June 2021 that required employees to pay income taxes in the city where they work. If work is done at home, then that community benefits, rather than where the traditional workplace is located.

“I’m so thankful for the efforts of The Buckeye Institute in helping me obtain my refund and establish that Ohio cities cannot tax non-Ohioans working in another state,” Morsy said. “I am especially grateful for the outstanding support and commitment provided by Buckeye’s senior litigator Jay R. Carson to resolve my problem to its rightful conclusion.”