AK brass seek tax refund
By Thomas Gnau
AK Steel Chairman and Chief Executive Officer Richard M.
Wardrop Jr. wants a tax refund from Middletown government.
The head of the Middletown-area's largest employer filed a
complaint last month in Butler County Common Pleas Court
against the city's Income Tax Review Board after it denied his
bid for a refund for work he performed outside Middletown. The
court complaint is a public document.
A ruling against city government would "probably" force the
city to alter the way it interprets its tax law, Middletown
Assistant Law Director Ursula McDonnell said Wednesday.
AK's chief financial officer, James Wainscott, also wants a
refund, she said.
According to the complaint, Wardrop wants a refund for "the
portion of his compensation that is attributable to services
performed outside of the city." He seeks a reversal of the tax
review board's decision and an order granting a refund.
Middletown has a 1.5 percent income tax rate.
Wardrop, a resident of Clearcreek Township in Warren
County, seeks a refund of $42,630 for 123 days worked outside
the city in 2000, McDonnell said, and documents show.
According to the city's case file, provided to The Journal
by the law office, Wardrop's 2000 city income tax resulted in
Middletown withholding $79,714. In a statement calculating
time worked outside the city, he put "total city wages" at
$5,314,282 that year, with $2,472,296 set as "wages earned in
city."
According to the city documents, Wardrop's return applied
the 1.5 percent rate to the smaller number and calculates the
proper tax as $37,084 ‹ or $42,630 less than the amount
Middletown withheld.
Curtis Street-based AK has more than 11,000 employees in
Middletown, several other Ohio cities, and in Kentucky,
Indiana and Pennsylvania and other states. Wardrop's job
requires "a significant amount of travel," AK Vice President
of Public Affairs Alan McCoy said.
Wardrop and Wainscott "believe the law is clear, that
they're not liable for the city income tax when they're
earning that income outside the city," McCoy said.
Wainscott, a Loveland resident, seeks a refund of $2,527
for 51 days worked outside Middletown in 2000. The city
withheld $11,149 that year, and Wainscott put total wages as
$743,273 and wages earned inside Middletown as $574,798.
The complaint said Middletown's income tax superintendent
denied Wardrop's claim. An appeal hearing was held last Oct.
17; the board denied the appeal by letter Nov. 12.
The board's response said Middletown's tax code imposes a
tax "as a result of employment in the city."
McDonnell said the city will stand its ground.
Wardrop's and Wainscott's "earnings are as a result of
employment here in the city," she said.
She said if the two received a refund from Middletown, they
may be subject to income taxes in other communities.
"It would be up to those cities to collect that," she said.
Asked if Wardrop and Wainscott pay local income taxes in
other cities, McCoy said that is "considered to be a private
individual tax matter at this time."
It's unclear what the impact on city revenue would be if
the city had to refund taxpayers for work outside city limits.
"I can't give you an estimate," Middletown Finance Director
John Lyons said.
City Manager Ron Olson could not be reached for comment.
Wardrop's attorney in the matter, Samuel Scoggins, declined
to comment beyond saying the case is in its "early stages."
McDonnell said Common Pleas Judge Matthew Crehan will hear the
case. No hearing date has been set, she said.
