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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.

 

   


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