Vermilion City Faces Class Action Lawsuit Over Improper Income Tax Collection

Residents of Vermilion, Ohio, have recently taken a decisive legal action by initiating a class action lawsuit against the city, its finance director, and the Regional Income Tax Agency (RITA). The primary contention of this lawsuit, filed on April 15 under the representation of Avon Lake attorney Gerald Phillips, is the alleged wrongful collection of city income taxes between 2018 and 2022 from residents Thomas and Corrie Ostrowski and Roy B. Anderson. The focal point of this legal challenge revolves around Vermilion’s handling of the Resident Income Tax Credit ordinance, approved by the City Council in 2018.

The ordinance, aimed to provide a 1% tax credit to residents working outside the city, on condition that the external city also imposed a 1% or greater income tax, was intended to prevent duplicative taxation. However, as per the lawsuit, Vermilion purportedly failed to grant the full 1% credit during the specified period, thereby resulting in residents paying higher taxes than warranted. Subsequently, in 2022, the tax credit was reduced to 0.5%, with the city subsequently reverting to the full 1% credit in April 2025 through Ordinance No. 2025-12. Despite this reinstatement, the impacted residents argue that they had already incurred financial losses due to the initial mishandling.

Attorney Gerald Phillips noted that the nature of this issue warranted a collective legal action due to the insufficient individual refund amounts to justify separate lawsuits. By consolidating their claims into a class action lawsuit, the plaintiffs aim to represent all affected Vermilion residents and seek redress collectively for the alleged wrongful tax collection spanning multiple years. The rationale behind seeking over $25,000 in restitution for unjustly collected taxes and a similar amount in punitive damages is to address what the plaintiffs describe as Vermilion’s “unjust enrichment” at the expense of its residents.

Furthermore, the lawsuit underscores the alleged awareness of Vermilion Mayor Jim Forthofer and the City Council regarding this matter since June 2022, with claims that necessary actions to rectify and compensate the residents were not taken. Attorney Phillips articulated the filing of the class action as a means for Vermilion residents to receive fair treatment and the restitution they are entitled to, highlighting a crucial stance against what is deemed as unfair practices by the city officials.

In conclusion, the unfolding class action lawsuit against Vermilion City reflects a significant legal battle aimed at rectifying alleged injustices in income tax collection, seeking compensation for affected residents, and advocating for accountability on the part of the city authorities. By uniting under the banner of a class action, the plaintiffs strive to amplify their collective voice and pursue rightful restitution for a perceived violation of their rights.