Three Vermilion residents, who worked outside of the city from 2018 to 2022, filed a class action lawsuit against the city to recover income taxes collected between 2018 and 2022.
According to a news release, Avon Lake attorney Gerald Phillips is representing Thomas and Corrie Ostrowski, and Roy B. Anderson against the city, Finance Director Amy Hendricks and the Regional Income Tax Agency, or RITA,
The lawsuit seeks more than $25,000 restitution, which requires the return of city income taxes unjustly collected and withheld and punitive damages exceeding $25,000, it says.
The suit was filed April 15 and addresses a Resident Income Tax Credit ordinance enacted in 2018 at 1 percent by Vermilion City Council.
The credit was reverted back to one-half percent in 2022, and the ordinance was repealed as the credit was reenacted the same year.
Vermilion residents working outside the city were entitled to a 1 percent Resident Income Tax Return on tax returns, granted the employment income tax rate of outside cities is 1 percent or higher and collected half of what was expected, the release states.
“This is just not right and intolerable,” Phillips said in the release. “This is why the class action lawsuit has been filed.
“So, the Vermilion residents can get what they deserve.”
Phillips stated that Vermilion Mayor Jim Forthofer and City Council have “known about this unjust enrichment and benefit” to the city at the expense of residents working in other cities since June 2022, and have failed to take action.
Forthofer declined to comment.
Hendricks and officials at the Regional Income Tax Agency could not be reached for comment.
The Resident Income Tax Credit remained at one-half percent for tax years 2023-24, however, Ordinance No. 2025-12, which passed April 7, reinstated the full 1 percent credit for tax years between 2018 and 2022, according to the release.
“No one resident would file this legal action to recover the amount wrongfully collected and withheld since the legal costs would far exceed the amount of their recovery,” Phillips said. “This is why the class action has been filed.”
