Hundreds — possibly thousands — of Vermilion residents could be owed refunds after years of being overcharged on their city income taxes. A new class action lawsuit, filed April 15, 2025, accuses the City of Vermilion and the Regional Income Tax Agency (RITA) of collecting too much from residents who lived in Vermilion but worked in other cities.

A Mistake That Lasted Years

In 2018, Vermilion City Council passed Ordinance 2018-19, setting the Resident Income Tax Credit at 1% for people who lived in Vermilion and worked elsewhere. This credit was meant to prevent double taxation when residents paid income taxes to another city.

However, according to the lawsuit, the City and RITA never properly updated the tax forms, instructions, or calculations. Instead, residents were given only a 0.5% credit — meaning they paid more local taxes than they legally should have.

This error affected tax years 2018 through 2022. The city reportedly became aware of the issue in June 2022, but no refunds were issued.

Recent Efforts to Correct the Error

On April 7, 2025, Vermilion City Council passed Ordinance 2025-12, restoring the 1% Resident Income Tax Credit starting Jan 1st 2025. “However this doesn’t affect taxes that were overcharged prior to this date”

The Class Action Lawsuit

Filed by Thomas and Corrie Ostrowski and Roy B. Anderson. Roy B. Anderson, one of the plaintiffs in the class action lawsuit, is the husband of Jean Anderson, a candidate in Vermilion’s upcoming mayoral election. Jean Anderson has publicly supported the lawsuit.

The class action lawsuit seeks:

• Refunds for overpaid taxes from 2018–2022.
• Punitive damages for what plaintiffs call negligent and potentially fraudulent behavior.
• Mandatory court orders forcing the City and RITA to repay residents.
• Attorney fees and court costs.

The lawsuit claims that Vermilion City officials knew about the error for years but failed to act, unjustly enriching the City at residents’ expense. It also alleges that RITA’s continued use of incorrect forms and instructions misled taxpayers and violated municipal and state law.

The case is currently pending in the Lorain County Common Pleas Court before Judge Melissa C. Kobasher.

Who Might Be Eligible?

If you:

• Lived in Vermilion between 2018 and 2022, and
• Worked in another city that charged at least a 1% local income tax,

you could be owed a refund of about 0.5% of your outside wages per year — potentially adding up to several hundred dollars or more over multiple years.

The lawsuit seeks to represent all affected Vermilion residents as a class action, meaning individuals won’t need to file separate lawsuits.

Why It Still Matters

Although Vermilion City Council corrected the tax credit for future filings, residents have not been automatically refunded for past overpayments.
Without court action or a refund program, residents must either:

• Join the class action lawsuit, or
• Hope for a settlement or refund plan initiated by the city or RITA later.

The lawsuit is also becoming a hot political issue in the upcoming Vermilion mayoral election, with some candidates publicly supporting the lawsuit and others opposing it.

Source of Documents and Information

The following official documents were reviewed to prepare this article:

• Class Action Complaint filed April 15, 2025 in Lorain County Common Pleas Court (Plaintiffs: Thomas & Corrie Ostrowski and Roy B. Anderson, Attorney: Gerald W. Phillips).
• Press Release issued by Attorney Gerald W. Phillips.
• City Ordinances:
  • Ordinance 2018-19 (setting the 1% credit),
  • Ordinances 2022-43, 2022-81, and 2022-85 (amending, repealing, and modifying the tax credit),
  • Ordinance 2025-12 (restoring the 1% credit for 2018–2022).

Copies of the lawsuit and related ordinances were obtained through publicly available filings and direct access to legal and city government documents.

What’s Next?

Residents are encouraged to stay informed as the lawsuit progresses. Updates from the court could determine if Vermilion residents will see refunds — and how much they could recover.

For now, the class action case remains active, and its outcome could have lasting financial and political impacts on the Vermilion community.

Timeline of Events: Vermilion Income Tax Credit Lawsuit