Society scores important tax victories in Ohio capital budget

From the Dec. 20, 2006 issue of the Ohio e-CPA Weekly

The Ohio Society successfully lobbied for several important tax provisions included in the state capital budget (HB 699) approved by the Ohio General Assembly this week.

The Ohio Society led efforts to bring the Ohio Revised Code (ORC) in line with the Internal Revenue Code (IRC) regarding the treatment of charitable distributions from independent retirement accounts (IRAs). Congress established tax-free IRA distributions for charitable purposes through the Pension Protection Act of 2006. However, the ORC did not recognize the tax-free distributions for the purposes of Ohio income tax and required taxpayers to add distributions back to adjusted gross income. Under HB 699, the “add-back” provision no longer exists and the ORC now mirrors the IRC.

Also included in the bill were modifications to the Job Creation and Job Retention Tax Credits. One change allows employers to retain the credit for employees who are shifted within the corporate entity, or to a subsidiary, so long as the positions are substantially equivalent. The bill also preserves the exception for active-duty military called to service. However, the bill does contain a new provision allowing the state to reduce the tax credits if the employer fails to meet their obligations under the state-established provisions of the tax credits.

The state capital budget also included a Society supported one-year extension of the Job Training Tax Credit which provides Ohio employers up to $100,000 annually to help offset the costs of training existing employees.

Separately, the General Assembly also passed legislation (HB 149) which creates a tax credit for the rehabilitation of historic buildings. The credit, which will be applied to the corporate franchise tax, is refundable and can be applied to existing projects if rehabilitation efforts are expanded. Administered by the Ohio Department of Taxation and the Ohio Department of Development, the state has four years after application to award the credit based on the net fiscal impact of the project. 

The tax changes were among the numerous provisions pursued by The Ohio Society in the waning days of lame duck session, and represent major victories for taxpayers, the accounting profession and the business community overall.

Both bills await approval by Gov. Taft.

For more information, contact Amy Mignogna. 

Ongoing success

• Commercial Activity Tax: Keeping the base broad and rate low
• Interstate practice issues; state-to-state license mobility
• Sales tax on services

2007

• Modification to Ohio’s tax code (Sub. HB 157)
• Changes to title agency review rules (Sub. HB 157)
• Further uniformity to Ohio’s municipal income tax collection methods (Sub. HB 224)
• Improving the internal audit function of Ohio Executive Branch (Sub. HB 166)
• Ohio Government Audit Work Paper Public Record Issue

2006

• Title agency review rules
• Ohio government audit work paper public record issue
• Audit work paper confidentiality (HB 9)
• Gramm-Leach-Bliley privacy notification exemption (SB 2856)
• Ohio income tax residency requirements; increase in contact periods (HB 73)
• Statute of limitations for tax collection (HB 390)
• ORC and IRC uniformity regarding treatment of charitable pension distributions (HB 699)
• Ohio attorney general rules impacting charitable entities
• Data breach legislation (HB 104)

2005

• Tax reform (HB 66)
• Protecting the regulation of the accounting profession (HB 66)
• Improving Ohio’s legal environment (SB 80)

2004

• Agreed upon rules and procedures for nonprofit child caring agencies
• Elimination of licensed professionals from independent contractor classification (HB 200)

2003

• Municipal income tax reform (HB 95)
• Tort reform; limiting abusive lawsuits (SB 120)