Big win for Society, CPAs as legislators mostly preserve BID

Written on Jul 18, 2019

OSCPA staff report

After months of meetings, conference calls and digging into the technical details of all things tax by OSCPA and its member experts, plus even more discussions with key legislators, Ohio’s massive biennial budget bill (Am. Sub. HB 166) was signed into law this morning and included very good news for Ohio’s business owners: continuation of the BID as is for almost all businesses. The Business Income Deduction (BID) was kept at $250,000 and maintains the 3% flat rate cap on income above it. Further, OSCPA was successful in convincing legislators to avoid tying the BID to the federal 199A law. This harmful provision was mentioned multiple times as an option and would have negatively impacted a broad array of specified service trades and businesses (SSTB) – including CPAs.

“OSCPA’s robust lobbying efforts have resulted in a strong outcome for the CPA profession,” said OSCPA President & CEO Scott Wiley, CAE. “Key legislators were seriously considering adopting the federal 199A language as late as this past Friday. Our Government Relations team, leveraging the expertise of OSCPA members, quickly engaged and convinced key elected officials that adopting the provision into Ohio law would be bad for Ohio. As the voice of Ohio’s CPAs, we are pleased this negative proposal failed to gain support and appreciate all the hard work by the DeWine Administration and House and Senate leaders to not only understand the nuances of complex tax law but ultimately to largely keep the BID intact.”

The House, Senate and DeWine Administration, working tirelessly over many late nights, reached a last-minute compromise to keep the rates as is but eliminated BID eligibility for lawyers and lobbyists – two professions at the center of BID concerns by some legislators. There are still some questions about the possible impact on other businesses who employ Ohio-licensed attorneys or have out-of-state corporate counsel. OSCPA is currently evaluating that language to better understand potential ramifications.

While our government relations team is still digging through the bill to evaluate possible impact on other issues of concern, OSCPA’s advocacy work on behalf of the profession resulted in these noteworthy accomplishments within the budget bill:

  • Lawmakers approved an amendment promoted by OSCPA to exempt supplemental executive retirement plans (SERPs) from municipal income tax, effective Jan. 1, 2020.
  • OSCPA ensured that already regulated CPAs were excluded from penalties for failure to provide their Preparer Tax Identification Number (PTIN) on tax forms; other paid tax preparers can be penalized.
  • Across-the-board cuts to the personal income tax will be 4%, down from 6.6% in the House version and 8% in the Senate version. That extra money will go into wraparound services for students.
  • The OSCPA-backed medical marijuana language protecting CPA licensure was included in the bill.
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9 comments

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  1. Greg Saul | Jul 18, 2019
    Tim, the changes for lawyers/lobbyists are effective for 2020.
  2. Tim Oatney | Jul 18, 2019
    One question: Are the attorneys affected in 2019 or starting in 2020?
  3. Stan Olejarski, CPA | Jul 18, 2019

    Barb,
    Congrats to you and your team-another job well done.
    For thise CPAs who do not contribute to the PAC, this is why you need to.

  4. Barb Benton | Jul 17, 2019
    Louise:  Thanks so much for your comments.  You're largely correct about the horsetrading.  There are literally hundreds of issues in the 3,000+page budget bill, and over 500 differences between what the House and Senate passed when the bill reached the conference committee, plus varying priorities of the Administration. After weeks of negotiations concluded, lawyers and lobbyists ended up where they did - excluded from the BID starting in 2020.   The Ohio State Bar Association has asked Governor DeWine to veto the two exemptions.  BB
  5. Allen R. Houk, CPA | Jul 17, 2019
    Great Work! A big win for small business.
  6. Linda Tracy Gill, CPA | Jul 17, 2019
    Thank you for all of your continued efforts on behalf of small business owners everywhere.  Great win!
  7. Mark Bainbridge | Jul 17, 2019

    Barb and Greg

    Thanks for all your efforts in our behalf!

  8. Timothy Mott, CPA | Jul 17, 2019
    Thanks to the Govt Relations team for all your hard work in helping to preserve the SBID.  This deduction has been a blessing for my clients who are small business owners and its retention will continue to spur reinvestment here in Ohio.  Again, thank you.
  9. Louise Jackson | Jul 17, 2019

    Barb Benton -- wearing my other profession's hat, I'm really ticked that all of the sudden, the ineligibility of lawyers for the BID appears.  Got any insight you can share about how or why that happened?  I figure it was pure horse trading -- the legislature decided to fill a tax gap by penalizing lawyers and lobbyists in order to produce an income tax reduction. 

     

    In any event, I've always thought the CPA profession was well-represented by you and your colleagues in dealing with the Ohio legislators.  So kudos to you on protecting this deduction for most small business owners! 

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