Society supports many budget provisions, urges Senate to remove House’s BID changes

Written on May 23, 2019

OSCPA staff report

Though many provisions in Ohio’s biennial budget bill will help the state’s economy, Senate members should remove the House’s changes to reduce the business income deduction (BID), because they could wind up having the opposite effect.

That was the message OSCPA delivered on Thursday in testimony to the Ohio Senate Finance Committee on Substitute House Bill 166, the state’s biennial budget. In his testimony, OSCPA Tax Policy Director Greg Saul, Esq., CAE, reminded lawmakers that the Tax Expenditure Review Committee – created with the support of OSCPA – has a regularly scheduled review of the BID set for 2021-2022.

“We urge you to remove the BID changes from H.B. 166,” Saul testified. “Any needed adjustments should be made only after the necessary data has been gathered and carefully considered, with input from all interested parties.”

He cited OSCPA’s recent CPA poll, which revealed concerns about the impact of reducing the deduction from $250,000 to $100,000, eliminating the flat 3% rate and making these changes retroactive to taxable years beginning on or after Jan. 1, 2019.

“Business owners have been in good faith planning and implementing changes to their business operations since Jan. 1 based on the current laws,” Saul said. “Changing these laws several months into 2019 after business expenditures have already been made, whether it be through hiring more people, purchasing equipment, goods or services, or other operational changes, is unfair to impacted Ohioans.”

“Further, estimated tax payments for the first quarter were already made by April 15, and the second quarter payments are due by June 15,” he added. “Businesses should not be punished with unexpected tax obligations, including penalties and interest, simply for complying with current law.”

“Elimination of the flat 3% rate on income over $250,000 will have a negative impact on Ohio businesses. If adopted, a number of our members have said companies they work with will pull back on plans for proposed business expansion in Ohio.”

Nevertheless, Saul said there is much in the bill that CPAs do support, namely:

  • The reduction of Ohio’s income tax brackets from seven to five.
  • Language that brings Ohio into line with the Wayfair decision, ensuring that out-of-state remote sellers are collecting sales and use tax due under existing law.
  • No substantive changes were made to the Commercial Activity Tax.
  • Inclusion of language ensuring CPAs will not lose their license to practice public accounting by providing guidance to Ohio’s new medical marijuana businesses.

Members who have concerns about any of these provisions are encouraged to contact OSCPA, and to share their views with your state senator. Click here to find out how to do so or to contact OSCPA for help.

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