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OSCPA testifies on muni tax and the BID

Written on Feb 18, 2022

OSCPA staff report

OSCPA on Tuesday offered support to two bills before the Ohio House Ways & Means Committee that will influence the municipal income tax and the business income deduction.

Society Tax Policy Director Greg Saul, Esq., CAE, testified for House Bill 519, which seeks to make changes to the administration and enforcement of municipal income taxes.

The bill limits the circumstances under which municipal income tax inquiries or notices may be sent to a taxpayer who has received a filing extension (typically from April 15 to Oct. 15). H.B. 519 proposes to allow municipal tax administrators to send an inquiry or notice only if they have actual knowledge that the taxpayer did not actually file for a federal or municipal income tax extension.

Second, the bill limits the late fees that may be imposed on a taxpayer for failing to timely file municipal income tax returns. Under current law, for each late income tax or withholding return other than an estimated tax return, municipalities may impose $25 per month, increasing by $25 for each month the return remains unfiled, up to $150. H.B. 519 proposes to limit the cap on these late fees to 50% of the unpaid tax if that amount is less than $150.

Tom Zaino, CPA, JD, managing member of Zaino Hall & Farrin testified on behalf of OSCPA for House Bill 515, on the business income deduction.

“H.B. 515 clarifies that gains from the sale of an ownership interest in a business is considered ‘business income’ for Ohio income tax purposes, provided the sale satisfies either of the following: (1) the sale is treated for federal income tax purposes as the sale of assets; or, (2) the seller was involved in the day-to-day management of the business during the taxable year in which the sale occurred or during any of the five preceding years,” Zaino said in his testimony.

He said H.B. 515 is a remedial measure intended to clarify existing law. It also applies to any petition for reassessment or any appeal thereof; to any application for refund or any appeal thereof pending on or after the effective date; and to any transaction that is subject to an ODT audit on or after the effective date. OSCPA has previously testified as a proponent in the Senate on the H.B. 515 companion legislation, Senate Bill 247.

This comes after last week’s testimony from the bills’ legislative sponsors.

Additionally, Representatives Thomas West, D-Canton, and Bill Roemer, CPA, R-Richfield, offered sponsor testimony in front of the Senate Ways & Means Committee last week on House Bill 45, saying it would create a temporary amnesty program from July 1 – August 31, 2022, which would waive any interest or penalties that have accrued on delinquent taxes and fees so long as individuals and businesses pay the original amount of those taxes and fees while the program is in effect. It passed the Ohio House unanimously on Dec. 8.