By Greg Saul, Esq., CAE, OSCPA tax policy director
The final week of winter saw some movement on legislation of interest to Ohio CPAs:
SALT cap parity: An OSCPA priority bill, Senate Bill 246, is on the move. The legislation would authorize a pass-through entity owner to claim a refundable credit against the owner’s Ohio income tax liability equal to the owner’s proportionate share of the tax paid by the PTE. As a result of a change in IRS Notice 2020-75, states are permitted to enact legislation to clarify that taxes paid by a PTE do not count towards an owner’s $10,000 cap limitation on the state and local tax deduction for federal income tax purposes. To date, 22 states have enacted legislation and seven (including Ohio) have bills pending. See the map of states with pending or enacted legislation.
S.B. 246 passed the full Senate on March 16 by a unanimous vote and now heads to the House for hearings, likely the House Ways & Means Committee. OSCPA plans to testify in support of S.B. 246 in the House just as we did in the Senate.
Temporary tax amnesty: House Bill 45 had its third hearing on Tuesday in the Senate Ways & Means Committee. The legislation would establish a two-month “amnesty” period during which taxpayers owing past-due state taxes and certain fees may discharge the debt by paying the delinquent tax or fee without having to pay the penalty and accrued interest normally due. The most recent general tax amnesty was conducted by the Ohio Department of Taxation in early 2018. The current proposed dates for the amnesty period are July 1-Aug. 31, 2022, but the bill is likely to be amended soon to move those dates to Sept. 1-Oct. 31, 2022. The House on Dec. 8 unanimously passed H.B. 45.
BID and Business Sales. OSCPA is still pursuing a legislative change in response to the Ohio Department of Taxation’s audits of resident business sales. Both House Bill 515 and Senate Bill 247 seek to clarify that gains resulting from the sale of an ownership interest in a business is considered business income for Ohio’s business income deduction, provided the sale satisfies either of the following:
The sale is treated for federal income tax purposes as the sale of assets; or
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.
Without this change, business owners will continue to leave Ohio to become non-residents before the sale. The goal of this legislation is to secure a remedial measure intended to clarify existing law so it can be applied to current audits.
Both H.B. 515 and S.B. 247 have had three hearings in their respective Ways & Means Committees. OSCPA has testified in support of both bills, most recently H.B. 515.