Questions answered on popular IT 4738 Form

The OSCPA webinar on the new IT 4738 Form proved popular Thursday as participants had a steady stream of questions and comments during the presentation.   

“It is extremely important for everyone to understand this is not a fix for everybody's situation,” said Tom Zaino, JD, CPA, managing member and founder of the firm Zaino Hall & Farrin. “It is a tool in our toolbox as tax professionals, to present to our client and review with them whether or not the federal benefits would outweigh the state tax impacts.” 

Also joining Zaino on the webinar was Matt Dodovich, an attorney supervisor in the Tax Appeals Division at the Ohio Department of Taxation, and Steve Hall, also from Zaino Hall & Farrin.  

The Ohio Department of Taxation on Jan. 20 released a third round of guidance for pass-through entities (PTEs) who “elect” to be subject to a new entity-level tax in response to the federal $10,000 SALT deduction cap limit placed on individuals.    

The ODT created the new Form IT 4738 after the enactment of OSCPA-supported Senate Bill 246, also known as Ohio’s version of the SALT cap deduction parity/workaround. The guidance includes a final version of the new IT 4738 form and instructions, a new payment coupon, and currently a total of 35 FAQs. All of the prior guidance also can be found by clicking here.    

The questions asked touched on tax software, tiered partnership, member adjustments and much more. 

“When we got this enacted we had to work within the current Ohio tax structure to get it done,” said Zaino. “That means there are some limitations to this tool. It had to be revenue neutral, that was important to gain any sort of support for this significant change. The idea here is you get a federal tax reduction, but not an Ohio tax reduction.”  

Among the many topics covered, Dodovich spoke on how critical it is to fill out all the schedules to return on the form.  

“The most important thing to note is that this is a roll up schedule, meaning that a lot of the information on this schedule comes from other schedules on the return,” he said. “Some taxpayers will fill out this first page and leave the rest of the return blank. When you submit that return in our system, because there's nothing on those supporting schedules, it uses those to calculate schedule one and will reset those numbers to zero or reset them to whatever it comes up with based on what you've put on those later schedules.”  

Dodovich encouraged everyone to sign up for tax alerts from ODT and to reach out to the tax department if they still have questions.  

“We have almost 40 FAQs now on just this topic, so please check those out,” he said. “They're valuable and they are always being updated. And the more times you guys ask a question, the more likely we are able to say it's frequent enough to get it on the FAQ page.” 

The webinar was recorded and OSCPA is currently discussing how best to make it available to a larger base of members and related professionals.