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OSCPA testifies on muni notices and late filing fees

Written on Mar 31, 2023

OSCPA staff report 
OSCPA offered proponent testimony to the Ohio House Ways & Means Committee Tuesday in support of House Bill 105, legislation sponsored by State Rep. Jim Thomas (R-Jackson Twp.). H.B. 105 would place limits on notices and late filing penalties under R.C. 718.27, and is a reintroduction of the House-passed version of H.B. 519 (134th GA) from the previous legislative session. 
Greg Saul, Esq., CAE, director of tax policy, said H.B. 105 first would limit the circumstances under which municipal income tax inquiries or notices may be sent to a taxpayer who has received a filing extension by prohibiting tax administrators from sending them prior to the taxpayer filing the return or prior to the extended due date, whichever comes first.  Further, if this prohibition is violated, tax administrators would be required to reimburse the taxpayer for any costs incurred to respond to that inquiry.   

Second, H.B. 105 limits the late fees that may be imposed on a taxpayer for failing to timely file municipal income tax returns by (1) limiting the late filing penalty to $25, rather than the $150 cap in current law; (2) requiring any late filing penalty assessed on a taxpayer’s first late filing to be refunded or abated once the taxpayer files the overdue return. 

Deduction of Bonus Depreciation and Expensing Allowances. The House Ways & Means Committee also heard sponsor testimony on House Bill 116, which seeks to amend R.C. 5747.01 to allow taxpayers to deduct in a single year the full bonus depreciation and enhanced expensing allowances the taxpayer deducts for federal income tax purposes. The bill creates an election allowing taxpayers to eliminate the addback and phase out subtraction. The sponsors are State Rep. Bob Peterson (R-Washington Court House) and State Rep. Thad Claggett (R-Newark).  

Guaranteed Payments and BID. Finally, House Bill 138 was also introduced on Tuesday. It would classify guaranteed payments paid to pass-through entity (PTE) investors, regardless of their ownership interest, as “business income” and therefore eligible for the business income deduction and flat income tax rate. The sponsors are State Rep. Angie King (R-Celina) and State Rep. Tom Young (R-Washington Twp.).  

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