Guidance update on SALT & BID bills

On Friday evening, the Ohio Department of Taxation released an initial round of guidance on the SALT deduction cap parity.  Also, ODT recently presented at a conference where they provided further details on both the SALT and BID bills.

Gov. DeWine signed in June OSCPA-supported Senate Bill 246 and House Bill 515, also known as the SALT and BID bills respectively.

The SALT cap parity bill levies a tax on a pass-through entity's income apportioned to Ohio and authorizes a refundable income tax credit for an owner for such tax paid.

IRS Notice 2020-75 is what allowed states to enact legislation to clarify that taxes paid by a PTE do not count towards an owner’s $10,000 state and local tax limitation deduction for federal income tax purposes. 

The BID bill clarifies that gains from the sale of an ownership interest in a business is considered ‘business

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 of Sept. 23, 2022.

The complete guidance is not expected to arrive until closer to the effective dates of both H.B. 515 (Sept. 23) and S.B. 246 (Sept. 13).  However, ODT recently gave a conference presentation on these two topics, among other items, with valuable insight into the process, including the new PTE election form will be called the IT 4738. You can download a copy of the presentation slides here.

Once OSCPA receives additional guidance on either of these bills, we will share what we know via Legislative Update.  The S.B. 246 and SALT deduction cap parity initial guidance can be downloaded here.