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OSCPA testifies in support of PPP deductibility, PTE withholding rate reduction

Written on Feb 25, 2021

OSCPA staff report 

OSCPA on Tuesday testified before the Ohio House Ways & Means Committee advocating for tax conformity legislation – S.B. 18 – that will, among other things, ensure Ohio’s deductibility of forgiven PPP loan expenses, and exclude Bureau of Workers’ Compensation dividends from the Commercial Activity Tax. The goal of S.B. 18 as a whole is to simplify the tax code and minimize compliance costs. Because S.B. 18 is emergency legislation, it would be enacted immediately upon the Governor’s signature instead of the normal effective date 90 days later. 

Ohio Statehouse

State Sens. Kristina Roegner, R-Hudson, and State Sen. Tim Schaffer, R-Lancaster sponsored legislation to incorporate into Ohio Revised Code section 5701.11 several of the federal tax law changes to the Internal Revenue Code which became law between March 27, 2020 (H.B. 197, 133rd GA) and S.B. 18’s eventual effective date. 

“Many of these federal tax provisions were just recently made by the ‘Consolidated Appropriations Act, 2021,’ H.R. 133 of the 116th Congress, signed into law on Dec. 27, 2020,” said Greg Saul, director of tax policy for OSCPA. 

“Unless the Ohio General Assembly and the Governor again amend the Ohio Revised Code, many taxpayers will have to make “add-backs” on their 2020 income tax returns,” Saul said in his proponent testimony. “These add-backs would be complicated and costly to taxpayers, resulting in increased compliance burden and additional tax liability. Further, timing is critical because CPAs across the state are already engaged in tax preparation for their clients.” 

Members concerned about PPP deductibility and BWC dividend CAT taxation are encouraged to reach out to their state representative. OSCPA’s easy-to-use letter-writing software will enable you to make your voice heard in less than five minutes. https://www.ohiocpa.com/advocacy/Take_Action#/    

Saul also testified this week in support of H.B. 124, which seeks to reduce the rate of Ohio’s withholding on income generated from pass-through entities, such as partnerships and S-corporations. H.B. 124 provides language to streamline the remittance of tax paid on behalf of nonresident investors in Ohio-operating PTEs. The purpose of this bill is to equalize the Ohio income tax rate, currently 3% on business income above $250,000, with Ohio’s PTE withholding provisions. Current law requires these entities to withhold on behalf of nonresident individuals at 5% and other PTEs (nonindividuals) at 8.5%. 

For additional learning on COVID-19 and PPP, visit ohiocpa.com