Ohio tax update: Did your clients actually get that state refund?

Written on Jul 31, 2020

By Gary Hunt, senior content editor

An OSCPA member recently contacted us with a cautionary tale about a client who last year was required to take the Ohio Department of Taxation’s ID Confirmation Quiz.

The client did not successfully complete the quiz, and thus didn’t receive his state tax refund… but then never noticed.

Don’t let that happen to your clients.

The Ohio Department of Taxation said about 665,000 Ohio taxpayers were asked to take the quiz in 2016 – down from nearly 1.7 million in 2015, when, taxpayers complained about the questions and Gov. Kasich vetoed a budget provision that would have limited the questions to information obtained from the previous five years.

Those who do not take the quiz within 30 days – or fail it multiple times – have to provide documentation to receive their refunds. The requested refund will not be issued until a quiz is passed or ODT receives and accepts proper documentation to confirm your identity.

Tax Commissioner Joe Testa last year said taxpayers found the quiz quick and easy to take, a view supported by its 98.8% passage rate. And ODT said hundreds of millions of dollars of fraudulent refund claims have been blocked since 2014.

What that number should NOT include is legitimate refunds that haven’t been issued. Now, ODT isn’t going to track down failed quiz takers and demand they come get their refunds. So we suggest asking clients who were required to take the quiz whether they actually did so, and whether they received their state refunds. Once you provide the proper documentation, then ODT will release the money.

ODT: Filing season is nigh

In other news, the Ohio Department of Taxation announced this week that the state income tax filing season begins Jan. 23. As expected, the ID Confirmation Quiz is back, and taxpayers will need to provide a driver’s license or state ID card information to help combat stolen-identity tax fraud.

ODT said this year’s income tax filing process will include the following changes:

  • The business income deduction for 2016 has been increased to 100% of the first $250,000 of net business income from “pass-through” businesses. Income over that amount from these businesses will remain subject to a flat 3% tax rate.

  • Ohio has added a deduction for contributions to Ohio’s STABLE Account to help taxpayers who are caring for a disabled child or other designated disabled beneficiary. This deduction allows taxpayers to reduce their taxable gross income by up to $2,000 per beneficiary per year.

  • Indexing of income brackets which protects Ohioans from the impact of inflation on their personal income tax rates resumes in 2016 at the conclusion of the phase-in of the Governor's previous personal income tax rate reductions.