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Ohio Senate votes BWC refunds CAT fix, PPP deductibility bill to the House

Written on Feb 11, 2021

OSCPA staff report 

The Ohio Senate Feb. 10 voted 32-0 in favor of Senate Bill 18, sending the tax conformity and Paycheck Protection Plan deductibility legislation to the Ohio House for consideration. In a major OSCPA victory, the Senate Ways & Means Committee on Feb. 9 amended the bill to exclude BWC refunds/dividends from the CAT in R.C. 5751.01(F)(2)(nn). This change applies to tax periods beginning on and after Jan. 1, 2020, thus exempting from the CAT the entire $8 billion the BWC issued in 2020. 

The bill, which was written on the encouragement of The Ohio Society of CPAs, would ensure that expenses paid with forgiven Paycheck Protection Plan loans become deductible for state income tax purposes. On Feb. 2, the committee also amended the bill to ensure that PPP2 forgiven loans would not be subject to the CAT. Original PPP forgiven loans had already been excluded from the CAT in H.B. 481 (133rd GA) in June. 

Introduced by State Sens. Kristina Roegner, R-Hudson, and State Sen. Tim Schaffer, R-Lancaster, S.B. 18 would amend Ohio law to incorporate changes in the Internal Revenue Code since March 27, 2020, into Ohio law. The March 2020 law, H.B. 197, originally brought Ohio into conformity with the CARES Act (H.R. 748) and its applicability to Ohio’s income taxes. 

OSCPA Tax Policy Director Greg Saul, Esq., CAE, testified Feb. 2 in favor of S.B. 18 before the Ohio Senate Ways & Means Committee and said the legislation deals with many federal tax provisions that were recently enacted as part of the Dec. 27 Consolidated Appropriations Act (H.R. 133). (View the testimony.) 

Because the bill is emergency legislation, it would be enacted immediately upon the Governor’s signature instead of the normal effective date 90 days later. A companion bill, House Bill 48, also has been introduced in the Ohio House where Saul testified in support on Feb. 9 before the House Ways & Means Committee. 

Act TODAY to help struggling Ohio businesses by keeping Paycheck Protection Program forgiven loans deductible at the state level! Without this proposed legislation that will conform Ohio tax laws to those adopted by Congress in December 2020, impacted businesses will face a surprise state tax bill when they can least afford it. You can also reach out to lend your support for excluding BWC refunds from the CAT. Use OSCPA’s fast and easy letter-writing program to send your message to your state elected officials in less than five minutes

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