OSCPA leads federal-level effort to address BWC dividend issues

Written on Feb 18, 2021

OSCPA staff report 

A group of 13 top business and trade associations – led by The Ohio Society of CPAs – on Wednesday sent a letter to Ohio’s Congressional delegation asking them to address issues surrounding 2020 Ohio Bureau of Workers’ Compensation dividends. 

U.S. Capitol Building

At the state level, the Ohio Senate brought some clarity to the gross receipts issue last week by amending Senate Bill 18 to exclude BWC refunds/dividends from the CAT. At the federal level, there is still an open question as to whether those amounts will be included in federal gross receipts. The letter urges the U.S. Small Business Administration and Treasury to exclude the recent BWC premium refunds from Ohio businesses’ federal gross receipts when taxpayers are applying for Payroll Protection Program loans and the Employee Retention Credit. 

“Specifically, there is one issue that needs to be addressed immediately – so as to not disadvantage many small and other Ohio businesses,” said OSCPA President & CEO Scott Wiley, CAE. 

That issue is Ohio-specific, and it has arisen with the SBA and Treasury regarding the recent BWC premium refunds. Because applications for the PPP are only being accepted until March 31 and the ERC is scheduled to expire June 30, CPAs and other business leaders need guidance soon so Ohio employers can take advantage of those programs. 

In the recent Consolidated Appropriations Act enacted Dec. 27, borrowers are eligible for a second-draw PPP loan of up to $2 million, provided they can certify they experienced a revenue reduction of 25% or more calculated by comparing gross receipts in any 2020 quarter with an applicable quarter in 2019. The expanded ERC also has a similar gross receipts test for eligibility. 

“We want to ultimately aid Ohio businesses and ensure they continue to be eligible for the Paycheck Protection Program loans and the Employee Retention Credit,” reads the Feb. 17 letter. Signatories included leaders representing associations for Ohio bankers, attorneys, manufacturers, auto dealers, contractors, truckers, restaurateurs, and retail merchants, as well as agriculture and medical associations. 

Wiley said OSCPA will continue to work with the DeWine administration on the issue, as well as seeking Congressional assistance. 

The Ohio BWC issued three rounds of “dividend” checks in 2020, totaling around $8 billion total. The bureau in the past has referred to these payments as either “rebates” or “dividends,” and thus far has not issued 1099 tax forms. However, BWC announced very recently that the IRS is now requiring that the 1099s be issued, and the forms are expected to reach Ohio employers very soon. Further, BWC has stated that the income will be reported in box 6, taxable grants, on the 1099-G. 

“Given this truly unique situation, the devastation that employers faced in 2020, and that these payment refunds are not a reflection of these Ohio businesses’ normal course of operations but a reflection of the state creatively helping struggling Ohio businesses, we are requesting that the three rounds of BWC premiums returned to Ohio employers in 2020 should not be included in federal gross receipts when calculating revenue during a PPP and/or ERC application and certification.”