OSCPA staff report
Governor Mike DeWine on Wednesday signed Senate Bill 18 into law, which ensures that expenses paid with forgiven Paycheck Protection Plan loans become deductible for state income tax purposes.
This OSCPA-supported legislation puts Ohio in step with recent changes to federal tax law, including deductibility of expenses from the Paycheck Protection Program and excluding $10,200 in unemployment compensation from income tax.
Because this is emergency legislation, it is enacted immediately upon the Governor’s signature. Ohio-specific provisions in S.B. 18 will exclude 2020 (and any in 2021) Ohio Bureau of Workers’ Compensation refunds/dividends from CAT; reduce pass-through entity withholding rates for out-of-state owners and exclude PPP second-draw loans from CAT.
Introduced by State Sens. Kristina Roegner, R-Hudson, and State Sen. Tim Schaffer, R-Lancaster, S.B. 18 amends Ohio law to incorporate changes in the Internal Revenue Code since March 27, 2020. 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.)
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.