Chapter 5747 | Income Tax

Section 5747.01 | Definitions.

• Effective: April 30, 2024
• Latest Legislation: House Bill 101 - 135th General Assembly

Except as otherwise expressly provided or clearly appearing from the context, any term used in this chapter that is not otherwise defined in this section has the same meaning as when used in a comparable context in the laws of the United States relating to federal income taxes or if not used in a comparable context in those laws, has the same meaning as in section 5733.40 of the Revised Code. Any reference in this chapter to the Internal Revenue Code includes other laws of the United States relating to federal income taxes.

As used in this chapter:

(A) "Adjusted gross income" or "Ohio adjusted gross income" means federal adjusted gross income, as defined and used in the Internal Revenue Code, adjusted as provided in this section:

(1) Add interest or dividends on obligations or securities of any state or of any political subdivision or authority of any state, other than this state and its subdivisions and authorities.

(2) Add interest or dividends on obligations of any authority, commission, instrumentality, territory, or possession of the United States to the extent that the interest or dividends are exempt from federal income taxes but not from state income taxes.

(3) Deduct interest or dividends on obligations of the United States and its territories and possessions or of any authority, commission, or instrumentality of the United States to the extent that the interest or dividends are included in federal adjusted gross income but exempt from state income taxes under the laws of the United States.

(4) Deduct disability and survivor's benefits to the extent included in federal adjusted gross income.

(5) Deduct the following, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income:

(a) Benefits under Title II of the Social Security Act and tier 1 railroad retirement;

(b) Railroad retirement benefits, other than tier 1 railroad retirement benefits, to the extent such amounts are exempt from state taxation under federal law.

(6) Deduct the amount of wages and salaries, if any, not otherwise allowable as a deduction but that would have been allowable as a deduction in computing federal adjusted gross income for the taxable year, had the work opportunity tax credit allowed and determined under sections 38, 51, and 52 of the Internal Revenue Code not been in effect.

(7) Deduct any interest or interest equivalent on public obligations and purchase obligations to the extent that the interest or interest equivalent is included in federal adjusted gross income.

(8) Add any loss or deduct any gain resulting from the sale, exchange, or other disposition of public obligations to the extent that the loss has been deducted or the gain has been included in computing federal adjusted gross income.

(9) Deduct or add amounts, as provided under section 5747.70 of the Revised Code, related to contributions made to or tuition units purchased under a qualified tuition program established pursuant to section 529 of the Internal Revenue Code.

(10)(a) Deduct, to the extent not otherwise allowable as a deduction or exclusion in computing federal or Ohio adjusted gross income for the taxable year, the amount the taxpayer paid during the taxable year for medical care insurance and qualified long-term care insurance for the taxpayer, the taxpayer's spouse, and dependents. No deduction for medical care insurance under division (A)(10)(a) of this section shall be allowed either to any taxpayer who is eligible to participate in any subsidized health plan maintained by any employer of the taxpayer or of the taxpayer's spouse, or to any taxpayer who is entitled to, or on application would be entitled to, benefits under part A of Title XVIII of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C. 301, as amended. For the purposes of division (A)(10)(a) of this section, "subsidized health plan" means a health plan for which the employer pays any portion of the plan's cost. The deduction allowed under division (A)(10)(a) of this section shall be the net of any related premium refunds, related premium reimbursements, or related insurance premium dividends received during the taxable year.

(b) Deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income during the taxable year, the amount the taxpayer paid during the taxable year, not compensated for by any insurance or otherwise, for medical care of the taxpayer, the taxpayer's spouse, and dependents, to the extent the expenses exceed seven and one-half per cent of the taxpayer's federal adjusted gross income.

(c) For purposes of division (A)(10) of this section, "medical care" has the meaning given in section 213 of the Internal Revenue Code, subject to the special rules, limitations, and exclusions set forth therein, and "qualified long-term care" has the same meaning given in section 7702B(c) of the Internal Revenue Code. Solely for purposes of division (A)(10)(a) of this section, "dependent" includes a person who otherwise would be a "qualifying relative" and thus a "dependent" under section 152 of the Internal Revenue Code but for the fact that the person fails to meet the income and support limitations under section 152(d)(1)(B) and (C) of the Internal Revenue Code.

(11)(a) Deduct any amount included in federal adjusted gross income solely because the amount represents a reimbursement or refund of expenses that in any year the taxpayer had deducted as an itemized deduction pursuant to section 63 of the Internal Revenue Code and applicable United States department of the treasury regulations. The deduction otherwise allowed under division (A)(11)(a) of this section shall be reduced to the extent the reimbursement is attributable to an amount the taxpayer deducted under this section in any taxable year.

(b) Add any amount not otherwise included in Ohio adjusted gross income for any taxable year to the extent that the amount is attributable to the recovery during the taxable year of any amount deducted or excluded in computing federal or Ohio adjusted gross income in any taxable year.

(12) Deduct any portion of the deduction described in section 1341(a)(2) of the Internal Revenue Code, for repaying previously reported income received under a claim of right, that meets both of the following requirements:

(a) It is allowable for repayment of an item that was included in the taxpayer's adjusted gross income for a prior taxable year and did not qualify for a credit under division (A) or (B) of section 5747.05 of the Revised Code for that year;

(b) It does not otherwise reduce the taxpayer's adjusted gross income for the current or any other taxable year.

(13) Deduct an amount equal to the deposits made to, and net investment earnings of, a medical savings account during the taxable year, in accordance with section 3924.66 of the Revised Code. The deduction allowed by division (A)(13) of this section does not apply to medical savings account deposits and earnings otherwise deducted or excluded for the current or any other taxable year from the taxpayer's federal adjusted gross income.

(14)(a) Add an amount equal to the funds withdrawn from a medical savings account during the taxable year, and the net investment earnings on those funds, when the funds withdrawn were used for any purpose other than to reimburse an account holder for, or to pay, eligible medical expenses, in accordance with section 3924.66 of the Revised Code;

(b) Add the amounts distributed from a medical savings account under division (A)(2) of section 3924.68 of the Revised Code during the taxable year.

(15) Add any amount claimed as a credit under section 5747.059 of the Revised Code to the extent that such amount satisfies either of the following:

(a) The amount was deducted or excluded from the computation of the taxpayer's federal adjusted gross income as required to be reported for the taxpayer's taxable year under the Internal Revenue Code;

(b) The amount resulted in a reduction of the taxpayer's federal adjusted gross income as required to be reported for any of the taxpayer's taxable years under the Internal Revenue Code.

(16) Deduct the amount contributed by the taxpayer to an individual development account program established by a county department of job and family services pursuant to sections 329.11 to 329.14 of the Revised Code for the purpose of matching funds deposited by program participants. On request of the tax commissioner, the taxpayer shall provide any information that, in the tax commissioner's opinion, is necessary to establish the amount deducted under division (A)(16) of this section.

(17)(a)(i) Subject to divisions (A)(17)(a)(iii), (iv), and (v) of this section, add five-sixths of the amount of depreciation expense allowed by subsection (k) of section 168 of the Internal Revenue Code, including the taxpayer's proportionate or distributive share of the amount of depreciation expense allowed by that subsection to a pass-through entity in which the taxpayer has a direct or indirect ownership interest.

(ii) Subject to divisions (A)(17)(a)(iii), (iv), and (v) of this section, add five-sixths of the amount of qualifying section 179 depreciation expense, including the taxpayer's proportionate or distributive share of the amount of qualifying section 179 depreciation expense allowed to any pass-through entity in which the taxpayer has a direct or indirect ownership interest.

(iii) Subject to division (A)(17)(a)(v) of this section, for taxable years beginning in 2012 or thereafter, if the increase in income taxes withheld by the taxpayer is equal to or greater than ten per cent of income taxes withheld by the taxpayer during the taxpayer's immediately preceding taxable year, "two-thirds" shall be substituted for "five-sixths" for the purpose of divisions (A)(17)(a)(i) and (ii) of this section.

(iv) Subject to division (A)(17)(a)(v) of this section, for taxable years beginning in 2012 or thereafter, a taxpayer is not required to add an amount under division (A)(17) of this section if the increase in income taxes withheld by the taxpayer and by any pass-through entity in which the taxpayer has a direct or indirect ownership interest is equal to or greater than the sum of (I) the amount of qualifying section 179 depreciation expense and (II) the amount of depreciation expense allowed to the taxpayer by subsection (k) of section 168 of the Internal Revenue Code, and including the taxpayer's proportionate or distributive shares of such amounts allowed to any such pass-through entities.

(v) If a taxpayer directly or indirectly incurs a net operating loss for the taxable year for federal income tax purposes, to the extent such loss resulted from depreciation expense allowed by subsection (k) of section 168 of the Internal Revenue Code and by qualifying section 179 depreciation expense, "the entire" shall be substituted for "five-sixths of the" for the purpose of divisions (A)(17)(a)(i) and (ii) of this section.

The tax commissioner, under procedures established by the commissioner, may waive the add-backs related to a pass-through entity if the taxpayer owns, directly or indirectly, less than five per cent of the pass-through entity.

(b) Nothing in division (A)(17) of this section shall be construed to adjust or modify the adjusted basis of any asset.

(c) To the extent the add-back required under division (A)(17)(a) of this section is attributable to property generating nonbusiness income or loss allocated under section 5747.20 of the Revised Code, the add-back shall be sitused to the same location as the nonbusiness income or loss generated by the property for the purpose of determining the credit under division (A) of section 5747.05 of the Revised Code. Otherwise, the add-back shall be apportioned, subject to one or more of the four alternative methods of apportionment enumerated in section 5747.21 of the Revised Code.

(d) For the purposes of division (A)(17)(a)(v) of this section, net operating loss carryback and carryforward shall not include the allowance of any net operating loss deduction carryback or carryforward to the taxable year to the extent such loss resulted from depreciation allowed by section 168(k) of the Internal Revenue Code and by the qualifying section 179 depreciation expense amount.

(e) For the purposes of divisions (A)(17) and (18) of this section:

(i) "Income taxes withheld" means the total amount withheld and remitted under sections 5747.06 and 5747.07 of the Revised Code by an employer during the employer's taxable year.

(ii) "Increase in income taxes withheld" means the amount by which the amount of income taxes withheld by an employer during the employer's current taxable year exceeds the amount of income taxes withheld by that employer during the employer's immediately preceding taxable year.

(iii) "Qualifying section 179 depreciation expense" means the difference between (I) the amount of depreciation expense directly or indirectly allowed to a taxpayer under section 179 of the Internal Revised Code, and (II) the amount of depreciation expense directly or indirectly allowed to the taxpayer under section 179 of the Internal Revenue Code as that section existed on December 31, 2002.

(18)(a) If the taxpayer was required to add an amount under division (A)(17)(a) of this section for a taxable year, deduct one of the following:

(i) One-fifth of the amount so added for each of the five succeeding taxable years if the amount so added was five-sixths of qualifying section 179 depreciation expense or depreciation expense allowed by subsection (k) of section 168 of the Internal Revenue Code;

(ii) One-half of the amount so added for each of the two succeeding taxable years if the amount so added was two-thirds of such depreciation expense;

(iii) One-sixth of the amount so added for each of the six succeeding taxable years if the entire amount of such depreciation expense was so added.

(b) If the amount deducted under division (A)(18)(a) of this section is attributable to an add-back allocated under division (A)(17)(c) of this section, the amount deducted shall be sitused to the same location. Otherwise, the add-back shall be apportioned using the apportionment factors for the taxable year in which the deduction is taken, subject to one or more of the four alternative methods of apportionment enumerated in section 5747.21 of the Revised Code.

(c) No deduction is available under division (A)(18)(a) of this section with regard to any depreciation allowed by section 168(k) of the Internal Revenue Code and by the qualifying section 179 depreciation expense amount to the extent that such depreciation results in or increases a federal net operating loss carryback or carryforward. If no such deduction is available for a taxable year, the taxpayer may carry forward the amount not deducted in such taxable year to the next taxable year and add that amount to any deduction otherwise available under division (A)(18)(a) of this section for that next taxable year. The carryforward of amounts not so deducted shall continue until the entire addition required by division (A)(17)(a) of this section has been deducted.

(19) Deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income for the taxable year, the amount the taxpayer received during the taxable year as reimbursement for life insurance premiums under section 5919.31 of the Revised Code.

(20) Deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income for the taxable year, the amount the taxpayer received during the taxable year as a death benefit paid by the adjutant general under section 5919.33 of the Revised Code.

(21) Deduct, to the extent included in federal adjusted gross income and not otherwise allowable as a deduction or exclusion in computing federal or Ohio adjusted gross income for the taxable year, military pay and allowances received by the taxpayer during the taxable year for active duty service in the United States army, air force, navy, marine corps, or coast guard or reserve components thereof or the national guard. The deduction may not be claimed for military pay and allowances received by the taxpayer while the taxpayer is stationed in this state.

(22) Deduct, to the extent not otherwise allowable as a deduction or exclusion in computing federal or Ohio adjusted gross income for the taxable year and not otherwise compensated for by any other source, the amount of qualified organ donation expenses incurred by the taxpayer during the taxable year, not to exceed ten thousand dollars. A taxpayer may deduct qualified organ donation expenses only once for all taxable years beginning with taxable years beginning in 2007.

For the purposes of division (A)(22) of this section:

(a) "Human organ" means all or any portion of a human liver, pancreas, kidney, intestine, or lung, and any portion of human bone marrow.

(b) "Qualified organ donation expenses" means travel expenses, lodging expenses, and wages and salary forgone by a taxpayer in connection with the taxpayer's donation, while living, of one or more of the taxpayer's human organs to another human being.

(23) Deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income for the taxable year, amounts received by the taxpayer as retired personnel pay for service in the uniformed services or reserve components thereof, or the national guard, or received by the surviving spouse or former spouse of such a taxpayer under the survivor benefit plan on account of such a taxpayer's death. If the taxpayer receives income on account of retirement paid under the federal civil service retirement system or federal employees retirement system, or under any successor retirement program enacted by the congress of the United States that is established and maintained for retired employees of the United States government, and such retirement income is based, in whole or in part, on credit for the taxpayer's uniformed service, the deduction allowed under this division shall include only that portion of such retirement income that is attributable to the taxpayer's uniformed service, to the extent that portion of such retirement income is otherwise included in federal adjusted gross income and is not otherwise deducted under this section. Any amount deducted under division (A)(23) of this section is not included in a taxpayer's adjusted gross income for the purposes of section 5747.055 of the Revised Code. No amount may be deducted under division (A)(23) of this section on the basis of which a credit was claimed under section 5747.055 of the Revised Code.

(24) Deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income for the taxable year, the amount the taxpayer received during the taxable year from the military injury relief fund created in section 5902.05 of the Revised Code.

(25) Deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income for the taxable year, the amount the taxpayer received as a veterans bonus during the taxable year from the Ohio department of veterans services as authorized by Section 2r of Article VIII, Ohio Constitution.

(26) Deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income for the taxable year, any income derived from a transfer agreement or from the enterprise transferred under that agreement under section 4313.02 of the Revised Code.

(27) Deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income for the taxable year, Ohio college opportunity or federal Pell grant amounts received by the taxpayer or the taxpayer's spouse or dependent pursuant to section 3333.122 of the Revised Code or 20 U.S.C. 1070a, et seq., and used to pay room or board furnished by the educational institution for which the grant was awarded at the institution's facilities, including meal plans administered by the institution. For the purposes of this division, receipt of a grant includes the distribution of a grant directly to an educational institution and the crediting of the grant to the enrollee's account with the institution.

(28) Deduct from the portion of an individual's federal adjusted gross income that is business income, to the extent not otherwise deducted or excluded in computing federal adjusted gross income for the taxable year, one hundred twenty-five thousand dollars for each spouse if spouses file separate returns under section 5747.08 of the Revised Code or two hundred fifty thousand dollars for all other individuals.

(29) Deduct, as provided under section 5747.78 of the Revised Code, contributions to ABLE savings accounts made in accordance with sections 113.50 to 113.56 of the Revised Code.

(30)(a) Deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income during the taxable year, all of the following:

(i) Compensation paid to a qualifying employee described in division (A)(14)(a) of section 5703.94 of the Revised Code to the extent such compensation is for disaster work conducted in this state during a disaster response period pursuant to a qualifying solicitation received by the employee's employer;

(ii) Compensation paid to a qualifying employee described in division (A)(14)(b) of section 5703.94 of the Revised Code to the extent such compensation is for disaster work conducted in this state by the employee during the disaster response period on critical infrastructure owned or used by the employee's employer;

(iii) Income received by an out-of-state disaster business for disaster work conducted in this state during a disaster response period, or, if the out-of-state disaster business is a pass-through entity, a taxpayer's distributive share of the pass-through entity's income from the business conducting disaster work in this state during a disaster response period, if, in either case, the disaster work is conducted pursuant to a qualifying solicitation received by the business.

(b) All terms used in division (A)(30) of this section have the same meanings as in section 5703.94 of the Revised Code.

(31) For a taxpayer who is a qualifying Ohio educator, deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income for the taxable year, the lesser of two hundred fifty dollars or the amount of expenses described in subsections (a)(2)(D)(i) and (ii) of section 62 of the Internal Revenue Code paid or incurred by the taxpayer during the taxpayer's taxable year in excess of the amount the taxpayer is authorized to deduct for that taxable year under subsection (a)(2)(D) of that section.

(32) Deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income for the taxable year, amounts received by the taxpayer as a disability severance payment, computed under 10 U.S.C. 1212, following discharge or release under honorable conditions from the armed forces, as defined by 10 U.S.C. 101.

(33) Deduct, to the extent not otherwise deducted or excluded in computing federal adjusted gross income or Ohio adjusted gross income, amounts not subject to tax due to an agreement entered into under division (A)(2) of section 5747.05 of the Revised Code.

(34) Deduct amounts as provided under section 5747.79 of the Revised Code related to the taxpayer's qualifying capital gains and deductible payroll.

To the extent a qualifying capital gain described under division (A)(34) of this section is business income, the taxpayer shall deduct those gains under this division before deducting any such gains under division (A)(28) of this section.

(35)(a) For taxable years beginning in or after 2026, deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income for the taxable year:

(i) One hundred per cent of the capital gain received by the taxpayer in the taxable year from a qualifying interest in an Ohio venture capital operating company attributable to the company's investments in Ohio businesses during the period for which the company was an Ohio venture operating company; and

(ii) Fifty per cent of the capital gain received by the taxpayer in the taxable year from a qualifying interest in an Ohio venture capital operating company attributable to the company's investments in all other businesses during the period for which the company was an Ohio venture operating company.

(b) Add amounts previously deducted by the taxpayer under division (A)(35)(a) of this section if the director of development certifies to the tax commissioner that the requirements for the deduction were not met.

(c) All terms used in division (A)(35) of this section have the same meanings as in section 122.851 of the Revised Code.

(d) To the extent a capital gain described in division (A)(35)(a) of this section is business income, the taxpayer shall apply that division before applying division (A)(28) of this section.

(36) Add, to the extent not otherwise included in computing federal or Ohio adjusted gross income for any taxable year, the taxpayer's proportionate share of the amount of the tax levied under section 5747.38 of the Revised Code and paid by an electing pass-through entity for the taxable year.

Notwithstanding any provision of the Revised Code to the contrary, the portion of the addition required by division (A)(36) of this section related to the apportioned business income of the pass-through entity shall be considered business income under division (B) of this section. Such addition is eligible for the deduction in division (A)(28) of this section, subject to the applicable dollar limitations, and the tax rate prescribed by division (A)(4)(a) of section 5747.02 of the Revised Code. The taxpayer shall provide, upon request of the tax commissioner, any documentation necessary to verify the portion of the addition that is business income under this division.

(37) Deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income for the taxable year, amounts delivered to a qualifying institution pursuant to section 3333.128 of the Revised Code for the benefit of the taxpayer or the taxpayer's spouse or dependent.

(38) Deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income for the taxable year, amounts received under the Ohio adoption grant program pursuant to section 5101.191 of the Revised Code.

(39) Deduct, to the extent included in federal adjusted gross income, income attributable to amounts provided to a taxpayer for any of the purposes for which an exclusion would have been authorized under section 139 of the Internal Revenue Code if the train derailment near the city of East Palestine on February 3, 2023, had been a qualified disaster pursuant to that section, or to compensate for lost business resulting from that derailment, if such amounts are provided by any of the following:

(a) A federal, state, or local government agency;

(b) A railroad company, as that term is defined in section 5727.01 of the Revised Code;

(c) Any subsidiary, insurer, or agent of a railroad company or any related person.

Notwithstanding any provision to the contrary, the derailment is not required to meet the definition of a "qualified disaster" pursuant to section 139 of the Internal Revenue Code to qualify for the deduction under this section.

(40) Deduct, to the extent included in federal adjusted gross income, income attributable to loan repayments on behalf of the taxpayer under the rural practice incentive program under section 3333.135 of the Revised Code.

(41) Add any income taxes deducted in computing federal or Ohio adjusted gross income to the extent the income taxes were derived from income subject to a tax levied in another state or the District of Columbia when such tax was enacted for purposes of complying with internal revenue service notice 2020-75.

Notwithstanding any provision of the Revised Code to the contrary, the portion of the addition required by division (A)(41) of this section related to the apportioned business income of the pass-through entity shall be considered business income under division (B) of this section. Such addition is eligible for the deduction in division (A)(28) of this section, subject to the applicable dollar limitations, and the tax rate prescribed by division (A)(4)(a) of section 5747.02 of the Revised Code. The taxpayer shall provide, upon request of the tax commissioner, any documentation necessary to verify the portion of the addition that is business income under this division.

(42) Deduct amounts contributed to a homeownership savings account and calculated pursuant to divisions (B) and (C) of section 5747.85 of the Revised Code.

(43) If the taxpayer is the account owner, add the amount of funds withdrawn from a homeownership savings account not used for eligible expenses, regardless of who deposited those funds. As used in division (A)(43) of this section, "homeownership savings account," "account owner," and "eligible expenses" have the same meanings as in section 5747.85 of the Revised Code.

(B) "Business income" means income, including gain or loss, arising from transactions, activities, and sources in the regular course of a trade or business and includes income, gain, or loss from real property, tangible property, and intangible property if the acquisition, rental, management, and disposition of the property constitute integral parts of the regular course of a trade or business operation. "Business income" includes income, including gain or loss, from a partial or complete liquidation of a business, including, but not limited to, gain or loss from the sale or other disposition of goodwill or the sale of an equity or ownership interest in a business.

As used in this division, the "sale of an equity or ownership interest in a business" means sales to which either or both of the following apply:

(1) The sale is treated for federal income tax purposes as the sale of assets.

(2) The seller materially participated, as described in 26 C.F.R. 1.469-5T, in the activities of the business during the taxable year in which the sale occurs or during any of the five preceding taxable years.

(C) "Nonbusiness income" means all income other than business income and may include, but is not limited to, compensation, rents and royalties from real or tangible personal property, capital gains, interest, dividends and distributions, patent or copyright royalties, or lottery winnings, prizes, and awards.

(D) "Compensation" means any form of remuneration paid to an employee for personal services.

(E) "Fiduciary" means a guardian, trustee, executor, administrator, receiver, conservator, or any other person acting in any fiduciary capacity for any individual, trust, or estate.

(F) "Fiscal year" means an accounting period of twelve months ending on the last day of any month other than December.

(G) "Individual" means any natural person.

(H) "Internal Revenue Code" means the "Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended.

(I) "Resident" means any of the following:

(1) An individual who is domiciled in this state, subject to section 5747.24 of the Revised Code;

(2) The estate of a decedent who at the time of death was domiciled in this state. The domicile tests of section 5747.24 of the Revised Code are not controlling for purposes of division (I)(2) of this section.

(3) A trust that, in whole or part, resides in this state. If only part of a trust resides in this state, the trust is a resident only with respect to that part.

For the purposes of division (I)(3) of this section:

(a) A trust resides in this state for the trust's current taxable year to the extent, as described in division (I)(3)(d) of this section, that the trust consists directly or indirectly, in whole or in part, of assets, net of any related liabilities, that were transferred, or caused to be transferred, directly or indirectly, to the trust by any of the following:

(i) A person, a court, or a governmental entity or instrumentality on account of the death of a decedent, but only if the trust is described in division (I)(3)(e)(i) or (ii) of this section;

(ii) A person who was domiciled in this state for the purposes of this chapter when the person directly or indirectly transferred assets to an irrevocable trust, but only if at least one of the trust's qualifying beneficiaries is domiciled in this state for the purposes of this chapter during all or some portion of the trust's current taxable year;

(iii) A person who was domiciled in this state for the purposes of this chapter when the trust document or instrument or part of the trust document or instrument became irrevocable, but only if at least one of the trust's qualifying beneficiaries is a resident domiciled in this state for the purposes of this chapter during all or some portion of the trust's current taxable year. If a trust document or instrument became irrevocable upon the death of a person who at the time of death was domiciled in this state for purposes of this chapter, that person is a person described in division (I)(3)(a)(iii) of this section.

(b) A trust is irrevocable to the extent that the transferor is not considered to be the owner of the net assets of the trust under sections 671 to 678 of the Internal Revenue Code.

(c) With respect to a trust other than a charitable lead trust, "qualifying beneficiary" has the same meaning as "potential current beneficiary" as defined in section 1361(e)(2) of the Internal Revenue Code, and with respect to a charitable lead trust "qualifying beneficiary" is any current, future, or contingent beneficiary, but with respect to any trust "qualifying beneficiary" excludes a person or a governmental entity or instrumentality to any of which a contribution would qualify for the charitable deduction under section 170 of the Internal Revenue Code.

(d) For the purposes of division (I)(3)(a) of this section, the extent to which a trust consists directly or indirectly, in whole or in part, of assets, net of any related liabilities, that were transferred directly or indirectly, in whole or part, to the trust by any of the sources enumerated in that division shall be ascertained by multiplying the fair market value of the trust's assets, net of related liabilities, by the qualifying ratio, which shall be computed as follows:

(i) The first time the trust receives assets, the numerator of the qualifying ratio is the fair market value of those assets at that time, net of any related liabilities, from sources enumerated in division (I)(3)(a) of this section. The denominator of the qualifying ratio is the fair market value of all the trust's assets at that time, net of any related liabilities.

(ii) Each subsequent time the trust receives assets, a revised qualifying ratio shall be computed. The numerator of the revised qualifying ratio is the sum of (1) the fair market value of the trust's assets immediately prior to the subsequent transfer, net of any related liabilities, multiplied by the qualifying ratio last computed without regard to the subsequent transfer, and (2) the fair market value of the subsequently transferred assets at the time transferred, net of any related liabilities, from sources enumerated in division (I)(3)(a) of this section. The denominator of the revised qualifying ratio is the fair market value of all the trust's assets immediately after the subsequent transfer, net of any related liabilities.

(iii) Whether a transfer to the trust is by or from any of the sources enumerated in division (I)(3)(a) of this section shall be ascertained without regard to the domicile of the trust's beneficiaries.

(e) For the purposes of division (I)(3)(a)(i) of this section:

(i) A trust is described in division (I)(3)(e)(i) of this section if the trust is a testamentary trust and the testator of that testamentary trust was domiciled in this state at the time of the testator's death for purposes of the taxes levied under Chapter 5731. of the Revised Code.

(ii) A trust is described in division (I)(3)(e)(ii) of this section if the transfer is a qualifying transfer described in any of divisions (I)(3)(f)(i) to (vi) of this section, the trust is an irrevocable inter vivos trust, and at least one of the trust's qualifying beneficiaries is domiciled in this state for purposes of this chapter during all or some portion of the trust's current taxable year.

(f) For the purposes of division (I)(3)(e)(ii) of this section, a "qualifying transfer" is a transfer of assets, net of any related liabilities, directly or indirectly to a trust, if the transfer is described in any of the following:

(i) The transfer is made to a trust, created by the decedent before the decedent's death and while the decedent was domiciled in this state for the purposes of this chapter, and, prior to the death of the decedent, the trust became irrevocable while the decedent was domiciled in this state for the purposes of this chapter.

(ii) The transfer is made to a trust to which the decedent, prior to the decedent's death, had directly or indirectly transferred assets, net of any related liabilities, while the decedent was domiciled in this state for the purposes of this chapter, and prior to the death of the decedent the trust became irrevocable while the decedent was domiciled in this state for the purposes of this chapter.

(iii) The transfer is made on account of a contractual relationship existing directly or indirectly between the transferor and either the decedent or the estate of the decedent at any time prior to the date of the decedent's death, and the decedent was domiciled in this state at the time of death for purposes of the taxes levied under Chapter 5731. of the Revised Code.

(iv) The transfer is made to a trust on account of a contractual relationship existing directly or indirectly between the transferor and another person who at the time of the decedent's death was domiciled in this state for purposes of this chapter.

(v) The transfer is made to a trust on account of the will of a testator who was domiciled in this state at the time of the testator's death for purposes of the taxes levied under Chapter 5731. of the Revised Code.

(vi) The transfer is made to a trust created by or caused to be created by a court, and the trust was directly or indirectly created in connection with or as a result of the death of an individual who, for purposes of the taxes levied under Chapter 5731. of the Revised Code, was domiciled in this state at the time of the individual's death.

(g) The tax commissioner may adopt rules to ascertain the part of a trust residing in this state.

(J) "Nonresident" means an individual or estate that is not a resident. An individual who is a resident for only part of a taxable year is a nonresident for the remainder of that taxable year.

(K) "Pass-through entity" has the same meaning as in section 5733.04 of the Revised Code.

(L) "Return" means the notifications and reports required to be filed pursuant to this chapter for the purpose of reporting the tax due and includes declarations of estimated tax when so required.

(M) "Taxable year" means the calendar year or the taxpayer's fiscal year ending during the calendar year, or fractional part thereof, upon which the adjusted gross income is calculated pursuant to this chapter.

(N) "Taxpayer" means any person subject to the tax imposed by section 5747.02 of the Revised Code or any pass-through entity that makes the election under division (D) of section 5747.08 of the Revised Code.

(O) "Dependents" means one of the following:

(1) For taxable years beginning on or after January 1, 2018, and before January 1, 2026, dependents as defined in the Internal Revenue Code;

(2) For all other taxable years, dependents as defined in the Internal Revenue Code and as claimed in the taxpayer's federal income tax return for the taxable year or which the taxpayer would have been permitted to claim had the taxpayer filed a federal income tax return.

(P) "Principal county of employment" means, in the case of a nonresident, the county within the state in which a taxpayer performs services for an employer or, if those services are performed in more than one county, the county in which the major portion of the services are performed.

(Q) As used in sections 5747.50 to 5747.55 of the Revised Code:

(1) "Subdivision" means any county, municipal corporation, park district, or township.

(2) "Essential local government purposes" includes all functions that any subdivision is required by general law to exercise, including like functions that are exercised under a charter adopted pursuant to the Ohio Constitution.

(R) "Overpayment" means any amount already paid that exceeds the figure determined to be the correct amount of the tax.

(S) "Taxable income" or "Ohio taxable income" applies only to estates and trusts, and means federal taxable income, as defined and used in the Internal Revenue Code, adjusted as follows:

(1) Add interest or dividends, net of ordinary, necessary, and reasonable expenses not deducted in computing federal taxable income, on obligations or securities of any state or of any political subdivision or authority of any state, other than this state and its subdivisions and authorities, but only to the extent that such net amount is not otherwise includible in Ohio taxable income and is described in either division (S)(1)(a) or (b) of this section:

(a) The net amount is not attributable to the S portion of an electing small business trust and has not been distributed to beneficiaries for the taxable year;

(b) The net amount is attributable to the S portion of an electing small business trust for the taxable year.

(2) Add interest or dividends, net of ordinary, necessary, and reasonable expenses not deducted in computing federal taxable income, on obligations of any authority, commission, instrumentality, territory, or possession of the United States to the extent that the interest or dividends are exempt from federal income taxes but not from state income taxes, but only to the extent that such net amount is not otherwise includible in Ohio taxable income and is described in either division (S)(1)(a) or (b) of this section;

(3) Add the amount of personal exemption allowed to the estate pursuant to section 642(b) of the Internal Revenue Code;

(4) Deduct interest or dividends, net of related expenses deducted in computing federal taxable income, on obligations of the United States and its territories and possessions or of any authority, commission, or instrumentality of the United States to the extent that the interest or dividends are exempt from state taxes under the laws of the United States, but only to the extent that such amount is included in federal taxable income and is described in either division (S)(1)(a) or (b) of this section;

(5) Deduct the amount of wages and salaries, if any, not otherwise allowable as a deduction but that would have been allowable as a deduction in computing federal taxable income for the taxable year, had the work opportunity tax credit allowed under sections 38, 51, and 52 of the Internal Revenue Code not been in effect, but only to the extent such amount relates either to income included in federal taxable income for the taxable year or to income of the S portion of an electing small business trust for the taxable year;

(6) Deduct any interest or interest equivalent, net of related expenses deducted in computing federal taxable income, on public obligations and purchase obligations, but only to the extent that such net amount relates either to income included in federal taxable income for the taxable year or to income of the S portion of an electing small business trust for the taxable year;

(7) Add any loss or deduct any gain resulting from sale, exchange, or other disposition of public obligations to the extent that such loss has been deducted or such gain has been included in computing either federal taxable income or income of the S portion of an electing small business trust for the taxable year;

(8) Except in the case of the final return of an estate, add any amount deducted by the taxpayer on both its Ohio estate tax return pursuant to section 5731.14 of the Revised Code, and on its federal income tax return in determining federal taxable income;

(9)(a) Deduct any amount included in federal taxable income solely because the amount represents a reimbursement or refund of expenses that in a previous year the decedent had deducted as an itemized deduction pursuant to section 63 of the Internal Revenue Code and applicable treasury regulations. The deduction otherwise allowed under division (S)(9)(a) of this section shall be reduced to the extent the reimbursement is attributable to an amount the taxpayer or decedent deducted under this section in any taxable year.

(b) Add any amount not otherwise included in Ohio taxable income for any taxable year to the extent that the amount is attributable to the recovery during the taxable year of any amount deducted or excluded in computing federal or Ohio taxable income in any taxable year, but only to the extent such amount has not been distributed to beneficiaries for the taxable year.

(10) Deduct any portion of the deduction described in section 1341(a)(2) of the Internal Revenue Code, for repaying previously reported income received under a claim of right, that meets both of the following requirements:

(a) It is allowable for repayment of an item that was included in the taxpayer's taxable income or the decedent's adjusted gross income for a prior taxable year and did not qualify for a credit under division (A) or (B) of section 5747.05 of the Revised Code for that year.

(b) It does not otherwise reduce the taxpayer's taxable income or the decedent's adjusted gross income for the current or any other taxable year.

(11) Add any amount claimed as a credit under section 5747.059 of the Revised Code to the extent that the amount satisfies either of the following:

(a) The amount was deducted or excluded from the computation of the taxpayer's federal taxable income as required to be reported for the taxpayer's taxable year under the Internal Revenue Code;

(b) The amount resulted in a reduction in the taxpayer's federal taxable income as required to be reported for any of the taxpayer's taxable years under the Internal Revenue Code.

(12) Deduct any amount, net of related expenses deducted in computing federal taxable income, that a trust is required to report as farm income on its federal income tax return, but only if the assets of the trust include at least ten acres of land satisfying the definition of "land devoted exclusively to agricultural use" under section 5713.30 of the Revised Code, regardless of whether the land is valued for tax purposes as such land under sections 5713.30 to 5713.38 of the Revised Code. If the trust is a pass-through entity investor, section 5747.231 of the Revised Code applies in ascertaining if the trust is eligible to claim the deduction provided by division (S)(12) of this section in connection with the pass-through entity's farm income.

Except for farm income attributable to the S portion of an electing small business trust, the deduction provided by division (S)(12) of this section is allowed only to the extent that the trust has not distributed such farm income.

(13) Add the net amount of income described in section 641(c) of the Internal Revenue Code to the extent that amount is not included in federal taxable income.

(14) Deduct the amount the taxpayer would be required to deduct under division (A)(18) of this section if the taxpayer's Ohio taxable income were computed in the same manner as an individual's Ohio adjusted gross income is computed under this section.

(15) Add, to the extent not otherwise included in computing taxable income or Ohio taxable income for any taxable year, the taxpayer's proportionate share of the amount of the tax levied under section 5747.38 of the Revised Code and paid by an electing pass-through entity for the taxable year.

(16) Add any income taxes deducted in computing federal taxable income or Ohio taxable income to the extent the income taxes were derived from income subject to a tax levied in another state or the District of Columbia when such tax was enacted for purposes of complying with internal revenue service notice 2020-75.

(T) "School district income" and "school district income tax" have the same meanings as in section 5748.01 of the Revised Code.

(U) As used in divisions (A)(7), (A)(8), (S)(6), and (S)(7) of this section, "public obligations," "purchase obligations," and "interest or interest equivalent" have the same meanings as in section 5709.76 of the Revised Code.

(V) "Limited liability company" means any limited liability company formed under former Chapter 1705. of the Revised Code as that chapter existed prior to February 11, 2022, Chapter 1706. of the Revised Code, or the laws of any other state.

(W) "Pass-through entity investor" means any person who, during any portion of a taxable year of a pass-through entity, is a partner, member, shareholder, or equity investor in that pass-through entity.

(X) "Banking day" has the same meaning as in section 1304.01 of the Revised Code.

(Y) "Month" means a calendar month.

(Z) "Quarter" means the first three months, the second three months, the third three months, or the last three months of the taxpayer's taxable year.

(AA)(1) "Modified business income" means the business income included in a trust's Ohio taxable income after such taxable income is first reduced by the qualifying trust amount, if any.

(2) "Qualifying trust amount" of a trust means capital gains and losses from the sale, exchange, or other disposition of equity or ownership interests in, or debt obligations of, a qualifying investee to the extent included in the trust's Ohio taxable income, but only if the following requirements are satisfied:

(a) The book value of the qualifying investee's physical assets in this state and everywhere, as of the last day of the qualifying investee's fiscal or calendar year ending immediately prior to the date on which the trust recognizes the gain or loss, is available to the trust.

(b) The requirements of section 5747.011 of the Revised Code are satisfied for the trust's taxable year in which the trust recognizes the gain or loss.

Any gain or loss that is not a qualifying trust amount is modified business income, qualifying investment income, or modified nonbusiness income, as the case may be.

(3) "Modified nonbusiness income" means a trust's Ohio taxable income other than modified business income, other than the qualifying trust amount, and other than qualifying investment income, as defined in section 5747.012 of the Revised Code, to the extent such qualifying investment income is not otherwise part of modified business income.

(4) "Modified Ohio taxable income" applies only to trusts, and means the sum of the amounts described in divisions (AA)(4)(a) to (c) of this section:

(a) The fraction, calculated under section 5747.013, and applying section 5747.231 of the Revised Code, multiplied by the sum of the following amounts:

(i) The trust's modified business income;

(ii) The trust's qualifying investment income, as defined in section 5747.012 of the Revised Code, but only to the extent the qualifying investment income does not otherwise constitute modified business income and does not otherwise constitute a qualifying trust amount.

(b) The qualifying trust amount multiplied by a fraction, the numerator of which is the sum of the book value of the qualifying investee's physical assets in this state on the last day of the qualifying investee's fiscal or calendar year ending immediately prior to the day on which the trust recognizes the qualifying trust amount, and the denominator of which is the sum of the book value of the qualifying investee's total physical assets everywhere on the last day of the qualifying investee's fiscal or calendar year ending immediately prior to the day on which the trust recognizes the qualifying trust amount. If, for a taxable year, the trust recognizes a qualifying trust amount with respect to more than one qualifying investee, the amount described in division (AA)(4)(b) of this section shall equal the sum of the products so computed for each such qualifying investee.

(c)(i) With respect to a trust or portion of a trust that is a resident as ascertained in accordance with division (I)(3)(d) of this section, its modified nonbusiness income.

(ii) With respect to a trust or portion of a trust that is not a resident as ascertained in accordance with division (I)(3)(d) of this section, the amount of its modified nonbusiness income satisfying the descriptions in divisions (B)(2) to (5) of section 5747.20 of the Revised Code, except as otherwise provided in division (AA)(4)(c)(ii) of this section. With respect to a trust or portion of a trust that is not a resident as ascertained in accordance with division (I)(3)(d) of this section, the trust's portion of modified nonbusiness income recognized from the sale, exchange, or other disposition of a debt interest in or equity interest in a section 5747.212 entity, as defined in section 5747.212 of the Revised Code, without regard to division (A) of that section, shall not be allocated to this state in accordance with section 5747.20 of the Revised Code but shall be apportioned to this state in accordance with division (B) of section 5747.212 of the Revised Code without regard to division (A) of that section.

If the allocation and apportionment of a trust's income under divisions (AA)(4)(a) and (c) of this section do not fairly represent the modified Ohio taxable income of the trust in this state, the alternative methods described in division (C) of section 5747.21 of the Revised Code may be applied in the manner and to the same extent provided in that section.

(5)(a) Except as set forth in division (AA)(5)(b) of this section, "qualifying investee" means a person in which a trust has an equity or ownership interest, or a person or unit of government the debt obligations of either of which are owned by a trust. For the purposes of division (AA)(2)(a) of this section and for the purpose of computing the fraction described in division (AA)(4)(b) of this section, all of the following apply:

(i) If the qualifying investee is a member of a qualifying controlled group on the last day of the qualifying investee's fiscal or calendar year ending immediately prior to the date on which the trust recognizes the gain or loss, then "qualifying investee" includes all persons in the qualifying controlled group on such last day.

(ii) If the qualifying investee, or if the qualifying investee and any members of the qualifying controlled group of which the qualifying investee is a member on the last day of the qualifying investee's fiscal or calendar year ending immediately prior to the date on which the trust recognizes the gain or loss, separately or cumulatively own, directly or indirectly, on the last day of the qualifying investee's fiscal or calendar year ending immediately prior to the date on which the trust recognizes the qualifying trust amount, more than fifty per cent of the equity of a pass-through entity, then the qualifying investee and the other members are deemed to own the proportionate share of the pass-through entity's physical assets which the pass-through entity directly or indirectly owns on the last day of the pass-through entity's calendar or fiscal year ending within or with the last day of the qualifying investee's fiscal or calendar year ending immediately prior to the date on which the trust recognizes the qualifying trust amount.

(iii) For the purposes of division (AA)(5)(a)(iii) of this section, "upper level pass-through entity" means a pass-through entity directly or indirectly owning any equity of another pass-through entity, and "lower level pass-through entity" means that other pass-through entity.

An upper level pass-through entity, whether or not it is also a qualifying investee, is deemed to own, on the last day of the upper level pass-through entity's calendar or fiscal year, the proportionate share of the lower level pass-through entity's physical assets that the lower level pass-through entity directly or indirectly owns on the last day of the lower level pass-through entity's calendar or fiscal year ending within or with the last day of the upper level pass-through entity's fiscal or calendar year. If the upper level pass-through entity directly and indirectly owns less than fifty per cent of the equity of the lower level pass-through entity on each day of the upper level pass-through entity's calendar or fiscal year in which or with which ends the calendar or fiscal year of the lower level pass-through entity and if, based upon clear and convincing evidence, complete information about the location and cost of the physical assets of the lower pass-through entity is not available to the upper level pass-through entity, then solely for purposes of ascertaining if a gain or loss constitutes a qualifying trust amount, the upper level pass-through entity shall be deemed as owning no equity of the lower level pass-through entity for each day during the upper level pass-through entity's calendar or fiscal year in which or with which ends the lower level pass-through entity's calendar or fiscal year. Nothing in division (AA)(5)(a)(iii) of this section shall be construed to provide for any deduction or exclusion in computing any trust's Ohio taxable income.

(b) With respect to a trust that is not a resident for the taxable year and with respect to a part of a trust that is not a resident for the taxable year, "qualifying investee" for that taxable year does not include a C corporation if both of the following apply:

(i) During the taxable year the trust or part of the trust recognizes a gain or loss from the sale, exchange, or other disposition of equity or ownership interests in, or debt obligations of, the C corporation.

(ii) Such gain or loss constitutes nonbusiness income.

(6) "Available" means information is such that a person is able to learn of the information by the due date plus extensions, if any, for filing the return for the taxable year in which the trust recognizes the gain or loss.

(BB) "Qualifying controlled group" has the same meaning as in section 5733.04 of the Revised Code.

(CC) "Related member" has the same meaning as in section 5733.042 of the Revised Code.

(DD)(1) For the purposes of division (DD) of this section:

(a) "Qualifying person" means any person other than a qualifying corporation.

(b) "Qualifying corporation" means any person classified for federal income tax purposes as an association taxable as a corporation, except either of the following:

(i) A corporation that has made an election under subchapter S, chapter one, subtitle A, of the Internal Revenue Code for its taxable year ending within, or on the last day of, the investor's taxable year;

(ii) A subsidiary that is wholly owned by any corporation that has made an election under subchapter S, chapter one, subtitle A of the Internal Revenue Code for its taxable year ending within, or on the last day of, the investor's taxable year.

(2) For the purposes of this chapter, unless expressly stated otherwise, no qualifying person indirectly owns any asset directly or indirectly owned by any qualifying corporation.

(EE) For purposes of this chapter and Chapter 5751. of the Revised Code:

(1) "Trust" does not include a qualified pre-income tax trust.

(2) A "qualified pre-income tax trust" is any pre-income tax trust that makes a qualifying pre-income tax trust election as described in division (EE)(3) of this section.

(3) A "qualifying pre-income tax trust election" is an election by a pre-income tax trust to subject to the tax imposed by section 5751.02 of the Revised Code the pre-income tax trust and all pass-through entities of which the trust owns or controls, directly, indirectly, or constructively through related interests, five per cent or more of the ownership or equity interests. The trustee shall notify the tax commissioner in writing of the election on or before April 15, 2006. The election, if timely made, shall be effective on and after January 1, 2006, and shall apply for all tax periods and tax years until revoked by the trustee of the trust.

(4) A "pre-income tax trust" is a trust that satisfies all of the following requirements:

(a) The document or instrument creating the trust was executed by the grantor before January 1, 1972;

(b) The trust became irrevocable upon the creation of the trust; and

(c) The grantor was domiciled in this state at the time the trust was created.

(FF) "Uniformed services" has the same meaning as in 10 U.S.C. 101.

(GG) "Taxable business income" means the amount by which an individual's business income that is included in federal adjusted gross income exceeds the amount of business income the individual is authorized to deduct under division (A)(28) of this section for the taxable year.

(HH) "Employer" does not include a franchisor with respect to the franchisor's relationship with a franchisee or an employee of a franchisee, unless the franchisor agrees to assume that role in writing or a court of competent jurisdiction determines that the franchisor exercises a type or degree of control over the franchisee or the franchisee's employees that is not customarily exercised by a franchisor for the purpose of protecting the franchisor's trademark, brand, or both. For purposes of this division, "franchisor" and "franchisee" have the same meanings as in 16 C.F.R. 436.1.

(II) "Modified adjusted gross income" means Ohio adjusted gross income plus any amount deducted under divisions (A)(28) and (34) of this section for the taxable year.

(JJ) "Qualifying Ohio educator" means an individual who, for a taxable year, qualifies as an eligible educator, as that term is defined in section 62 of the Internal Revenue Code, and who holds a certificate, license, or permit described in Chapter 3319. or section 3301.071 of the Revised Code.

Last updated July 22, 2024 at 1:31 PM

Section 5747.011 | Gain or loss included in trust's Ohio taxable income.

• Effective: March 27, 2020
• Latest Legislation: House Bill 197 - 133rd General Assembly

(A) As used in this section:

(1) "Qualifying closely-held C corporation" means a person classified for federal income tax purposes as an association taxed as a corporation and that has more than fifty per cent of the value of its outstanding stock or equity owned, directly or indirectly, by or for not more than five qualifying persons. For the purposes of this division, the ownership of stock shall be determined under the rules set forth in section 544 of the Internal Revenue Code.

(2) "Qualifying person" means an individual; an organization described in section 401(a), 501(c)(17), or 509(a) of the Internal Revenue Code; or a portion of a trust permanently set aside or to be used exclusively for the purposes described in section 642(c) of the Internal Revenue Code or a corresponding provision of a prior federal income tax law.

(3) "Qualifying limited liability company" means a limited liability company that is not classified for federal income tax purposes as an association taxed as a corporation.

(4) "Ownership interest" means the equity or ownership interest in, or debt obligation of, a "qualifying investee" as defined in section 5747.01 of the Revised Code.

(5) "Qualifying individual beneficiary" has the same meaning as qualifying beneficiary as used in division (I)(3)(c) of section 5747.01 of the Revised Code, but is limited to individuals.

(6) "Family" of an individual means only the individual's spouse; the individual's ancestors, limited to the individual's parents, grandparents, and great grandparents; the siblings of such ancestors, whether by the whole or half blood or by legal adoption; the lineal descendants of such ancestors and siblings; persons legally adopted by such ancestors or by such siblings; and the spouses of such ancestors, siblings, legally adopted persons, and lineal descendants.

(B) The requirements of this division apply for purposes of division (AA)(2)(b) of section 5747.01 of the Revised Code and for the purposes of division (D) of section 5747.012 of the Revised Code. Gain or loss included in a trust's Ohio taxable income is not a qualifying trust amount unless the trust's ownership interest in the qualifying investee is at least five per cent of the total outstanding ownership interests in such qualifying investee at any time during the ten-year period ending on the last day of the trust's taxable year in which the sale, exchange, or other disposition occurs. Nothing in this section negates the requirements in division (AA)(2) of section 5747.01 of the Revised Code.

For the purpose of ascertaining whether the trust's ownership interest in a qualifying investee is at least five per cent of the total outstanding ownership interests in such qualifying investee, the following apply:

(1) On each day, an ownership interest owned, directly or indirectly, by or for a qualifying closely-held C corporation, an S corporation, a partnership other than a publicly traded partnership, a qualifying limited liability company, an estate, or a trust that is irrevocable as defined in division (I)(3)(b) of section 5747.01 of the Revised Code is considered as being owned proportionately on the same day by the equity investors of such qualifying closely-held C corporation, S corporation, partnership, or qualifying limited liability company, or by the beneficiaries of such estate or trust, as the case may be. For the purposes of division (B)(1) of this section, a beneficiary's proportionate share of an ownership interest held by a trust shall be ascertained in accordance with section 544(a)(1) of the Internal Revenue Code.

(2) On each day, a trust, hereinafter referred to as the first trust, is considered as owning any ownership interest owned, directly or indirectly, by or for another trust, hereinafter referred to as the second trust, if on the same day the second trust has at least one individual trustee who is either (a) a trustee of the first trust, or (b) a member of a family that includes at least one of the trustees of the first trust.

(3) On each day, a trust, hereinafter referred to as the first trust, is considered as owning any ownership interest owned, directly or indirectly, by or for another trust, hereinafter referred to as the second trust, if on the same day the second trust has at least one qualifying individual beneficiary who is either (a) a qualifying individual beneficiary of the first trust or (b) a member of a family which includes a qualifying individual beneficiary of the first trust.

(4) An ownership interest constructively owned by a person by reason of the application of division (B)(1) of this section shall, for the purpose of applying divisions (B)(1) to (3) of this section, be treated as actually owned by that person.

(5) An ownership interest constructively owned by a trust by reason of the application of division (B)(2) or (3) of this section shall not be treated as actually owned by that trust for purposes of applying divisions (B)(1) to (3) of this section.

(6) If an ownership interest may be considered as owned by a trust under division (B)(1) or (2) of this section, the ownership interest shall be considered owned by that trust under division (B)(2) of this section.

(7) If an ownership interest may be considered as owned by a trust under division (B)(1) or (3) of this section, the ownership interest shall be considered owned by that trust under division (B)(3) of this section.

Section 5747.012 | Tax treatment of qualifying investment income from pass-through entity.

• Effective: March 27, 2020
• Latest Legislation: House Bill 197 - 133rd General Assembly

This section applies for the purposes of divisions (AA)(3) and (4)(a)(ii) of section 5747.01 of the Revised Code.

(A) As used in this section:

(1)(a) Except as set forth in division (A)(1)(b) of this section, "qualifying investment income" means the portion of a qualifying investment pass-through entity's net income attributable to transaction fees in connection with the acquisition, ownership, or disposition of intangible property; loan fees; financing fees; consent fees; waiver fees; application fees; net management fees; dividend income; interest income; net capital gains from the sale or exchange or other disposition of intangible property; and all types and classifications of income attributable to distributive shares of income from other pass-through entities.

(b)(i) Notwithstanding division (A)(1)(a) of this section, "qualifying investment income" does not include any part of the qualifying investment pass-through entity's net capital gain which, after the application of section 5747.231 of the Revised Code with respect to a trust, would also constitute a qualifying trust amount.

(ii) Notwithstanding division (A)(1)(a) of this section, "qualifying investment income" does not include any part of the qualifying investment pass-through entity's net income attributable to the portion of a distributive share of income directly or indirectly from another pass-through entity to the extent such portion constitutes the other pass-through entity's net capital gain which, after the application of section 5747.231 of the Revised Code with respect to a trust, would also constitute a qualifying trust amount.

(2) "Qualifying investment pass-through entity" means an investment pass-through entity, as defined in section 5733.401 of the Revised Code, subject to the following qualifications:

(a) "Forty per cent" shall be substituted for "ninety per cent" wherever "ninety per cent" appears in section 5733.401 of the Revised Code.

(b) The pass-through entity must have been formed or organized as an entity prior to June 5, 2002, and must exist as a pass-through entity for all of the taxable year of the trust.

(c) The qualifying section 5747.012 trust or related persons to the qualifying section 5747.012 trust must directly or indirectly own at least five per cent of the equity of the investment pass-through entity each day of the entity's fiscal or calendar year ending within or with the last day of the qualifying section 5747.012 trust's taxable year;

(d) During the investment pass-through entity's calendar or fiscal year ending within or with the last day of the qualifying section 5747.012 trust's taxable year, the qualifying section 5747.012 trust or related persons of or to the qualifying section 5747.012 trust must, on each day of the investment pass-through entity's year, own directly, or own through equity investments in other pass-through entities, more than sixty per cent of the equity of the investment pass-through entity.

(B) "Qualifying section 5747.012 trust" means a trust satisfying one of the following:

(1) The trust was created prior to, and was irrevocable on, June 5, 2002; or

(2) If the trust was created after June 4, 2002, or if the trust became irrevocable after June 4, 2002, then at least eighty per cent of the assets transferred to the trust must have been previously owned by related persons to the trust or by a trust created prior to June 5, 2002, under which the creator did not retain the power to change beneficiaries, amend the trust, or revoke the trust. For purposes of division (B)(2) of this section, the power to substitute property of equal value shall not be considered to be a power to change beneficiaries, amend the trust, or revoke the trust.

(C) For the purposes of this section, "related persons" means the family of a qualifying individual beneficiary, as defined in division (A)(5) of section 5747.011 of the Revised Code. For the purposes of this division, "family" has the same meaning as in division (A)(6) of section 5747.011 of the Revised Code.

(D) For the purposes of applying divisions (A)(2)(c), (A)(2)(d), and (B)(2) of this section, the related persons or the qualifying section 5747.012 trust, as the case may be, shall be deemed to own the equity of the investment pass-through entity after the application of division (B) of section 5747.011 of the Revised Code.

(E) "Irrevocable" has the same meaning as in division (I)(3)(b) of section 5747.01 of the Revised Code.

(F) Nothing in this section requires any item of income, gain, or loss not satisfying the definition of qualifying investment income to be treated as modified nonbusiness income. Any item of income, gain, or loss that is not qualifying investment income is modified business income, modified nonbusiness income, or a qualifying trust amount, as the case may be.

Section 5747.013 | Calculating a trust's modified Ohio taxable income.

• Effective: March 27, 2020
• Latest Legislation: House Bill 197 - 133rd General Assembly

(A) As used in this section:

(1) "Electric company," "combined company," and "telephone company" have the same meanings as in section 5727.01 of the Revised Code.

(2) "Qualified research" means laboratory research, experimental research, and other similar types of research; research in developing or improving a product; or research in developing or improving the means of producing a product. It does not include market research, consumer surveys, efficiency surveys, management studies, ordinary testing or inspection of material or products for quality control, historical research, or literary research. "Product," as used in this paragraph, does not include services or intangible property.

(B) The fraction to be used in calculating a trust's modified Ohio taxable income under division (AA)(4)(a) of section 5747.01 of the Revised Code shall be determined as follows: The numerator of the fraction is the sum of the following products: the property factor multiplied by twenty, the payroll factor multiplied by twenty, and the sales factor multiplied by sixty. The denominator of the fraction is one hundred, provided that the denominator shall be reduced by twenty if the property factor has a denominator of zero, by twenty if the payroll factor has a denominator of zero, and by sixty if the sales factor has a denominator of zero.

The property, payroll, and sales factors shall be determined as follows:

(1) The property factor is a fraction the numerator of which is the average value of the trust's real and tangible personal property owned or rented and used in the trade or business in this state during the taxable year, and the denominator of which is the average value of all the trust's real and tangible personal property owned or rented and used in the trade or business everywhere during such year. Real and tangible personal property that is owned but leased to a lessee to be used in the lessee's trade or business shall not be included in the property factor of the owner. There shall be excluded from the numerator and denominator of the fraction the original cost of all of the following property within Ohio: property with respect to which a "pollution control facility" certificate has been issued pursuant to section 5709.21 of the Revised Code; property with respect to which an "industrial water pollution control certificate" has been issued pursuant to that section or former section 6111.31 of the Revised Code; and property used exclusively during the taxable year for qualified research.

(a) Property owned by the trust is valued at its original cost. Property rented by the trust is valued at eight times the net annual rental rate. "Net annual rental rate" means the annual rental rate paid by the trust less any annual rental rate received by the trust from subrentals.

(b) The average value of property shall be determined by averaging the values at the beginning and the end of the taxable year, but the tax commissioner may require the averaging of monthly values during the taxable year, if reasonably required to reflect properly the average value of the trust's property.

(2) The payroll factor is a fraction the numerator of which is the total amount paid in this state during the taxable year by the trust for compensation, and the denominator of which is the total compensation paid everywhere by the trust during such year. There shall be excluded from the numerator and the denominator of the payroll factor the total compensation paid in this state to employees who are primarily engaged in qualified research.

(a) Compensation is paid in this state if: (i) the recipient's service is performed entirely within this state; (ii) the recipient's service is performed both within and without this state, but the service performed without this state is incidental to the recipient's service within this state; or (iii) some of the service is performed within this state and either the base of operations, or if there is no base of operations, the place from which the service is directed or controlled, is within this state, or the base of operations or the place from which the service is directed or controlled is not in any state in which some part of the service is performed, but the recipient's residence is in this state.

(b) Compensation is paid in this state to any employee of a common or contract motor carrier corporation, who performs the employee's regularly assigned duties on a motor vehicle in more than one state, in the same ratio by which the mileage traveled by such employee within the state bears to the total mileage traveled by such employee everywhere during the taxable year.

(3) The sales factor is a fraction the numerator of which is the total sales in this state by the trust during the taxable year, and the denominator of which is the total sales by the trust everywhere during such year. In determining the numerator and denominator of the fraction, receipts from the sale or other disposal of a capital asset or an asset described in section 1231 of the Internal Revenue Code shall be eliminated. Also, in determining the numerator and denominator of the sales factor, in the case of a trust owning at least eighty per cent of the issued and outstanding common stock of one or more insurance companies or public utilities, except an electric company and a combined company, and, for tax years 2005 and thereafter, a telephone company, or owning at least twenty-five per cent of the issued and outstanding common stock of one or more financial institutions, receipts received by the trust from such insurance companies, utilities, and financial institutions shall be eliminated.

For the purpose of this section and section 5747.08 of the Revised Code, sales of tangible personal property are in this state where such property is received in this state by the purchaser. In the case of delivery of tangible personal property by common carrier or by other means of transportation, the place at which such property is ultimately received after all transportation has been completed shall be considered as the place at which such property is received by the purchaser. Direct delivery in this state, other than for purposes of transportation, to a person or firm designated by a purchaser constitutes delivery to the purchaser in this state, and direct delivery outside this state to a person or firm designated by a purchaser does not constitute delivery to the purchaser in this state, regardless of where title passes or other conditions of sale.

Sales, other than sales of tangible personal property, are in this state if either:

(a) The income-producing activity is performed solely in this state; or

(b) The income-producing activity is performed both within and without this state and a greater proportion of the seller's income-producing activity is performed within this state than in any other state, based on costs of performance.

Section 5747.02 | Tax rates.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

(A) For the purpose of providing revenue for the support of schools and local government functions, to provide relief to property taxpayers, to provide revenue for the general revenue fund, and to meet the expenses of administering the tax levied by this chapter, there is hereby levied on every individual, trust, and estate residing in or earning or receiving income in this state, on every individual, trust, and estate earning or receiving lottery winnings, prizes, or awards pursuant to Chapter 3770. of the Revised Code, on every individual, trust, and estate earning or receiving winnings on casino or sports gaming, and on every individual, trust, and estate otherwise having nexus with or in this state under the Constitution of the United States, an annual tax measured as prescribed in divisions (A)(1) to (4) of this section.

(1) In the case of trusts, the tax imposed by this section shall be measured by modified Ohio taxable income under division (D) of this section and levied in the same amount as the tax is imposed on estates as prescribed in division (A)(2) of this section.

(2) In the case of estates, the tax imposed by this section shall be measured by Ohio taxable income. The tax shall be levied at the rate of 1.38462% for the first twenty-six thousand fifty dollars of such income and, for income in excess of that amount, the tax shall be levied at the same rates prescribed in division (A)(3) of this section for individuals.

(3) In the case of individuals, the tax imposed by this section on income other than taxable business income shall be measured by Ohio adjusted gross income, less taxable business income and less an exemption for the taxpayer, the taxpayer's spouse, and each dependent as provided in section 5747.025 of the Revised Code. If the balance thus obtained is equal to or less than twenty-six thousand fifty dollars, no tax shall be imposed on that balance. If the balance thus obtained is greater than twenty-six thousand fifty dollars, the tax is hereby levied as follows:

(a) For taxable years beginning in 2023:

OHIO ADJUSTED GROSS INCOME LESS TAXABLE BUSINESS INCOME AND EXEMPTIONS (INDIVIDUALS) OR MODIFIED OHIO TAXABLE INCOME (TRUSTS) OR OHIO TAXABLE INCOME (ESTATES)	TAX
More than $26,050 but not more than $100,000	$360.69 plus 2.75% of the amount in excess of $26,050
More than $100,000 but not more than $115,300	$2,394.32 plus 3.688% of the amount in excess of $100,000
More than $115,300	$2,958.58 plus 3.75% of the amount in excess of $115,300

(b) For taxable years beginning in 2024 and thereafter:

OHIO ADJUSTED GROSS INCOME LESS TAXABLE BUSINESS INCOME AND EXEMPTIONS (INDIVIDUALS) OR MODIFIED OHIO TAXABLE INCOME (TRUSTS) OR OHIO TAXABLE INCOME (ESTATES)	TAX
More than $26,050 but not more than $100,000	$360.69 plus 2.75% of the amount in excess of $26,050
More than $100,000	$2,394.32 plus 3.5% of the amount in excess of $100,000

(4)(a) In the case of individuals, the tax imposed by this section on taxable business income shall equal three per cent of the result obtained by subtracting any amount allowed under division (A)(4)(b) of this section from the individual's taxable business income.

(b) If the exemptions allowed to an individual under division (A)(3) of this section exceed the taxpayer's Ohio adjusted gross income less taxable business income, the excess shall be deducted from taxable business income before computing the tax under division (A)(4)(a) of this section.

(5) Except as otherwise provided in this division, in August of each year, the tax commissioner shall make a new adjustment to the income amounts prescribed in divisions (A)(2) and (3) of this section by multiplying the percentage increase in the gross domestic product deflator computed that year under section 5747.025 of the Revised Code by each of the income amounts resulting from the adjustment under this division in the preceding year, adding the resulting product to the corresponding income amount resulting from the adjustment in the preceding year, and rounding the resulting sum to the nearest multiple of fifty dollars. The tax commissioner also shall recompute each of the tax dollar amounts to the extent necessary to reflect the new adjustment of the income amounts. To recompute the tax dollar amount corresponding to the lowest tax rate in division (A)(3) of this section, the commissioner shall multiply the tax rate prescribed in division (A)(2) of this section by the income amount specified in that division and as adjusted according to this paragraph. The rates of taxation shall not be adjusted.

The adjusted amounts apply to taxable years beginning in the calendar year in which the adjustments are made and to taxable years beginning in each ensuing calendar year until a calendar year in which a new adjustment is made pursuant to this division. The tax commissioner shall not make a new adjustment in any year in which the amount resulting from the adjustment would be less than the amount resulting from the adjustment in the preceding year.

(B) If the director of budget and management makes a certification to the tax commissioner under division (B) of section 131.44 of the Revised Code, the amount of tax as determined under divisions (A)(1) to (3) of this section shall be reduced by the percentage prescribed in that certification for taxable years beginning in the calendar year in which that certification is made.

(C)(1) The tax imposed by this section on a trust shall be computed by multiplying the Ohio modified taxable income of the trust by the rates prescribed by division (A) of this section.

(2) A resident trust may claim a credit against the tax computed under division (C) of this section equal to the lesser of (a) the tax paid to another state or the District of Columbia on the resident trust's modified nonbusiness income, other than the portion of the resident trust's nonbusiness income that is qualifying investment income as defined in section 5747.012 of the Revised Code, or (b) the effective tax rate, based on modified Ohio taxable income, multiplied by the resident trust's modified nonbusiness income other than the portion of the resident trust's nonbusiness income that is qualifying investment income. The credit applies before any other applicable credits.

(3) Any credit authorized against the tax imposed by this section applies to a trust subject to division (C) of this section only if the trust otherwise qualifies for the credit. To the extent that the trust distributes income for the taxable year for which a credit is available to the trust, the credit shall be shared by the trust and its beneficiaries. The tax commissioner and the trust shall be guided by applicable regulations of the United States treasury regarding the sharing of credits.

(D) For the purposes of this section, "trust" means any trust described in Subchapter J of Chapter 1 of the Internal Revenue Code, excluding trusts that are not irrevocable as defined in division (I)(3)(b) of section 5747.01 of the Revised Code and that have no modified Ohio taxable income for the taxable year, charitable remainder trusts, qualified funeral trusts and preneed funeral contract trusts established pursuant to sections 4717.31 to 4717.38 of the Revised Code that are not qualified funeral trusts, endowment and perpetual care trusts, qualified settlement trusts and funds, designated settlement trusts and funds, and trusts exempted from taxation under section 501(a) of the Internal Revenue Code.

(E) Nothing in division (A)(3) of this section shall prohibit an individual with an Ohio adjusted gross income, less taxable business income and exemptions, of twenty-six thousand fifty dollars or less from filing a return under this chapter to receive a refund of taxes withheld or to claim any refundable credit allowed under this chapter.

Last updated July 12, 2024 at 8:55 AM

Section 5747.021 | School district income tax.

• Effective: November 15, 1981
• Latest Legislation: House Bill 694 - 114th General Assembly

In addition to the tax levied under section 5747.02 of the Revised Code, the tax commissioner shall charge the tax imposed on the school district income of an individual or estate by a school district under Chapter 5748. of the Revised Code by multiplying the rate certified to be charged under such chapter by the taxpayer's school district income with respect to that district.

Section 5747.022 | Tax credits for exemptions.

• Effective: October 17, 2019
• Latest Legislation: House Bill 166 - 133rd General Assembly

An individual subject to the tax imposed by section 5747.02 of the Revised Code whose modified adjusted gross income, less applicable exemptions under section 5747.025 of the Revised Code, for the taxable year as shown on an individual or joint annual return is less than thirty thousand dollars may claim a credit equal to twenty dollars times the number of exemptions allowed for the taxpayer, the taxpayer's spouse, and each dependent under section 5747.02 of the Revised Code. The credit shall be claimed in the order required under section 5747.98 of the Revised Code. The credit shall not be considered in determining the taxes required to be withheld under section 5747.06 of the Revised Code or the estimated taxes required to be paid under section 5747.09 of the Revised Code. In the case of an individual with respect to whom an exemption under section 5747.02 of the Revised Code is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual's taxable year begins, the "number of exemptions allowed" for purposes of calculating the credit allowed under this section to such individual for the individual's taxable year shall not include an exemption for the individual.

Section 5747.023 | Tax credits for armed forces member killed in combat or military or civilian employee killed in terroristic or military action.

• Effective: April 17, 1991
• Latest Legislation: Senate Bill 3 - 119th General Assembly

(A) Any individual who dies while in active service as a member of the armed forces of the United States, if such death occurred while serving in a combat zone or as a result of wounds, disease, or injury incurred while so serving, shall be exempt from taxes as follows:

(1) Any taxes imposed by this chapter or Chapter 5748. of the Revised Code for a taxable year commencing after 1990 if the individual is exempted by division (a)(1) of section 692 of the Internal Revenue Code from federal income taxes for such taxable year;

(2) Any taxes imposed under this chapter or Chapter 5748. of the Revised Code for taxable years preceding those specified in division (A)(1) of this section if the taxes are unpaid at the date of the individual's death and the individual would be exempted by division (a)(2) of section 692 of the Internal Revenue Code from paying such taxes if they were unpaid federal income taxes.

(B) An individual who dies after 1990 while a military or civilian employee of the United States, if such death occurs as a result of wounds or injury incurred while the individual was a military or civilian employee of the United States and also incurred outside the United States in a terroristic or military action, shall be exempt from any taxes imposed by this chapter or Chapter 5748. of the Revised Code for a taxable year if the individual is exempted by division (c) of section 692 of the Internal Revenue Code from federal income taxes for such taxable year.

(C) If an individual subject to this section is included in a joint return for federal income tax purposes, the individual also shall be included in a joint return for purposes of this chapter and Chapter 5748. of the Revised Code, and the effect of any exemption under this section on such joint tax liability shall be determined in a manner consistent with the determination of the effect of any exemption under section 692 of the Internal Revenue Code on such joint tax liability.

(D) As used in this section, "taxes" includes penalties and interest.

Section 5747.024 | Military pay not included in adjusted gross income.

• Effective: April 17, 1991
• Latest Legislation: Senate Bill 3 - 119th General Assembly

Military pay and allowances received by members of the armed forces of the United States (as defined in Internal Revenue Code section 7701) which, pursuant to Internal Revenue Code section 112, is not included in gross income (as defined in Internal Revenue Code section 61) is not included in Ohio adjusted gross income as defined in section 5747.01 of the Revised Code. Nothing in this section shall be construed to allow a deduction for such income to the extent such income is already excluded from federal adjusted gross income as defined in Internal Revenue Code section 62.

Section 5747.025 | Personal exemptions.

• Effective: October 17, 2019
• Latest Legislation: House Bill 166 - 133rd General Assembly

(A) The personal exemption for the taxpayer, the taxpayer's spouse, and each dependent shall be one of the following amounts:

(1) Two thousand three hundred fifty dollars if the taxpayer's modified adjusted gross income for the taxable year as shown on an individual or joint annual return is less than or equal to forty thousand dollars;

(2) Two thousand one hundred dollars if the taxpayer's modified adjusted gross income for the taxable year as shown on an individual or joint annual return is greater than forty thousand dollars but less than or equal to eighty thousand dollars;

(3) One thousand eight hundred fifty dollars if the taxpayer's modified adjusted gross income for the taxable year as shown on an individual or joint annual return is greater than eighty thousand dollars.

(B) For taxable years beginning in 2020 and thereafter, the personal exemption amounts prescribed in division (A) of this section shall be adjusted each year in the manner prescribed in division (C) of this section. In the case of an individual with respect to whom an exemption under section 5747.02 of the Revised Code is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual's taxable year begins, the exemption amount applicable to such individual for such individual's taxable year shall be zero.

(C) Except as otherwise provided in this division, in August of each year, the tax commissioner shall determine the percentage increase in the gross domestic product deflator determined by the bureau of economic analysis of the United States department of commerce from the first day of January of the preceding calendar year to the last day of December of the preceding year, and make a new adjustment to the personal exemption amount for taxable years beginning in the current calendar year by multiplying that amount by the percentage increase in the gross domestic product deflator for that period; adding the resulting product to the personal exemption amount for taxable years beginning in the preceding calendar year; and rounding the resulting sum upward to the nearest multiple of fifty dollars. The adjusted amount applies to taxable years beginning in the calendar year in which the adjustment is made and to taxable years beginning in each ensuing calendar year until a calendar year in which a new adjustment is made pursuant to this division. The commissioner shall not make a new adjustment in any calendar year in which the amount resulting from the adjustment would be less than the amount resulting from the adjustment in the preceding calendar year.

Section 5747.026 | Extensions for filing and payment by members called to active duty.

• Effective: June 2, 2005
• Latest Legislation: House Bill 2 - 126th General Assembly

(A) For taxable years beginning on or after January 1, 2002, each member of the national guard and each member of a reserve component of the armed forces of the United States called to active duty pursuant to an executive order issued by the president of the United States or an act of the congress of the United States may apply to the tax commissioner for both an extension for filing of the return and an extension of time for payment of taxes required under this chapter and under Chapter 5748. of the Revised Code during the period of the member's duty service and for sixty days thereafter. The application shall be filed on or before the sixtieth day after the member's duty terminates. An applicant shall provide such evidence as the tax commissioner considers necessary to demonstrate eligibility for the extension.

(B)(1) If the tax commissioner ascertains that an applicant is qualified for an extension under this section, the tax commissioner shall enter into a contract with the applicant for the payment of the tax in installments that begin on the sixty-first day after the applicant's active duty terminates. Except as provided in division (B)(3) of this section, the tax commissioner may prescribe such contract terms as the tax commissioner considers appropriate. If the amount owed is two thousand four hundred dollars or less, the contract shall be for not longer than twelve months. If the amount owed is more than two thousand four hundred dollars, the contract shall be for not longer than twenty-four months.

(2) If the tax commissioner ascertains that an applicant is qualified for an extension under this section, the applicant shall neither be required to file any return, report, or other tax document nor be required to pay any tax otherwise due under this chapter and Chapter 5748. of the Revised Code before the sixty-first day after the applicant's active duty terminates.

(3) Taxes paid pursuant to a contract entered into under division (B)(1) of this section are not delinquent. The tax commissioner shall not require any payments of penalties, interest penalties, or interest in connection with those taxes for the extension period.

(C)(1) Nothing in this division denies to any person described in this division the application of divisions (A) and (B) of this section.

(2)(a) A qualifying taxpayer who is eligible for an extension under the Internal Revenue Code shall receive both an extension of time in which to file any return, report, or other tax document described in this chapter and an extension of time in which to make any payment of taxes required under this chapter and Chapter 5748. of the Revised Code. The length of any extension granted under division (C)(2)(a) of this section shall be equal to the length of the corresponding extension that the taxpayer receives under the Internal Revenue Code. As used in this section, "qualifying taxpayer" means a member of the national guard, or a member of the reserve component of the armed forces of the United States, who is called to active duty pursuant to either an executive order issued by the president of the United States or an act of the congress of the United States.

(b) Taxes whose payment is extended in accordance with division (C)(2)(a) of this section are not delinquent during the extension period. The tax commissioner shall not require any payment of penalties, interest penalties, or interest in connection with those taxes for the extension period. The tax commissioner shall not include any period of extension granted under division (C)(2)(a) of this section in calculating the penalty, interest penalty, or interest due on any unpaid tax.

(D) For each taxable year to which division (A), (B), or (C) of this section applies to a taxpayer, the provisions of divisions (B)(2) and (3) or (C) of this section, as applicable, apply to the spouse of that taxpayer if the filing status of the spouse and the taxpayer is married filing jointly for that year.

(E) The tax commissioner may adopt rules necessary to administer this section, including rules establishing the following:

(1) Forms and procedures by which applicants may apply for extensions;

(2) Criteria for eligibility;

(3) A schedule for repayment of deferred taxes.

Section 5747.03 | Distributing income tax revenue.

• Effective: April 6, 2023
• Latest Legislation: House Bill 281 (GA 134), Senate Bill 246 (GA 134)

(A)(1) All money collected under this chapter arising from the taxes imposed by section 5747.02, 5747.38, or 5747.41 of the Revised Code shall be credited to the general revenue fund and distributed pursuant to division (F) of section 321.24 and section 323.156 of the Revised Code; to make subsidy payments to institutions of higher education from appropriations to the department of higher education; to support expenditures for programs and services for persons with mental illnesses, persons with developmental disabilities, and the elderly; for primary and secondary education; for medical assistance; and for any other purposes authorized by law, subject to the limitation that at least fifty per cent of the income tax collected by the state from the tax imposed by section 5747.02 of the Revised Code shall be returned pursuant to Section 9 of Article XII, Ohio Constitution.

(2) To ensure that such constitutional requirement is satisfied the tax commissioner shall, on or before the thirtieth day of June of each year, from the best information available to the tax commissioner, determine and certify for each county to the director of budget and management the amount of taxes collected under this chapter from the tax imposed under section 5747.02 of the Revised Code during the preceding calendar year that are required to be returned to the county by Section 9 of Article XII, Ohio Constitution. The director shall provide for payment from the general revenue fund to the county in the amount, if any, that the sum of the amount so certified for that county exceeds the sum of the following:

(a) The sum of the payments from the general revenue fund for the preceding calendar year credited to the county's undivided income tax fund pursuant to division (F) of section 321.24 and section 323.156 of the Revised Code or made directly from the general revenue fund to political subdivisions located in the county;

(b) The sum of the amounts from the general revenue fund distributed in the county during the preceding calendar year for subsidy payments to institutions of higher education from appropriations to the department of higher education; for programs and services for persons with mental illnesses, persons with developmental disabilities, and elderly persons; for primary and secondary education; and for medical assistance.

(c) In the case of payments made by the director under this division in 2007, the total amount distributed to the county during the preceding calendar year from the local government fund and the local government revenue assistance fund, and, in the case of payments made by the director under this division in subsequent calendar years, the amount distributed to the county from the local government fund;

(d) In the case of payments made by the director under this division, the total amount distributed to the county during the preceding calendar year from the public library fund.

Payments under this division shall be credited to the county's undivided income tax fund, except that, notwithstanding section 5705.14 of the Revised Code, such payments may be transferred by the board of county commissioners to the county general fund by resolution adopted with the affirmative vote of two-thirds of the members thereof.

(B) All payments received in each month from taxes imposed under Chapter 5748. of the Revised Code and any penalties or interest thereon shall be paid into the school district income tax fund, which is hereby created in the state treasury, except that an amount equal to the following portion of such payments shall be paid into the general school district income tax administrative fund, which is hereby created in the state treasury:

(1) One and three-quarters of one per cent of those received in fiscal year 1996;

(2) One and one-half per cent of those received in fiscal year 1997 and thereafter.

Money in the school district income tax administrative fund shall be used by the tax commissioner to defray costs incurred in administering the school district's income tax, including the cost of providing employers with information regarding the rate of tax imposed by any school district. Any moneys remaining in the fund after such use shall be deposited in the school district income tax fund.

All interest earned on moneys in the school district income tax fund shall be credited to the fund.

(C)(1)(a) Within thirty days of the end of each calendar quarter ending on the last day of March, June, September, and December, the director of budget and management shall make a payment from the school district income tax fund to each school district for which school district income tax revenue was received during that quarter. The amount of the payment shall equal the balance in the school district's account at the end of that quarter.

(b) After a school district ceases to levy an income tax, the director of budget and management shall adjust the payments under division (C)(1)(a) of this section to retain sufficient money in the school district's account to pay refunds. For the calendar quarters ending on the last day of March and December of the calendar year following the last calendar year the tax is levied, the director shall make the payments in the amount required under division (C)(1)(a) of this section. For the calendar quarter ending on the last day of June of the calendar year following the last calendar year the tax is levied, the director shall make a payment equal to nine-tenths of the balance in the account at the end of that quarter. For the calendar quarter ending on the last day of September of the calendar year following the last calendar year the tax is levied, the director shall make no payment. For the second and succeeding calendar years following the last calendar year the tax is levied, the director shall make one payment each year, within thirty days of the last day of June, in an amount equal to the balance in the district's account on the last day of June.

(2) Moneys paid to a school district under this division shall be deposited in its school district income tax fund. All interest earned on moneys in the school district income tax fund shall be apportioned by the tax commissioner pro rata among the school districts in the proportions and at the times the districts are entitled to receive payments under this division.

The Legislative Service Commission presents the text of this section as a composite of the section as amended by multiple acts of the General Assembly. This presentation recognizes the principle stated in R.C. 1.52(B) that amendments are to be harmonized if reasonably capable of simultaneous operation.

Last updated February 14, 2023 at 2:37 PM

Section 5747.031 | Separate reporting of business and nonbusiness income tax revenues.

• Effective: September 29, 2017
• Latest Legislation: House Bill 49 - 132nd General Assembly

For annual returns filed for taxable years beginning on or after January 1, 2017, the department of taxation shall determine and provide to the office of budget and management a report of the tax liability, before the application of any credits, under section 5747.02 of the Revised Code that arises from taxable business income, the tax liability, before the application of any credits, that arises from income, other than taxable business income, as measured and taxed under divisions(A)(1), (2), or (3) of that section, and the total amount of credits claimed against the tax levied under that section.

In providing actual and estimates of revenue pursuant to Chapter 126. of the Revised Code, the office of budget and management shall separately list the tax liability, before the application of any credits, under section 5747.02 of the Revised Code that arises from taxable business income, the tax liability, before the application of any credits, that arises from income, other than taxable business income, as measured and taxed under divisions (A)(1), (2), or (3) of that section, and the total amount of credits claimed against the tax levied under that section.

Last updated March 3, 2023 at 11:09 AM

Section 5747.04 | Attributing tax receipts to county.

• Effective: October 17, 2019
• Latest Legislation: House Bill 166 - 133rd General Assembly

All reports, returns, and payments required of a taxpayer or employer by this chapter, except payments by electronic funds transfer as required under section 5747.072 of the Revised Code, shall be filed with the tax commissioner.

Upon receipt by the commissioner of any payments under this chapter arising from a tax imposed under section 5747.02 of the Revised Code, the commissioner shall estimate and annually reconcile and determine for any amount paid by or on behalf of any taxpayer and for any amount shown due or owed to any taxpayer, the county to which such amount is attributable. The county of attribution is the county in which the taxpayer was a resident for one more than half of the number of days of the payroll period during which any income subject to taxation under this chapter was earned or, in the case of a nonresident taxpayer, the nonresident taxpayer's principal county of employment. If there is no payroll period to which such income can be attributed, the county of attribution is the county in which the taxpayer resided at the time the taxpayer received such income.

The commissioner shall adopt such rules, including a requirement that each taxpayer indicate the taxpayer's school district of residence on the taxpayer's tax return, as are reasonably necessary to insure the efficient administration of this section and the distribution required by division (A) of section 5747.03 of the Revised Code.

Section 5747.05 | Tax credits.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

As used in this section, "income tax" includes both a tax on net income and a tax measured by net income.

The following credits shall be allowed against the aggregate income tax liability imposed by section 5747.02 of the Revised Code on individuals and estates:

(A)(1) The amount of tax otherwise due under section 5747.02 of the Revised Code on such portion of the combined adjusted gross income and business income of any nonresident taxpayer that is not allocable or apportionable to this state pursuant to sections 5747.20 to 5747.23 of the Revised Code. The credit provided under this division shall not exceed the total tax due under section 5747.02 of the Revised Code.

(2) The tax commissioner may enter into an agreement with the taxing authorities of any state or of the District of Columbia that imposes an income tax to provide that compensation paid in this state to a nonresident taxpayer shall not be subject to the tax levied in section 5747.02 of the Revised Code so long as compensation paid in such other state or in the District of Columbia to a resident taxpayer shall likewise not be subject to the income tax of such other state or of the District of Columbia.

(B) The lesser of division (B)(1) or (2) of this section:

(1) The aggregate amount of tax otherwise due under section 5747.02 of the Revised Code on such portion of the combined adjusted gross income and business income of a resident taxpayer that in another state or in the District of Columbia is subjected to an income tax. The credit provided under division (B)(1) of this section shall not exceed the total tax due under section 5747.02 of the Revised Code.

(2) The amount of income tax liability to another state or the District of Columbia on the portion of the combined adjusted gross income and business income of a resident taxpayer that in another state or in the District of Columbia is subjected to an income tax. The credit provided under division (B)(2) of this section shall not exceed the total amount of tax otherwise due under section 5747.02 of the Revised Code.

(3) For the purpose of divisions (B)(1) and (2) of this section, a resident taxpayer's combined adjusted gross income and business income that is subject to an income tax levied in another state or in the District of Columbia includes income that is subject to either (a) a tax similar to the tax imposed by division (D)(1)(a) of section 5747.08 of the Revised Code or (b) a tax enacted for purposes of complying with internal revenue service notice 2020-75. In computing a resident taxpayer's income tax paid or accrued to another state or the District of Columbia, the deduction authorized by division (A)(28) of section 5747.01 of the Revised Code shall first be deducted against business income apportioned to this state.

(4) If the credit provided under division (B) of this section is affected by a change in either the portion of the combined adjusted gross income and business income of a resident taxpayer subjected to an income tax in another state or the District of Columbia or the amount of income tax liability that has been paid to another state or the District of Columbia, the taxpayer shall report the change to the tax commissioner within ninety days of the change in such form as the commissioner requires.

(a) In the case of an underpayment, the report shall be accompanied by payment of any additional tax due as a result of the reduction in credit together with interest on the additional tax and is a return subject to assessment under section 5747.13 of the Revised Code solely for the purpose of assessing any additional tax due under this division, together with any applicable penalty and interest. It shall not reopen the computation of the taxpayer's tax liability under this chapter from a previously filed return no longer subject to assessment except to the extent that such liability is affected by an adjustment to the credit allowed by division (B) of this section.

(b) In the case of an overpayment, an application for refund may be filed under this division within the ninety-day period prescribed for filing the report even if it is beyond the period prescribed in section 5747.11 of the Revised Code if it otherwise conforms to the requirements of such section. An application filed under this division shall only claim refund of overpayments resulting from an adjustment to the credit allowed by division (B) of this section unless it is also filed within the time prescribed in section 5747.11 of the Revised Code. It shall not reopen the computation of the taxpayer's tax liability except to the extent that such liability is affected by an adjustment to the credit allowed by division (B) of this section.

(5) No credit shall be allowed under division (B) of this section:

(a) For income tax paid or accrued to another state or to the District of Columbia if the taxpayer, when computing federal adjusted gross income, has directly or indirectly deducted, or was required to directly or indirectly deduct, the amount of that income tax;

Division (B)(5)(a) of this section does not apply to income taxes included in the computation of Ohio adjusted gross income under division (A)(41) of section 5747.01 of the Revised Code and not deducted from Ohio adjusted gross income under division (A)(28) of that section or to income taxes included in Ohio taxable income under division (S)(16) of section 5747.01 of the Revised Code.

(b) For compensation that is not subject to the income tax of another state or the District of Columbia as the result of an agreement entered into by the tax commissioner under division (A)(3) of this section; or

(c) For income tax paid or accrued to another state or the District of Columbia if the taxpayer fails to furnish such proof as the tax commissioner shall require that such income tax liability has been paid.

(C) An individual who is a resident for part of a taxable year and a nonresident for the remainder of the taxable year is allowed the credits under divisions (A) and (B) of this section in accordance with rules prescribed by the tax commissioner. In no event shall the same income be subject to both credits.

(D) The credit allowed under division (A) of this section shall be calculated based upon the amount of tax due under section 5747.02 of the Revised Code after subtracting any other credits that precede the credit under that division in the order required under section 5747.98 of the Revised Code. The credit allowed under division (B) of this section shall be calculated based upon the amount of tax due under section 5747.02 of the Revised Code after subtracting any other credits that precede the credit under that division in the order required under section 5747.98 of the Revised Code.

(E)(1) On a joint return filed by a husband and wife, each of whom had adjusted gross income of at least five hundred dollars, exclusive of interest, dividends and distributions, royalties, rent, and capital gains, a credit equal to the lesser of six hundred fifty dollars or the percentage shown in column B that corresponds with the taxpayer's modified adjusted gross income, less exemptions for the taxable year, of the total amount of tax due after allowing for any other credit that precedes this credit as required under section 5747.98 of the Revised Code:

A.	B.
IF THE MODIFIED ADJUSTED GROSS INCOME, LESS EXEMPTIONS, FOR THE TAX YEAR IS:	THE CREDIT FOR THE TAXABLE YEAR IS:
$25,000 or less	20%
More than $25,000 but not more than $50,000	15%
More than $50,000 but not more than $75,000	10%
More than $75,000	5%

(2) The credit shall be claimed in the order required under section 5747.98 of the Revised Code.

(F) No claim for credit under this section shall be allowed unless the claimant furnishes such supporting information as the tax commissioner prescribes by rules.

Last updated September 5, 2023 at 3:36 PM

Section 5747.054 | Tax credit based on federal dependent care credit.

• Effective: October 17, 2019
• Latest Legislation: House Bill 166 - 133rd General Assembly

In addition to all other credits allowed by this chapter, a credit shall be allowed against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for taxpayers with modified adjusted gross income of less than forty thousand dollars. The amount of the credit shall equal twenty-five per cent of the federal dependent care credit for which the taxpayer is eligible for the taxable year under section 21 of the Internal Revenue Code, 26 U.S.C.A. 21; except that the amount of the credit for a taxpayer with modified adjusted gross income of less than twenty thousand dollars shall equal the federal credit for which the taxpayer is eligible, in any case without regard to any limitation imposed by section 26 of the Internal Revenue Code, 26 U.S.C.A. 26.

The credit allowed by this section shall be claimed in the order required under section 5747.98 of the Revised Code.

Section 5747.055 | Tax credit for retirement income.

• Effective: October 17, 2019
• Latest Legislation: House Bill 166 - 133rd General Assembly

(A) As used in this section "retirement income" means retirement benefits, annuities, or distributions that are made from or pursuant to a pension, retirement, or profit-sharing plan and that:

(1) In the case of an individual, are received by the individual on account of retirement and are included in the individual's adjusted gross income;

(2) In the case of an estate, are payable to the estate for the benefit of the surviving spouse of the decedent and are included in the estate's taxable income.

(B) A credit shall be allowed against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for taxpayers who received retirement income during the taxable year and whose modified adjusted gross income for the taxable year, less applicable exemptions under section 5747.025 of the Revised Code, as shown on an individual or joint annual return is less than one hundred thousand dollars. Only one such credit shall be allowed for each return, and the amount of the credit shall be computed in accordance with the following schedule:

AMOUNT OF RETIREMENT INCOME RECEIVED DURING THE TAXABLE YEAR	CREDIT FOR THE TAXABLE YEAR
$500 or less	$ 0
Over $500 but not more than $1,500	$ 25
Over $1,500 but not more than $3,000	$ 50
Over $3,000 but not more than $5,000	$ 80
Over $5,000 but not more than $8,000	$ 130
Over $8,000	$ 200

(C) A taxpayer who received a lump-sum distribution from a pension, retirement, or profit-sharing plan in the taxable year and whose modified adjusted gross income for the taxable year, less applicable exemptions under section 5747.025 of the Revised Code, as shown on an individual or joint annual return is less than one hundred thousand dollars, may elect to receive a credit under this division in lieu of the credit allowed under division (B) of this section. A taxpayer making such an election is not entitled to the credit authorized under this division or division (B) of this section in subsequent taxable years. A taxpayer electing the credit under this division shall receive a credit for the taxable year against the taxpayer's aggregate tax liability under section 5747.02 of the Revised Code computed as follows:

(1) Divide the amount of retirement income received during the taxable year by the taxpayer's expected remaining life on the last day of the taxable year, as shown by annuity tables issued under the provisions of the Internal Revenue Code and in effect for the calendar year that includes the last day of the taxable year;

(2) Using the quotient thus obtained as the amount of retirement income received during the taxable year, compute the credit for the taxable year in accordance with division (B) of this section;

(3) Multiply the credit thus obtained by the taxpayer's expected remaining life. The product thus obtained shall be the credit under this division for the taxable year.

(D) If the credit under division (C) or (E) of this section exceeds the taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for the taxable year after allowing for any other credit that precedes that credit in the order required under section 5747.98 of the Revised Code, the taxpayer may elect to receive a credit for each subsequent taxable year. The amount of the credit for each such year shall be computed as follows:

(1) Determine the amount by which the unused credit elected under division (C) or (E) of this section exceeded the total tax due for the taxable year after allowing for any preceding credit in the required order;

(2) Divide the amount of such excess by one year less than the taxpayer's expected remaining life on the last day of the taxable year of the distribution for which the credit was allowed under division (C) or (E) of this section. The quotient thus obtained shall be the credit for each subsequent year.

(E) If subsequent to the receipt of a lump-sum distribution and an election under division (C) of this section an individual receives another lump-sum distribution within one taxable year, and the taxpayer's modified adjusted gross income for the taxable year, less applicable exemptions under section 5747.025 of the Revised Code, as shown on an individual or joint annual return is less than one hundred thousand dollars, the taxpayer may elect to receive a credit for that taxable year. The credit shall equal the lesser of:

(1) A credit computed in the manner prescribed in division (C) of this section;

(2) The amount of credit, if any, to which the taxpayer would otherwise be entitled for the taxable year under division (D) of this section times the taxpayer's expected remaining life on the last day of the taxable year. A taxpayer who elects to receive a credit under this division is not entitled to a credit under this division or division (B) or (C) of this section for any subsequent year except as provided in division (D) of this section.

(F) A credit equal to fifty dollars for each return required to be filed under section 5747.08 of the Revised Code shall be allowed against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for taxpayers sixty-five years of age or older during the taxable year whose modified adjusted gross income, less applicable exemptions under section 5747.025 of the Revised Code, as shown on an individual or joint annual return is less than one hundred thousand dollars for that taxable year.

(G) A taxpayer sixty-five years of age or older during the taxable year who has received a lump-sum distribution from a pension, retirement, or profit-sharing plan in the taxable year, and whose modified adjusted gross income, less applicable exemptions under section 5747.025 of the Revised Code, as shown on an individual or joint annual return is less than one hundred thousand dollars for that taxable year may elect to receive a credit under this division in lieu of the credit to which the taxpayer is entitled under division (F) of this section. A taxpayer making such an election shall receive a credit for the taxable year against the taxpayer's aggregate tax liability under section 5747.02 of the Revised Code equal to fifty dollars times the taxpayer's expected remaining life as shown by annuity tables issued under the Internal Revenue Code and in effect for the calendar year that includes the last day of the taxable year. A taxpayer making an election under this division is not entitled to the credit authorized under this division or division (F) of this section in subsequent taxable years.

(H) The credits allowed by this section shall be claimed in the order required under section 5747.98 of the Revised Code. The tax commissioner may require a taxpayer to furnish any information necessary to support a claim for credit under this section, and no credit shall be allowed unless such information is provided.

Section 5747.057 | Tax credit for career-technical education program employees.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

(A) As used in this section:

(1) "Eligible employee" means an employee who is nineteen years of age or younger and enrolled in a career-technical education program approved under section 3317.161 of the Revised Code.

(2) "Eligible compensation" means compensation paid on and after March 23, 2022, from which the employer is required to deduct and withhold income tax under section 5747.06 of the Revised Code.

(B) A nonrefundable credit is allowed against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for a taxpayer that holds a tax credit certificate issued under this section. The credit equals the amount listed on the certificate and shall be claimed for the taxable year that includes the last day of the calendar year for which the certificate was issued. The credit shall be claimed in the order required under section 5747.98 of the Revised Code.

(C) An employer that is a taxpayer or a pass-through entity and that employs an eligible employee in fulfillment of a work-based learning experience, internship, or cooperative education program associated with the career-technical education program in which the eligible employee is enrolled may apply to the department of education and workforce for a tax credit certificate. The application shall be made on forms prescribed by the department, in consultation with the tax commissioner, on or after the first day of January and on or before the first day of February of each year. The application shall include all of the following information for the calendar year preceding the year in which the application is made:

(1) The amount of eligible compensation paid by the applicant to each of its eligible employees;

(2) The name, birth date, and social security number of each eligible employee employed by the applicant;

(3) The career-technical education program in which each eligible employee is enrolled;

(4) A description of each eligible employee's duties as part of the employee's work-based learning experience, internship, or cooperative education program;

(5) Any other information requested by the department.

(D)(1) After determining that the applicant satisfies the conditions described in division (C) of this section, the department of education and workforce shall issue, within sixty days after the receipt of a complete application under that division, a tax credit certificate to the applicant equal to the lesser of (a) fifteen per cent of the eligible compensation paid by the applicant to all eligible employees during the calendar year or (b) five thousand dollars per eligible employee, in either case subject to the limitations in division (D)(2) of this section.

(2) If the applicant pays eligible compensation to an employee who ceases to qualify as an eligible employee during the calendar year, only the eligible compensation paid to the employee while the employee qualified as an eligible employee may be used to calculate the credit amount on a tax credit certificate issued under this section. The department shall not issue certificates in a total amount that would cause the tax credits claimed in any fiscal biennium to exceed five million dollars.

(3) Each tax credit certificate issued under this section shall include a unique identification number and shall state the amount of tax credit that may be claimed. A taxpayer claiming the credit allowed under this section shall submit a copy of the certificate with the taxpayer's return or report.

(E) If a tax credit certificate is issued to a pass-through entity under this section, any taxpayer that is a direct or indirect investor in the pass-through entity on the last day of the entity's taxable year ending in the calendar year for which the certificate was issued may claim the taxpayer's distributive or proportionate share of the credit against the taxpayer's aggregate tax liability under section 5747.02 of the Revised Code.

(F) For the purpose of issuing tax credit certificates under this section, the department of education and workforce may request from any of the following entities the data verification code assigned under division (D)(2) of section 3301.0714 of the Revised Code to any student who is included on an application made pursuant to division (C) of this section as an eligible employee:

(1) The student's resident district;

(2) The district or school offering the career-technical education program in which the student is enrolled;

(3) The independent contractor engaged to create and maintain student data verification codes.

The department may not release a data verification code received under this division to any person except as authorized by law. Any document related to the tax credit authorized under this section that the department maintains in its files that contains both a student's name or other personally identifiable information and the student's data verification code is not a public record as defined in section 149.43 of the Revised Code.

Last updated September 20, 2023 at 4:42 PM

Section 5747.058 | Tax credits to foster job creation or retention.

• Effective: March 27, 2020
• Latest Legislation: House Bill 197 - 133rd General Assembly

(A) A refundable income tax credit granted by the tax credit authority under section 122.17 or former division (B)(2) or (3) of section 122.171 of the Revised Code, as those divisions existed before the effective date of the amendment of this section by H.B. 64 of the 131st general assembly, September 29, 2015, may be claimed under this chapter, in the order required under section 5747.98 of the Revised Code. For purposes of making tax payments under this chapter, taxes equal to the amount of the refundable credit shall be considered to be paid to this state on the first day of the taxable year. The refundable credit shall not be claimed for any taxable years ending with or following the calendar year in which a relocation of employment positions occurs in violation of an agreement entered into under section 122.17 or 122.171 of the Revised Code.

(B) A nonrefundable income tax credit granted by the tax credit authority under division (B) of section 122.171 of the Revised Code may be claimed under this chapter, in the order required under section 5747.98 of the Revised Code.

Section 5747.059 | Tax credit for Ohio withholding tax paid by one or more qualifying pass-through entities.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

(A) This section applies only to reduce a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code.

(B) There is hereby allowed a refundable credit against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code. This credit shall be equal to the taxpayer's proportionate share of the lesser of either the tax due or the tax paid under section 5733.41 or 5747.41 of the Revised Code by any qualifying entity as defined in section 5733.40 of the Revised Code for the qualifying taxable year of the qualifying entity which ends in the taxable year of the taxpayer.

(C) The taxpayer shall claim the credit for the taxpayer's taxable year in which ends the qualifying entity's qualifying taxable year. For purposes of making tax payments under this chapter, taxes equal to the amount of the credit shall be considered to be paid by the taxpayer to this state on the day that the qualifying entity pays to the tax commissioner the amount due pursuant to section 5733.41 and sections 5747.41 to 5747.453 of the Revised Code with respect to and for the taxpayer.

(D) In claiming the credit and determining the taxpayer's proportionate share of the tax due and the tax paid by any qualifying entity, the taxpayer shall follow the concepts set forth in subchapters J and K of the Internal Revenue Code.

(E) The credit shall be claimed in the order required under section 5747.98 of the Revised Code. If the amount of the credit under this section exceeds the aggregate amount of tax otherwise due under section 5747.02 of the Revised Code after deduction of all other credits in that order, the taxpayer is entitled to a refund of the excess.

Last updated September 6, 2023 at 3:51 PM

Section 5747.06 | Employer's duty to withhold tax.

• Effective: October 17, 2019
• Latest Legislation: House Bill 166 - 133rd General Assembly

(A) Except as provided in division (E)(3) of this section, every employer, including the state and its political subdivisions, maintaining an office or transacting business within this state and making payment of any compensation to an employee who is a taxpayer shall deduct and withhold from such compensation for each payroll period a tax computed in such manner as to result, as far as practicable, in withholding from the employee's compensation during each calendar year an amount substantially equivalent to the tax reasonably estimated to be due from the employee under this chapter and Chapter 5748. of the Revised Code with respect to the amount of such compensation included in the employee's adjusted gross income during the calendar year. The employer shall deduct and withhold the tax on the date that the employer directly, indirectly, or constructively pays the compensation to, or credits the compensation to the benefit of, the employee.

The method of determining the amount to be withheld shall be prescribed by rule of the tax commissioner. The rule shall require that taxes are withheld on a taxpayer's compensation at rates sufficient to ensure payment of the appropriate amount of tax reasonably estimated to be due.

In addition to any other exclusions from withholding permitted under this section, no tax shall be withheld by an employer from the compensation of an employee when such compensation is paid for:

(1) Agricultural labor as defined in division G of section 3121 of Title 26 of the United States Code;

(2) Domestic service in a private home, local college club, or local chapter of a college fraternity or sorority;

(3) Service performed in any calendar quarter by an employee unless the cash remuneration paid for such service is three hundred dollars or more and such service is performed by an individual who is regularly employed by such employer to perform such service;

(4) Services performed for a foreign government or an international organization;

(5) Services performed by an individual under the age of eighteen in the delivery or distribution of newspapers or shopping news, not including delivery or distribution to any point for subsequent delivery or distribution, or when performed by such individual under the age of eighteen under an arrangement where newspapers or magazines are to be sold by the individual at a fixed price, the individual's compensation being based on the retention of the excess of such price over the amount at which the newspapers or magazines are charged to the individual;

(6) Services not in the course of the employer's trade or business to the extent paid in any medium other than cash.

(B) Every employer required to deduct and withhold tax from the compensation of an employee under this chapter shall furnish to each employee, with respect to the compensation paid by such employer to such employee during the calendar year, on or before the thirty-first day of January of the succeeding year, or, if the employee's employment is terminated before the close of such calendar year, within thirty days from the date on which the last payment of compensation was made, a written statement as prescribed by the tax commissioner showing the amount of compensation paid by the employer to the employee, the amount deducted and withheld as state income tax, any amount deducted and withheld as school district income tax for each applicable school district, and any other information as the commissioner prescribes.

(C) The failure of an employer to withhold tax as required by this section does not relieve an employee from the liability for the tax. The failure of an employer to remit the tax as required by law does not relieve an employee from liability for the tax if the tax commissioner ascertains that the employee colluded with the employer with respect to the failure to remit the tax.

(D) If an employer fails to deduct and withhold any tax as required, and thereafter the tax is paid, the tax so required to be deducted and withheld shall not be collected from the employer, but the employer is not relieved from liability for penalties and interest otherwise applicable in respect to the failure to deduct and withhold the tax.

(E) To ensure that taxes imposed pursuant to Chapter 5748. of the Revised Code are deducted and withheld as provided in this section:

(1) An employer shall request that each employee furnish the name of the employee's school district of residence;

(2) Each employee shall furnish the employer with sufficient and correct information to enable the employer to withhold the taxes imposed under Chapter 5748. of the Revised Code. The employee shall provide additional or corrected information whenever information previously provided to the employer becomes insufficient or incorrect.

(3) If the employer complies with the requirements of division (E)(1) of this section and if the employee fails to comply with the requirements of division (E)(2) of this section, the employer is not required to withhold and pay the taxes imposed under Chapter 5748. of the Revised Code and is not subject to any penalties and interest otherwise applicable for failing to deduct and withhold such taxes.

Section 5747.061 | Withholding tax from wages of nonresident employees.

• Effective: March 27, 2020
• Latest Legislation: House Bill 197 - 133rd General Assembly

(A) As used in this section:

(1) "State agency" means the general assembly, all courts, any department, division, institution, board, commission, authority, bureau, or other instrumentality of the state.

(2) "Political subdivision" means a county, municipal corporation, township, school district, or other body corporate and politic responsible for governmental activities in a geographic area smaller than that of the state.

(3) "Legislative authority" means the board of county commissioners, the legislative authority of a municipal corporation, the board of township trustees, the board of education, or the board, council, commission, or other governing body of any other political subdivision.

(4) "Fiscal officer" means the county auditor, the treasurer of the municipal corporation, the clerk-treasurer of a village, or the officer who, by virtue of the charter, has the duties of the treasurer or clerk-treasurer, the township fiscal officer, the treasurer of the board of education, or, in the case of any state agency or other subdivision, the officer or person responsible for deducting and withholding from the compensation paid to an employee who is a taxpayer the amount of tax required to be withheld by section 5747.06 of the Revised Code.

(B)(1) The director or other chief administrator of any state agency, in accordance with rules adopted by the department of administrative services, may direct its fiscal officer to deduct and withhold from the compensation paid to an employee who is a resident of a state with which the commissioner has entered into an agreement under division (A)(2) of section 5747.05 of the Revised Code, a tax computed in such a manner as to result, as far as practicable, in withholding from the compensation of the employee during each calendar year an amount substantially equivalent to the tax reasonably estimated to be due under the income tax laws of the state of residence of the employee with respect to the amount of such compensation included in gross income during the calendar year under those laws.

(2) The legislative authority of a political subdivision may adopt a rule, ordinance, or resolution requiring the fiscal officer of the political subdivision to deduct and withhold from the compensation paid to an employee who is a resident of a state with which the tax commissioner has entered into an agreement under division (A)(2) of section 5747.05 of the Revised Code, a tax computed in such a manner as to result, as far as practicable, in withholding from the compensation of the employee during each calendar year an amount substantially equivalent to the tax reasonably estimated to be due under the income tax laws of the state of residence of the employee with respect to the amount of such compensation included in gross income during the calendar year under those laws.

(3) Upon direction of the director or other chief administrator of a state agency, or adoption of a rule, ordinance, or resolution by a political subdivision under this division, the fiscal officer shall obtain from the official responsible for administering the income tax laws of the state of residence of the employee, information necessary to enable the fiscal officer to withhold the proper amount of tax from the compensation of the employee for the calendar year.

(C) A fiscal officer who deducts and withholds tax from the compensation of a nonresident employee shall file a withholding return or other report and pay the full amount of the tax deducted and withheld as required by the income tax laws of the state of residence of the employee.

(D) A fiscal officer who deducts and withholds tax from the compensation of a nonresident employee shall furnish to that employee and to the official who is responsible for administering the income tax laws of the state of residence of the employee, a written statement showing the amount of compensation paid to the employee and the amount deducted and withheld from the compensation of the employee during the calendar year. The statement shall be furnished on or before the last day of January of the succeeding year, except that, with respect to an employee whose employment is terminated, the statement for the calendar year in which the last payment of compensation is made shall be furnished within thirty days from the date the last payment of compensation is made.

Section 5747.062 | Withholding tax from state lottery winnings.

• Effective: March 23, 2022
• Latest Legislation: House Bill 29 - 134th General Assembly

As used in this section, "transferee" has the same meaning as in section 3770.10 of the Revised Code, and "recipient" includes a transferee.

(A)(1) Before making any other deduction required by Chapter 3770. of the Revised Code, the state lottery commission shall deduct and withhold an amount equal to four per cent of the payment from each lottery prize award payment that is of an amount for which reporting to the internal revenue service of the amount is required by section 6041 of the Internal Revenue Code, as amended.

(2) On or before the tenth day of each month, the state lottery commission, and each transferee required to deduct and withhold amounts pursuant to section 3770.072 of the Revised Code, shall file a return and remit to the tax commissioner all amounts deducted and withheld pursuant to this section during the preceding month.

(3) On or before the thirty-first day of January of each year, the state lottery commission, and each transferee required to deduct and withhold amounts pursuant to section 3770.072 of the Revised Code, shall file with the commissioner an annual return, in the form prescribed by the tax commissioner, indicating the total amount deducted and withheld pursuant to this section or section 3770.072 of the Revised Code during the preceding calendar year. At the time of filing that return, the state lottery commission or transferee shall remit any amount deducted and withheld during the preceding calendar year that was not previously remitted.

(4) The state lottery commission, and each transferee required to deduct and withhold amounts pursuant to section 3770.072 of the Revised Code, shall issue to each person with respect to whom tax has been deducted and withheld by the commission or transferee pursuant to this section or section 3770.072 of the Revised Code during the preceding calendar year, an information return in the form prescribed by the commissioner.

(B)(1) Division (B)(1) of this section does not apply to persons classified for federal income tax purposes as associations taxable as corporations.

Amounts withheld pursuant to this section or section 3770.072 of the Revised Code shall be allowed as a credit against payment of the tax imposed pursuant to section 5747.02 of the Revised Code upon the lottery prize award recipient, upon a beneficiary of such a recipient, or upon any investor in such a recipient if the recipient is a pass-through entity or disregarded entity, and shall be treated as taxes paid by the recipient, beneficiary, or investor for purposes of section 5747.09 of the Revised Code. The credit is available to the recipient, beneficiary, or investor even if the commission or transferee does not remit to the tax commissioner the amount withheld.

(2) Division (B)(2) of this section applies only to persons classified for federal income tax purposes as associations taxable as corporations.

Amounts withheld pursuant to this section or section 3770.072 of the Revised Code shall be treated as a credit against the tax imposed pursuant to section 5733.06 of the Revised Code for the tax year immediately following the date on which those amounts are deducted and withheld, upon the lottery prize award recipient, upon a beneficiary of such a recipient, or upon an investor in such a recipient if the recipient is a pass-through entity or disregarded entity, and shall be treated as paid by the recipient, beneficiary, or investor on the date on which those amounts are deducted and withheld. The credit is a refundable credit and shall be claimed in the order required under section 5733.98 of the Revised Code. The credit is available to the recipient, beneficiary, or investor even if the commission or transferee does not remit to the tax commissioner the amount withheld.

(3) Nothing in division (B)(1) or (2) of this section shall be construed to allow more than one person to claim the credit for any portion of each amount deducted and withheld.

(C) Failure of the commission or any transferee to deduct and withhold the required amounts from lottery prize awards or to remit amounts withheld as required by this section and section 3770.072 of the Revised Code shall not relieve a taxpayer described in division (B) of this section from liability for the tax imposed by section 5733.06 or 5747.02 of the Revised Code.

Last updated January 24, 2022 at 12:02 PM

Section 5747.063 | Withholding from casino and sports gaming winnings.

• Effective: March 23, 2022
• Latest Legislation: House Bill 29 - 134th General Assembly

The requirements imposed under this section are in addition to the municipal income tax withholding requirements under section 718.031 of the Revised Code. As used in this section, "sports gaming proprietor" and "sports gaming facility" have the same meanings as in section 3775.01 of the Revised Code.

(A)(1) If a person's winnings from casino gaming or from sports gaming are an amount for which reporting to the internal revenue service of the amount is required by section 6041 of the Internal Revenue Code, as amended, a casino operator or sports gaming proprietor shall deduct and withhold Ohio income tax from the person's winnings at a rate of four per cent of the amount won. A person's amount of winnings from casino gaming shall be determined each time the person exchanges amounts won in tokens, chips, casino credit, or other prepaid representations of value for cash or a cash equivalent. The casino operator or sports gaming proprietor shall issue, to a person from whose winnings an amount has been deducted and withheld, a receipt for the amount deducted and withheld, and also shall obtain from the person additional information that will be necessary for the casino operator or sports gaming proprietor to prepare the returns required by this section.

(2) If a person's winnings from casino gaming or sports gaming require reporting to the internal revenue service under division (A)(1) of this section, the casino operator or sports gaming proprietor also shall require the person to state in writing, under penalty of falsification, whether the person is in default under a support order.

(B) Amounts deducted and withheld by a casino operator or sports gaming proprietor are held in trust for the benefit of the state.

(1) On or before the tenth day of each month, the casino operator shall file a return electronically with the tax commissioner identifying the persons from whose winnings amounts were deducted and withheld, the amount of each such deduction and withholding during the preceding calendar month, the amount of the winnings from which each such amount was withheld, the type of casino gaming or sports gaming that resulted in such winnings, and any other information required by the tax commissioner. With the return, the casino operator or sports gaming proprietor shall remit electronically to the commissioner all the amounts deducted and withheld during the preceding month.

(2)(a) A casino operator or sports gaming proprietor shall maintain a record of each written statement provided under division (A)(2) of this section in which a person admits to being in default under a support order. The casino operator or sports gaming proprietor shall make these records available to the director of job and family services upon request.

(b) A casino operator or sports gaming proprietor shall maintain copies of receipts issued under division (A)(1) of this section and of written statements provided under division (A)(2) of this section and shall make these copies available to the tax commissioner upon request.

(c) A casino operator or sports gaming proprietor shall maintain the information described in divisions (B)(2)(a) and (b) of this section in accordance with section 5747.17 of the Revised Code and any rules adopted pursuant thereto.

(3) Annually, on or before the thirty-first day of January, a casino operator or sports gaming proprietor shall file an annual return electronically with the tax commissioner indicating the total amount deducted and withheld during the preceding calendar year. The casino operator or sports gaming proprietor shall remit electronically with the annual return any amount that was deducted and withheld and that was not previously remitted. If the identity of a person and the amount deducted and withheld with respect to that person were omitted on a monthly return, that information shall be indicated on the annual return.

(4)(a) A casino operator or sports gaming proprietor who fails to file a return and remit the amounts deducted and withheld is personally liable for the amount deducted and withheld and not remitted. The commissioner may impose a penalty up to one thousand dollars if a return is filed late, if amounts deducted and withheld are remitted late, if a return is not filed, or if amounts deducted and withheld are not remitted. Interest accrues on past due amounts deducted and withheld at the rate prescribed in section 5703.47 of the Revised Code. The commissioner may collect past due amounts deducted and withheld and penalties and interest thereon by assessment under section 5747.13 of the Revised Code as if they were income taxes collected by an employer.

(b) If a casino operator or sports gaming proprietor sells the casino facility or sports gaming facility, or otherwise quits the casino or sports gaming business, the amounts deducted and withheld and any penalties and interest thereon are immediately due and payable. The successor shall withhold an amount of the purchase money that is sufficient to cover the amounts deducted and withheld and penalties and interest thereon until the predecessor casino operator or sports gaming proprietor produces either a receipt from the commissioner showing that the amounts deducted and withheld and penalties and interest thereon have been paid or a certificate from the commissioner indicating that no amounts deducted and withheld or penalties and interest thereon are due. If the successor fails to withhold purchase money, the successor is personally liable for payment of the amounts deducted and withheld and penalties and interest thereon, up to the amount of the purchase money.

(C)(1) Annually, on or before the thirty-first day of January, a casino operator or sports gaming proprietor shall issue an information return to each person with respect to whom an amount has been deducted and withheld during the preceding calendar year. The information return shall show the total amount deducted from the person's winnings by the casino operator or sports gaming proprietor during the preceding calendar year.

(2) Annually, on or before the thirty-first day of January, a casino operator or sports gaming proprietor shall provide to the commissioner a copy of each information return issued under division (C)(1) of this section for the preceding calendar year. The commissioner may require that the copies be transmitted electronically.

(D) Amounts deducted and withheld shall be allowed as a credit against payment of the tax imposed by section 5747.02 of the Revised Code and shall be treated as taxes paid for purposes of section 5747.09 of the Revised Code. This division applies only to the person for whom the amount is deducted and withheld.

(E) The failure of a casino operator or sports gaming proprietor to deduct and withhold the required amount from a person's winnings does not relieve the person from liability for the tax imposed by section 5747.02 of the Revised Code with respect to those winnings. And compliance with this section does not relieve a casino operator or sports gaming proprietor or a person who has winnings from casino gaming or sports gaming from compliance with relevant provisions of federal tax laws.

(F) The commissioner shall prescribe the form of the receipt and returns required by this section. The director of job and family services shall prescribe the form of the statement required by this section.

(G) The commissioner may adopt rules that are necessary to administer this section.

Last updated February 14, 2022 at 4:13 PM

Section 5747.064 | Withholding from video lottery and sports gaming winnings.

• Effective: March 23, 2022
• Latest Legislation: House Bill 29 - 134th General Assembly

The requirements imposed under this section are in addition to the municipal income tax withholding requirements under section 718.031 of the Revised Code.

(A) As used in this section:

(1) "Video lottery terminal" has the same meaning as in section 3770.21 of the Revised Code.

(2) "Lottery sports gaming" has the same meaning as in section 3770.23 of the Revised Code.

(B) If a person's prize award from a video lottery terminal or from lottery sports gaming offered in a video lottery terminal facility is an amount for which reporting to the internal revenue service of the amount is required by section 6041 of the Internal Revenue Code, as amended, the lottery sales agent shall deduct and withhold Ohio income tax from the person's prize award at a rate of four per cent of the amount won. The lottery sales agent shall issue, to a person from whose prize award an amount has been deducted or withheld, a receipt for the amount deducted and withheld, and also shall obtain from the person additional information that will be necessary for the lottery sales agent to prepare the returns required by this section.

(C) Amounts deducted and withheld by a lottery sales agent are held in trust for the benefit of the state.

(1) On or before the tenth day of each month, the lottery sales agent shall file a return electronically with the tax commissioner identifying the persons from whose prize awards amounts were deducted and withheld, the amount of each such deduction and withholding during the preceding month, the amount of the prize award from which each such amount was withheld, and any other information required by the commissioner. With the return, the lottery sales agent shall remit electronically to the commissioner all the amounts deducted and withheld during the preceding month.

(2) A lottery sales agent shall maintain a record of all receipts issued under division (B) of this section and shall make those records available to the commissioner upon request. Such records shall be maintained in accordance with section 5747.17 of the Revised Code and any rules adopted pursuant thereto.

(3) Annually, on or before the thirty-first day of January, a lottery sales agent shall file an annual return electronically with the tax commissioner indicating the total amount deducted and withheld during the preceding calendar year. The lottery sales agent shall remit electronically with the annual return any amount that was deducted and withheld and that was not previously remitted. If the identity of a person and the amount deducted and withheld with respect to that person were omitted on a monthly return, that information shall be indicated on the annual return.

(4)(a) A lottery sales agent who fails to file a return and remit the amounts deducted and withheld is personally liable for the amount deducted and withheld and not remitted. The commissioner may impose a penalty of up to one thousand dollars if a return is filed late, if amounts deducted and withheld are remitted late, if a return is not filed, or if amounts deducted and withheld are not remitted. Interest accrues on past due amounts deducted and withheld at the rate prescribed in section 5703.47 of the Revised Code. The commissioner may collect past due amounts deducted and withheld and penalties and interest thereon by assessment under section 5747.13 of the Revised Code as if they were income taxes collected by an employer.

(b) If a lottery sales agent ceases to operate video lottery terminals, the amounts deducted and withheld and any penalties and interest thereon are immediately due and payable. A successor of the lottery sales agent that purchases the video lottery terminals from the agent shall withhold an amount of the purchase money that is sufficient to cover the amounts deducted and withheld and penalties and interest thereon until the predecessor lottery sales agent produces either a receipt from the tax commissioner showing that the amounts deducted and withheld and penalties and interest thereon have been paid or a certificate from the commissioner indicating that no amounts deducted and withheld or penalties and interest thereon are due. If the successor fails to withhold purchase money, the successor is personally liable for payment of the amounts deducted and withheld and penalties and interest thereon, up to the amount of the purchase money.

(D)(1) Annually, on or before the thirty-first day of January, a lottery sales agent shall issue an information return to each person with respect to whom an amount has been deducted and withheld during the preceding calendar year. The information return shall show the total amount deducted from the person's prize award by the lottery sales agent during the preceding year.

(2) Annually, on or before the thirty-first day of January, a lottery sales agent shall provide to the tax commissioner a copy of each information return issued under division (D)(1) of this section for the preceding calendar year. The commissioner may require that such copies be transmitted electronically.

(E) Amounts deducted and withheld shall be allowed as a credit against payment of the tax imposed by section 5747.02 of the Revised Code and shall be treated as taxes paid for purposes of section 5747.09 of the Revised Code. This division applies only to the person for whom the amount is deducted and withheld.

(F) The failure of a lottery sales agent to deduct and withhold the required amount from a person's prize award does not relieve the person from liability for the tax imposed by section 5747.02 of the Revised Code with respect to that income. Compliance with this section does not relieve a lottery sales agent or a person who has a prize award from compliance with relevant provisions of federal tax laws.

(G) The commissioner shall prescribe the form of the receipt and returns required by this section and may promulgate any rules necessary to administer the section.

Last updated February 14, 2022 at 4:15 PM

Section 5747.065 | Income tax withholding from unemployment compensation benefits.

• Effective: April 3, 2023
• Latest Legislation: Senate Bill 302 - 134th General Assembly

(A) If a taxpayer has elected under section 4141.321 of the Revised Code to have the director of job and family services deduct and withhold state income tax from the unemployment compensation benefits payable to the taxpayer, the director shall deduct and withhold such tax at the rate or rates that the director shall prescribe in consultation with the tax commissioner.

(B)(1) On or before the tenth day of each month, the director of job and family services shall file a return electronically with the tax commissioner, in the form prescribed by the commissioner. With the return, the director shall remit electronically to the commissioner all the amounts deducted and withheld under this section during the preceding month.

(2) On or before the thirty-first day of January of each year, beginning in 2026, the director shall electronically file an annual return with the commissioner, in the form prescribed by the commissioner, indicating the total amount deducted and withheld under this section during the preceding calendar year. At the time of filing that return, the director shall remit any amount deducted and withheld during the preceding calendar year that was not previously remitted.

(3) Annually, on or before the thirty-first day of January, the director shall issue an information return to each taxpayer with respect to whom an amount has been deducted and withheld under this section during the preceding calendar year. The information return shall show the total amount deducted from the taxpayer's unemployment compensation benefits during the preceding calendar year and any other information the tax commissioner requires. If the director is required under the Internal Revenue Code to report federal income tax deducted and withheld from unemployment compensation benefits, then the director may report the information required under this section on that report, as authorized by the Internal Revenue Code.

(4) Annually, on or before the thirty-first day of January, beginning in 2026, the director shall provide to the commissioner a copy of each information return issued under division (B)(3) of this section for the preceding calendar year. The commissioner may require that the copies be transmitted electronically.

(C) Failure of the director to deduct and withhold the required amounts from unemployment compensation benefits or to remit amounts withheld as required by this section does not relieve a taxpayer from liability for the tax imposed by section 5747.02 of the Revised Code.

(D) The director of job and family services may adopt rules as necessary to administer this section.

Last updated March 22, 2023 at 5:22 PM

Section 5747.07 | Employers to file return and pay withholding.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

(A) As used in this section:

(1) "Partial weekly withholding period" means a period during which an employer directly, indirectly, or constructively pays compensation to, or credits compensation to the benefit of, an employee, and that consists of a consecutive Saturday, Sunday, Monday, and Tuesday or a consecutive Wednesday, Thursday, and Friday. There are two partial weekly withholding periods each week, except that a partial weekly withholding period cannot extend from one calendar year into the next calendar year; if the first day of January falls on a day other than Saturday or Wednesday, the partial weekly withholding period ends on the thirty-first day of December and there are three partial weekly withholding periods during that week.

(2) "Undeposited taxes" means the taxes an employer is required to deduct and withhold from an employee's compensation pursuant to section 5747.06 of the Revised Code that have not been remitted to the tax commissioner pursuant to this section or section 5747.072 of the Revised Code.

(3) A "week" begins on Saturday and concludes at the end of the following Friday.

(4) "Professional employer organization," "professional employer organization agreement," and "professional employer organization reporting entity" have the same meanings as in section 4125.01 of the Revised Code.

(5) "Alternate employer organization" and "alternate employer organization agreement" have the same meanings as in section 4133.01 of the Revised Code.

(6) "Client employer" has the same meaning as in section 4125.01 of the Revised Code in the context of a professional employer organization or a professional employer organization reporting entity, or the same meaning as in section 4133.01 of the Revised Code in the context of an alternate employer organization.

(B) Except as provided in divisions (C) and (D) of this section and in division (A) of section 5747.072 of the Revised Code, every employer required to deduct and withhold any amount under section 5747.06 of the Revised Code shall file a return and shall pay the amount required by law as follows:

(1) An employer who accumulates or is required to accumulate undeposited taxes of one hundred thousand dollars or more during a partial weekly withholding period shall make the payment of the undeposited taxes by the close of the first banking day after the day on which the accumulation reaches one hundred thousand dollars. If required under division (I) of this section, the payment shall be made electronically under section 5747.072 of the Revised Code.

(2) Except as required by division (B)(1) of this section, an employer whose actual or required payments under this section were at least eighty-four thousand dollars during the twelve-month period ending on the thirtieth day of June of the preceding calendar year shall make the payment of undeposited taxes within three banking days after the close of a partial weekly withholding period during which the employer was required to deduct and withhold any amount under this chapter. If required under division (I) of this section, the payment shall be made electronically under section 5747.072 of the Revised Code.

(3) Except as required by divisions (B)(1) and (2) of this section, if an employer's actual or required payments were more than two thousand dollars during the twelve-month period ending on the thirtieth day of June of the preceding calendar year, the employer shall make the payment of undeposited taxes for each month during which they were required to be withheld no later than fifteen days following the last day of that month. The employer shall file the return prescribed by the tax commissioner with the payment.

(4) Except as required by divisions (B)(1), (2), and (3) of this section, an employer shall make the payment of undeposited taxes for each calendar quarter during which they were required to be withheld no later than the last day of the month following the last day of March, June, September, and December each year. The employer shall file the return prescribed by the tax commissioner with the payment.

(C) The return and payment schedules prescribed by divisions (B)(1) and (2) of this section do not apply to the return and payment of undeposited school district income taxes arising from taxes levied pursuant to Chapter 5748. of the Revised Code. Undeposited school district income taxes shall be returned and paid pursuant to divisions (B)(3) and (4) of this section, as applicable.

(D)(1) The requirements of division (B) of this section are met if the amount paid is not less than ninety-five per cent of the actual tax withheld or required to be withheld for the prior quarterly, monthly, or partial weekly withholding period, and the underpayment is not due to willful neglect. Any underpayment of withheld tax shall be paid within thirty days of the date on which the withheld tax was due without regard to division (D)(1) of this section. An employer described in division (B)(1) or (2) of this section shall make the payment electronically under section 5747.072 of the Revised Code.

(2) If the tax commissioner believes that quarterly or monthly payments would result in a delay that might jeopardize the remittance of withholding payments, the commissioner may order that the payments be made weekly, or more frequently if necessary, and the payments shall be made no later than three banking days following the close of the period for which the jeopardy order is made. An order requiring weekly or more frequent payments shall be delivered to the employer in the manner provided in section 5703.37 of the Revised Code and remains in effect until the commissioner notifies the employer to the contrary.

(3) If compelling circumstances exist concerning the remittance of undeposited taxes, the commissioner may order the employer to make payments under any of the payment schedules under division (B) of this section. The order shall be delivered to the employer in the manner provided in section 5703.37 of the Revised Code and shall remain in effect until the commissioner notifies the employer to the contrary. For purposes of division (D)(3) of this section, "compelling circumstances" exist if either or both of the following are true:

(a) Based upon annualization of payments made or required to be made during the preceding calendar year and during the current calendar year, the employer would be required for the next calendar year to make payments under division (B)(2) of this section.

(b) Based upon annualization of payments made or required to be made during the current calendar year, the employer would be required for the next calendar year to make payments under division (B)(2) of this section.

(E)(1) In addition to other returns required to be filed and payments required to be made under this section, every employer required to deduct and withhold taxes shall file, not later than the thirty-first day of January of each year, an annual return covering, but not limited to, both the aggregate amount deducted and withheld and the aggregate amount required to be deducted and withheld during the entire preceding year for the tax imposed under section 5747.02 of the Revised Code and for each tax imposed under Chapter 5748. of the Revised Code. At the time of filing that return, the employer shall pay over any amounts of undeposited taxes for the preceding year, whether actually deducted and withheld or required to be deducted and withheld, that have not been previously paid. The employer shall make the annual report, to each employee and to the tax commissioner, of the compensation paid and each tax withheld, as the commissioner by rule may prescribe.

(2) Each employer required to deduct and withhold any tax is liable for the payment of that amount required to be deducted and withheld, whether or not the tax has in fact been withheld, unless the failure to withhold was based upon the employer's good faith in reliance upon the statement of the employee as to liability, and the amount shall be deemed to be a special fund in trust for the general revenue fund.

(F) Each employer shall file with the employer's annual return the following items of information on employees for whom withholding is required under section 5747.06 of the Revised Code:

(1) The full name of each employee, the employee's address, the employee's school district of residence, and in the case of a nonresident employee, the employee's principal county of employment;

(2) The social security number of each employee;

(3) The total amount of compensation paid before any deductions to each employee for the period for which the annual return is made;

(4) The amount of the tax imposed by section 5747.02 of the Revised Code and the amount of each tax imposed under Chapter 5748. of the Revised Code withheld from the compensation of the employee for the period for which the annual return is made. The commissioner may extend upon good cause the period for filing any notice or return required to be filed under this section and may adopt rules relating to extensions of time. If the extension results in an extension of time for the payment of the amounts withheld with respect to which the return is filed, the employer shall pay, at the time the amount withheld is paid, an amount of interest computed at the rate per annum prescribed by section 5703.47 of the Revised Code on that amount withheld, from the day that amount was originally required to be paid to the day of actual payment or to the day an assessment is issued under section 5747.13 of the Revised Code, whichever occurs first.

(5) In addition to all other interest charges and penalties imposed, all amounts of taxes withheld or required to be withheld and remaining unpaid after the day the amounts are required to be paid shall bear interest from the date prescribed for payment at the rate per annum prescribed by section 5703.47 of the Revised Code on the amount unpaid, in addition to the amount withheld, until paid or until the day an assessment is issued under section 5747.13 of the Revised Code, whichever occurs first.

(G) An employee of a corporation, limited liability company, or business trust having control or supervision of or charged with the responsibility of filing the report and making payment, or an officer, member, manager, or trustee of a corporation, limited liability company, or business trust who is responsible for the execution of the corporation's, limited liability company's, or business trust's fiscal responsibilities, shall be personally liable for failure to file the report or pay the tax due as required by this section. The dissolution, termination, or bankruptcy of a corporation, limited liability company, or business trust does not discharge a responsible officer's, member's, manager's, employee's, or trustee's liability for a failure of the corporation, limited liability company, or business trust to file returns or pay tax due.

(H) If an employer required to deduct and withhold income tax from compensation and to pay that tax to the state under sections 5747.06 and 5747.07 of the Revised Code sells the employer's business or stock of merchandise or quits the employer's business, the taxes required to be deducted and withheld and paid to the state pursuant to those sections prior to that time, together with any interest and penalties imposed on those taxes, become due and payable immediately, and that person shall make a final return within fifteen days after the date of selling or quitting business. The employer's successor shall withhold a sufficient amount of the purchase money to cover the amount of the taxes, interest, and penalties due and unpaid, until the former owner produces a receipt from the tax commissioner showing that the taxes, interest, and penalties have been paid or a certificate indicating that no such taxes are due. If the purchaser of the business or stock of merchandise fails to withhold purchase money, the purchaser shall be personally liable for the payment of the taxes, interest, and penalties accrued and unpaid during the operation of the business by the former owner. If the amount of taxes, interest, and penalties outstanding at the time of the purchase exceeds the total purchase money, the tax commissioner in the commissioner's discretion may adjust the liability of the seller or the responsibility of the purchaser to pay that liability to maximize the collection of withholding tax revenue.

(I) An employer whose actual or required payments under this section exceeded eighty-four thousand dollars during the twelve-month period ending on the thirtieth day of June of the preceding calendar year shall make all payments required by this section for the year electronically under section 5747.072 of the Revised Code.

(J)(1) Every professional employer organization, professional employer organization reporting entity, and alternate employer organization shall file a report with the tax commissioner within thirty days after commencing business in this state that includes all of the following information:

(a) The name, address, number the employer receives from the secretary of state to do business in this state, if applicable, and federal employer identification number of each client employer of the organization or entity;

(b) The date that each client employer became a client of the organization or entity;

(c) The names and mailing addresses of the chief executive officer and the chief financial officer of each client employer for taxation of the client employer.

(2) Beginning with the calendar quarter ending after a professional employer organization, professional employer organization reporting entity, or alternate employer organization files the report required under division (J)(1) of this section, and every calendar quarter thereafter, the organization or entity shall file an updated report with the tax commissioner. The organization or entity shall file the updated report not later than the last day of the month following the end of the calendar quarter and shall include all of the following information in the report:

(a) If an entity became a client employer of the professional employer organization, professional employer organization reporting entity, or alternate employer organization at any time during the calendar quarter, all of the information required under division (J)(1) of this section for each new client employer;

(b) If an entity terminated the professional employer organization agreement or the alternate employer organization agreement between the entity and the professional employer organization, professional employer organization reporting entity, or alternate employer organization, as applicable, at any time during the calendar quarter, the information described in division (J)(1)(a) of this section for that entity, the date during the calendar quarter that the entity ceased being a client of the organization or reporting entity, if applicable, or the date the entity ceased business operations in this state, if applicable;

(c) If the name or mailing address of the chief executive officer or the chief financial officer of a client employer has changed since the professional employer organization, professional employer organization reporting entity, or alternate employer organization previously submitted a report under division (J)(1) or (2) of this section, the updated name or mailing address, or both, of the chief executive officer or the chief financial officer, as applicable;

(d) If none of the events described in divisions (J)(2)(a) to (c) of this section occurred during the calendar quarter, a statement of that fact.

Last updated September 15, 2023 at 4:29 PM

Section 5747.071 | Withholding tax from retirement benefits.

• Effective: November 2, 1999
• Latest Legislation: House Bill 222 - 123rd General Assembly

(A) As used in this section:

(1) "Retirement system" means the public employees retirement system, state teachers retirement system, school employees retirement system, Ohio police and fire pension fund, state highway patrol retirement system, and any municipal retirement system.

(2) "Benefits" means all annuities, allowances, pensions, and other benefits paid by a retirement system.

(3) "Recipient" means any person receiving benefits from a retirement system.

(B) Any recipient may request the recipient's retirement system to deduct and withhold from the recipient's benefits an amount during the calendar year reasonably estimated to be equal to the tax due from the recipient under this chapter for the year with respect to the recipient's benefits from the retirement system that are included in the recipient's adjusted gross income. The request shall be made pursuant to an application filed with the retirement system, on a form the system shall supply, and shall include the estimate of the recipient of the amount of state income taxes that will be due in the ensuing calendar year with respect to the benefits from the retirement system.

(C) A retirement system with which an application is filed under this section, commencing with the calendar year following the year in which the application is filed, shall withhold from the benefits of the recipient an amount that equals for the calendar year, the amount of taxes that the recipient estimated would be due for the year. The amount to be withheld for a calendar year shall be apportioned throughout the calendar year.

(D) A recipient may submit an amended application to increase or decrease the amount that will be withheld by the retirement system in an ensuing year.

(E) A retirement system that withholds a portion of the benefits of a recipient under this section shall file returns and pay the amounts withheld in accordance with the requirements of section 5747.07 of the Revised Code.

(F) Every retirement system required to deduct and withhold tax from benefits pursuant to this section shall furnish to the recipient, with respect to the benefits paid to the recipient during the calendar year, on or before the thirty-first day of January of the succeeding year, a written statement showing the amount of benefits deducted and withheld as state income tax, and such other information as the tax commissioner requires.

(G) A retirement system may adopt rules governing withholding under this section.

Section 5747.072 | Employers remitting taxes by electronic funds transfer.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

(A) Any employer required by section 5747.07 of the Revised Code to remit undeposited taxes electronically shall do so by using the Ohio business gateway, as defined in section 718.01 of the Revised Code, or another means of electronic payment on or before the dates specified under that section. The tax commissioner shall notify each such employer of the employer's obligation to remit undeposited taxes electronically. Failure by the commissioner to notify an employer subject to this section to remit taxes electronically does not relieve the employer of its obligation to remit taxes in that manner.

The payment of taxes electronically does not affect an employer's obligation to file the annual return as required under divisions (E) and (F) of section 5747.07 of the Revised Code.

An employer required by this section to remit taxes electronically may apply to the commissioner to be excused from that requirement. The commissioner may excuse the employer from electronic remittance for good cause shown for the period of time requested by the employer or a portion of that period. The commissioner shall notify the employer of the commissioner's decision as soon as is practicable.

(B) If an employer required by this section to remit undeposited taxes electronically remits those taxes by some other means, and the tax commissioner determines that such failure was not due to reasonable cause or was due to willful neglect, the commissioner may collect an additional charge by assessment in the manner prescribed by section 5747.13 of the Revised Code. The additional charge shall equal five per cent of the amount of the undeposited taxes, but shall not exceed five thousand dollars. Any additional charge assessed under this section is in addition to any other penalty or charge imposed by this chapter, and shall be considered as revenue arising from the taxes imposed by this chapter. The commissioner may remit all or a portion of such a charge and may adopt rules governing such remission.

No additional charge shall be assessed under this division against an employer that has been notified of its obligation to remit taxes electronically under this section and that remits its first two tax payments after such notification by some other means. The additional charge may be assessed upon the remittance of any subsequent tax payment that the employer remits by some means other than electronically.

Last updated September 15, 2023 at 4:36 PM

Section 5747.08 | Filing income tax return.

• Effective: June 14, 2022
• Latest Legislation: Senate Bill 246 - 134th General Assembly

An annual return with respect to the tax imposed by section 5747.02 of the Revised Code and each tax imposed under Chapter 5748. of the Revised Code shall be made by every taxpayer for any taxable year for which the taxpayer is liable for the tax imposed by that section or under that chapter, unless the total credits allowed under division (E) of section 5747.05 and divisions (F) and (G) of section 5747.055 of the Revised Code for the year are equal to or exceed the tax imposed by section 5747.02 of the Revised Code, in which case no return shall be required unless the taxpayer is liable for a tax imposed pursuant to Chapter 5748. of the Revised Code.

(A) If an individual is deceased, any return or notice required of that individual under this chapter shall be made and filed by that decedent's executor, administrator, or other person charged with the property of that decedent.

(B) If an individual is unable to make a return or notice required by this chapter, the return or notice required of that individual shall be made and filed by the individual's duly authorized agent, guardian, conservator, fiduciary, or other person charged with the care of the person or property of that individual.

(C) Returns or notices required of an estate or a trust shall be made and filed by the fiduciary of the estate or trust.

(D)(1)(a) Except as otherwise provided in division (D)(1)(b) of this section, any pass-through entity may file a single return on behalf of one or more of the entity's investors other than an investor that is a person subject to the tax imposed under section 5733.06 of the Revised Code. The single return shall set forth the name, address, and social security number or other identifying number of each of those pass-through entity investors and shall indicate the distributive share of each of those pass-through entity investor's income taxable in this state in accordance with sections 5747.20 to 5747.231 of the Revised Code. Such pass-through entity investors for whom the pass-through entity elects to file a single return are not entitled to the exemption or credit provided for by sections 5747.02 and 5747.022 of the Revised Code; shall calculate the tax before business credits at the highest rate of tax set forth in section 5747.02 of the Revised Code for the taxable year for which the return is filed; and are entitled to only their distributive share of the business credits as defined in division (D)(2) of this section. A single check drawn by the pass-through entity shall accompany the return in full payment of the tax due, as shown on the single return, for such investors, other than investors who are persons subject to the tax imposed under section 5733.06 of the Revised Code.

(b)(i) A pass-through entity shall not include in such a single return any investor that is a trust to the extent that any direct or indirect current, future, or contingent beneficiary of the trust is a person subject to the tax imposed under section 5733.06 of the Revised Code.

(ii) A pass-through entity shall not include in such a single return any investor that is itself a pass-through entity to the extent that any direct or indirect investor in the second pass-through entity is a person subject to the tax imposed under section 5733.06 of the Revised Code.

(c) Except as provided by division (L) of this section, nothing in division (D) of this section precludes the tax commissioner from requiring such investors to file the return and make the payment of taxes and related interest, penalty, and interest penalty required by this section or section 5747.02, 5747.09, or 5747.15 of the Revised Code. Nothing in division (D) of this section precludes such an investor from filing the annual return under this section, utilizing the refundable credit equal to the investor's proportionate share of the tax paid by the pass-through entity on behalf of the investor under division (I) of this section, and making the payment of taxes imposed under section 5747.02 of the Revised Code. Nothing in division (D) of this section shall be construed to provide to such an investor or pass-through entity any additional deduction or credit, other than the credit provided by division (I) of this section, solely on account of the entity's filing a return in accordance with this section. Such a pass-through entity also shall make the filing and payment of estimated taxes on behalf of the pass-through entity investors other than an investor that is a person subject to the tax imposed under section 5733.06 of the Revised Code.

(2) For the purposes of this section, "business credits" means the credits listed in section 5747.98 of the Revised Code excluding the following credits:

(a) The retirement income credit under division (B) of section 5747.055 of the Revised Code;

(b) The senior citizen credit under division (F) of section 5747.055 of the Revised Code;

(c) The lump sum distribution credit under division (G) of section 5747.055 of the Revised Code;

(d) The dependent care credit under section 5747.054 of the Revised Code;

(e) The lump sum retirement income credit under division (C) of section 5747.055 of the Revised Code;

(f) The lump sum retirement income credit under division (D) of section 5747.055 of the Revised Code;

(g) The lump sum retirement income credit under division (E) of section 5747.055 of the Revised Code;

(h) The credit for displaced workers who pay for job training under section 5747.27 of the Revised Code;

(i) The twenty-dollar personal exemption credit under section 5747.022 of the Revised Code;

(j) The joint filing credit under division (E) of section 5747.05 of the Revised Code;

(k) The nonresident credit under division (A) of section 5747.05 of the Revised Code;

(l) The credit for a resident's out-of-state income under division (B) of section 5747.05 of the Revised Code;

(m) The earned income tax credit under section 5747.71 of the Revised Code;

(n) The lead abatement credit under section 5747.26 of the Revised Code;

(o) The credit for education expenses under section 5747.72 of the Revised Code;

(p) The credit for tuition paid to a nonchartered nonpublic school under section 5747.75 of the Revised Code.

(3) The election provided for under division (D) of this section applies only to the taxable year for which the election is made by the pass-through entity. Unless the tax commissioner provides otherwise, this election, once made, is binding and irrevocable for the taxable year for which the election is made. Nothing in this division shall be construed to provide for any deduction or credit that would not be allowable if a nonresident pass-through entity investor were to file an annual return.

(4) If a pass-through entity makes the election provided for under division (D) of this section, the pass-through entity shall be liable for any additional taxes, interest, interest penalty, or penalties imposed by this chapter if the tax commissioner finds that the single return does not reflect the correct tax due by the pass-through entity investors covered by that return. Nothing in this division shall be construed to limit or alter the liability, if any, imposed on pass-through entity investors for unpaid or underpaid taxes, interest, interest penalty, or penalties as a result of the pass-through entity's making the election provided for under division (D) of this section. For the purposes of division (D) of this section, "correct tax due" means the tax that would have been paid by the pass-through entity had the single return been filed in a manner reflecting the commissioner's findings. Nothing in division (D) of this section shall be construed to make or hold a pass-through entity liable for tax attributable to a pass-through entity investor's income from a source other than the pass-through entity electing to file the single return.

(E) If a husband and wife file a joint federal income tax return for a taxable year, they shall file a joint return under this section for that taxable year, and their liabilities are joint and several, but, if the federal income tax liability of either spouse is determined on a separate federal income tax return, they shall file separate returns under this section.

If either spouse is not required to file a federal income tax return and either or both are required to file a return pursuant to this chapter, they may elect to file separate or joint returns, and, pursuant to that election, their liabilities are separate or joint and several. If a husband and wife file separate returns pursuant to this chapter, each must claim the taxpayer's own exemption, but not both, as authorized under section 5747.02 of the Revised Code on the taxpayer's own return.

(F) Each return or notice required to be filed under this section shall contain the signature of the taxpayer or the taxpayer's duly authorized agent and of the person who prepared the return for the taxpayer, and shall include the taxpayer's social security number. Each return shall be verified by a declaration under the penalties of perjury. The tax commissioner shall prescribe the form that the signature and declaration shall take.

(G) Each return or notice required to be filed under this section shall be made and filed as required by section 5747.04 of the Revised Code, on or before the fifteenth day of April of each year, on forms that the tax commissioner shall prescribe, together with remittance made payable to the treasurer of state in the combined amount of the state and all school district income taxes shown to be due on the form.

Upon good cause shown, the commissioner may extend the period for filing any notice or return required to be filed under this section and may adopt rules relating to extensions. If the extension results in an extension of time for the payment of any state or school district income tax liability with respect to which the return is filed, the taxpayer shall pay at the time the tax liability is paid an amount of interest computed at the rate per annum prescribed by section 5703.47 of the Revised Code on that liability from the time that payment is due without extension to the time of actual payment. Except as provided in section 5747.132 of the Revised Code, in addition to all other interest charges and penalties, all taxes imposed under this chapter or Chapter 5748. of the Revised Code and remaining unpaid after they become due, except combined amounts due of one dollar or less, bear interest at the rate per annum prescribed by section 5703.47 of the Revised Code until paid or until the day an assessment is issued under section 5747.13 of the Revised Code, whichever occurs first.

If the commissioner considers it necessary in order to ensure the payment of the tax imposed by section 5747.02 of the Revised Code or any tax imposed under Chapter 5748. of the Revised Code, the commissioner may require returns and payments to be made otherwise than as provided in this section.

To the extent that any provision in this division conflicts with any provision in section 5747.026 of the Revised Code, the provision in that section prevails.

(H) The amounts withheld pursuant to section 5747.06, 5747.062, 5747.063, 5747.064, 5747.065, or 5747.071 of the Revised Code shall be allowed to the ultimate recipient of the income as credits against payment of the appropriate taxes imposed on the ultimate recipient by section 5747.02 and under Chapter 5748. of the Revised Code. As used in this division, "ultimate recipient" means the person who is required to report income from which amounts are withheld pursuant to section 5747.06, 5747.062, 5747.063, 5747.064, 5747.065, or 5747.071 of the Revised Code on the annual return required to be filed under this section.

(I) If a pass-through entity elects to file a single return under division (D) of this section and if any investor is required to file the annual return and make the payment of taxes required by this chapter on account of the investor's other income that is not included in a single return filed by a pass-through entity or any other investor elects to file the annual return, the investor is entitled to a refundable credit equal to the investor's proportionate share of the tax paid by the pass-through entity on behalf of the investor. The investor shall claim the credit for the investor's taxable year in which or with which ends the taxable year of the pass-through entity. Nothing in this chapter shall be construed to allow any credit provided in this chapter to be claimed more than once. For the purpose of computing any interest, penalty, or interest penalty, the investor shall be deemed to have paid the refundable credit provided by this division on the day that the pass-through entity paid the estimated tax or the tax giving rise to the credit.

(J) The tax commissioner shall ensure that each return required to be filed under this section includes a box that the taxpayer may check to authorize a paid tax preparer who prepared the return to communicate with the department of taxation about matters pertaining to the return. The return or instructions accompanying the return shall indicate that by checking the box the taxpayer authorizes the department of taxation to contact the preparer concerning questions that arise during the processing of the return and authorizes the preparer only to provide the department with information that is missing from the return, to contact the department for information about the processing of the return or the status of the taxpayer's refund or payments, and to respond to notices about mathematical errors, offsets, or return preparation that the taxpayer has received from the department and has shown to the preparer.

(K) The tax commissioner shall permit individual taxpayers to instruct the department of taxation to cause any refund of overpaid taxes to be deposited directly into a checking account, savings account, or an individual retirement account or individual retirement annuity, or preexisting college savings plan or program account offered by the Ohio tuition trust authority under Chapter 3334. of the Revised Code, as designated by the taxpayer, when the taxpayer files the annual return required by this section electronically.

(L) If, for the taxable year, a nonresident or trust that is the owner of an electing pass-through entity, as defined in section 5747.38 of the Revised Code, does not have Ohio adjusted gross income or, in the case of a trust, modified Ohio taxable income other than from one or more electing pass-through entities, the nonresident or trust shall not be required to file an annual return under this section. Nothing in this division precludes such an owner from filing the annual return under this section, utilizing the refundable credit under section 5747.39 of the Revised Code equal to the owner's proportionate share of the tax levied under section 5747.38 of the Revised Code and paid by the electing pass-through entity, and making the payment of taxes imposed under section 5747.02 of the Revised Code.

(M) The tax commissioner may adopt rules to administer this section.

Last updated July 20, 2022 at 8:17 AM

Section 5747.082 | Use of electronic filing by tax preparers.

• Effective: March 27, 2020
• Latest Legislation: House Bill 197 - 133rd General Assembly

(A) As used in this section:

(1) "Electronic technology" means electronic technology acceptable to the tax commissioner under division (B) of this section.

(2) "Original tax return" means any report, return, or other tax document required to be filed under this chapter for the purpose of reporting the taxes due under, and withholdings required by, this chapter. "Original tax return" does not include an amended return or any declaration or form required by or filed in connection with section 5747.09 of the Revised Code.

(3) "Related member" has the same meaning as in section 5733.042 of the Revised Code.

(4) "Tax return preparer" means any person that operates a business that prepares, or directly or indirectly employs another person to prepare, for a taxpayer an original tax return in exchange for compensation or remuneration from the taxpayer or the taxpayer's related member. With respect to the preparation of a return or application for refund under this chapter, "tax return preparer" does not include an individual who performs only one or more of the following activities:

(a) Furnishes typing, reproducing, or other mechanical assistance;

(b) Prepares an application for refund or a return on behalf of an employer by whom the individual is regularly and continuously employed, or on behalf of an officer or employee of that employer;

(c) Prepares as a fiduciary an application for refund or a return;

(d) Prepares an application for refund or a return for a taxpayer in response to a notice of deficiency issued to the taxpayer or the taxpayer's related member, or in response to a waiver of restriction after the commencement of an audit of the taxpayer or the taxpayer's related member.

(B) Divisions (C) and (D) of this section apply to the filing of original tax returns that are due in a calendar year only if the tax commissioner, by the last day of the calendar year immediately preceding the calendar year in which such returns are due, has published on the department of taxation's official internet web site at least one method of electronic technology acceptable to the commissioner for filing such returns.

(C) A tax return preparer that prepares more than eleven original tax returns during any calendar year shall use electronic technology to file with the tax commissioner all original tax returns prepared by the tax return preparer. This division does not apply to a tax return preparer in any calendar year if, during the previous calendar year, the tax return preparer prepared not more than ten original tax returns.

(D) If a tax return preparer required by this section to submit original tax returns by electronic technology files an original tax return by some means other than by electronic technology, the tax commissioner shall impose a penalty of fifty dollars for each return in excess of eleven in any calendar year that is not filed by electronic technology. Upon good cause shown by the tax return preparer, the tax commissioner may waive all or any portion of the penalty or may refund all or any portion of the penalty the tax return preparer has paid.

Section 5747.083 | Report or payment of use tax on personal income tax return.

• Effective: June 21, 2002
• Latest Legislation: Senate Bill 143 - 124th General Assembly

The tax commissioner may not require the taxpayer, as a part of the taxpayer's personal income tax return, to report or pay use tax for any purchase made during the tax year on which the taxpayer has paid any sales tax to this state or any other state at the time of the purchase.

Section 5747.09 | Declaration of estimated taxes.

• Effective: September 28, 2018
• Latest Legislation: House Bill 133 - 132nd General Assembly

(A) As used in this section:

(1) "Estimated taxes" means the amount that the taxpayer estimates to be the taxpayer's combined tax liability under this chapter and Chapter 5748. of the Revised Code for the current taxable year.

(2) "Tax liability" means the total taxes due for the taxable year, after allowing any credit to which the taxpayer is entitled, but prior to applying any estimated tax payment, withholding payment, or refund from another tax year.

(3) "Taxes paid" include payments of estimated taxes made under division (C) of this section, taxes withheld from the taxpayer's compensation, and tax refunds applied by the taxpayer in payment of estimated taxes.

(4) "Required installment" means a payment equal to twenty-five per cent of the lesser of the following:

(a) Ninety per cent of the tax liability for the taxable year;

(b) One hundred per cent of the tax liability shown on the return of a taxpayer for the preceding taxable year.

Division (A)(4)(b) of this section applies only if the taxpayer filed a return under section 5747.08 of the Revised Code for the preceding taxable year and if the preceding taxable year was a twelve-month taxable year.

(B) Every taxpayer shall make declaration of estimated taxes for the current taxable year, in the form that the tax commissioner shall prescribe, if the amount payable as estimated taxes, less the amount to be withheld from the taxpayer's compensation, is more than five hundred dollars. For purposes of this section, taxes withheld from compensation shall be considered as paid in equal amounts on each payment date unless the taxpayer establishes the dates on which all amounts were actually withheld, in which case the amounts withheld shall be considered as paid on the dates on which the amounts were actually withheld. Taxpayers filing joint returns pursuant to section 5747.08 of the Revised Code shall file joint declarations of estimated taxes. A taxpayer may amend a declaration under rules prescribed by the commissioner. A taxpayer having a taxable year of less than twelve months shall make a declaration under rules prescribed by the commissioner. The declaration of estimated taxes for an individual under a disability shall be made and filed by the person who is required to file the income tax return.

The declaration of estimated taxes shall be filed on or before the fifteenth day of April of each year or on or before the fifteenth day of the fourth month after the taxpayer becomes subject to tax for the first time.

Taxpayers reporting on a fiscal year basis shall file a declaration on or before the fifteenth day of the fourth month after the beginning of each fiscal year or period.

The declaration shall be filed upon a form prescribed by the commissioner and furnished by or obtainable from the commissioner.

The original declaration or any subsequent amendment may be increased or decreased on or before any subsequent quarterly payment day as provided in this section.

(C) The required portion of the tax liability for the taxable year that shall be paid through estimated taxes made payable to the treasurer of state, including the application of tax refunds to estimated taxes, and withholding on or before the applicable payment date shall be as follows:

(1) On or before the fifteenth day of the fourth month after the beginning of the taxable year, twenty-two and one-half per cent of the tax liability for the taxable year;

(2) On or before the fifteenth day of the sixth month after the beginning of the taxable year, forty-five per cent of the tax liability for the taxable year;

(3) On or before the fifteenth day of the ninth month after the beginning of the taxable year, sixty-seven and one-half per cent of the tax liability for the taxable year;

(4) On or before the fifteenth day of the first month of the following taxable year, ninety per cent of the tax liability for the taxable year.

When an amended return has been filed, the unpaid balance shown due on the amended return shall be paid in equal installments on or before the remaining payment dates.

On or before the fifteenth day of the fourth month of the year following that for which the declaration or amended declaration was filed, an annual return shall be filed and any balance which may be due shall be paid with the return in accordance with section 5747.08 of the Revised Code.

(D) In the case of any underpayment of estimated taxes, an interest penalty shall be added to the taxes for the tax year at the rate per annum prescribed by section 5703.47 of the Revised Code upon the amount of underpayment for the period of underpayment, unless the underpayment is due to reasonable cause as described in division (E) of this section. The amount of the underpayment shall be determined as follows:

(1) For the first payment of estimated taxes each year, the required installment less the amount of taxes paid by the date prescribed for that payment;

(2) For the second payment of estimated taxes each year, the required installment less the amount of taxes paid by the date prescribed for that payment;

(3) For the third payment of estimated taxes each year, the required installment less the amount of taxes paid by the date prescribed for that payment;

(4) For the fourth payment of estimated taxes each year, the required installment less the amount of taxes paid by the date prescribed for that payment.

The period of the underpayment shall run from the day the estimated payment was required to be made to the date on which the payment is made. For purposes of this section, a payment of estimated taxes on or before any payment date shall be considered a payment of any previous underpayment only to the extent the payment of estimated taxes exceeds the amount of the payment presently required to be paid to avoid any penalty.

The interest penalty imposed under division (D) of this section shall be in lieu of any other interest charge or penalty imposed for failure to file an estimated return and make estimated payments as required by this section.

(E) An underpayment of estimated taxes determined under division (D) of this section shall be due to reasonable cause and the interest penalty imposed by this section shall not be added to the taxes for the tax year if either of the following apply:

(1) The amount of tax that was paid equals at least ninety per cent of the tax liability for the current taxable year, determined by annualizing the income received during the year up to the end of the month immediately preceding the month in which the payment is due;

(2) The amount of tax that was paid equals at least one hundred per cent of the tax liability shown on the return of the taxpayer for the preceding taxable year, provided that the immediately preceding taxable year reflected a period of twelve months and the taxpayer filed a return under section 5747.08 of the Revised Code for that year.

The tax commissioner may waive the requirement for filing a declaration of estimated taxes for any class of taxpayers after finding that the waiver is reasonable and proper in view of administrative costs and other factors.

Section 5747.10 | Amended returns.

• Effective: April 3, 2023
• Latest Legislation: House Bill 110, Senate Bill 33 - 134th General Assembly

(A) As used in this section:

(1) "Audited partnership" means a partnership subject to an examination by the internal revenue service pursuant to subchapter C, chapter 63, subtitle F of the Internal Revenue Code resulting in a federal adjustment.

(2)(a) "Direct investor" means a partner or other investor that holds a direct interest in a pass-through entity.

(b) "Indirect investor" means a partner or other investor that holds an interest in a pass-through entity that itself holds an interest, directly or through another indirect partner or other investor, in a pass-through entity.

(3) "Exempt partner" means a partner that is neither a pass-through entity nor a person subject to the tax imposed by section 5747.02 of the Revised Code.

(4) "Federal adjustment" means a change to an item or amount required to be determined under the Internal Revenue Code that directly or indirectly affects a taxpayer's aggregate tax liability under section 5747.02 or Chapter 5748. of the Revised Code and that results from an action or examination by the internal revenue service, or from the filing of an amended federal tax return, a claim for a federal tax refund, or an administrative adjustment request filed by a partnership under section 6227 of the Internal Revenue Code.

(5) "Federal adjustments return" means the form or other document prescribed by the tax commissioner for use by a taxpayer in reporting final federal adjustments.

(6) "State partnership representative" means either of the following:

(a) The person who served as the partnership's representative for federal income tax purposes, pursuant to section 6223(a) of the Internal Revenue Code, during the corresponding federal partnership audit;

(b) The person designated, on a form prescribed by the tax commissioner, to serve as the partnership's representative during the state partnership audit. The commissioner may establish reasonable qualifications and procedures for a person to be designated as a state partnership representative under this division.

(7) A federal adjustment is "final" or "agreed to or finally determined for federal income tax purposes" on any of the following:

(a) The day after which the period for appeal of a federal assessment has expired;

(b) The date on a refund check issued by the internal revenue service; or

(c) For agreements required to be signed by the internal revenue service and the taxpayer or audited partnership, the date on which the last party signed the agreement.

(B)(1) If any of the facts, figures, computations, or attachments required in a taxpayer's annual return to determine the tax charged by this chapter or Chapter 5748. of the Revised Code must be altered as the result of a final federal adjustment, and the federal adjustment is not required to be reported under division (C) of this section, the taxpayer shall file an amended return with the tax commissioner in such form as the commissioner requires. The amended return shall be filed not later than ninety days after the federal adjustment has been agreed to or finally determined for federal income tax purposes.

(2) "One hundred eighty" shall be substituted for "ninety" in divisions (B)(1) and (E)(1) of this section if, for any taxable year, the final federal adjustment results from taxes paid by the taxpayer on an amount described in division (A)(32) of section 5747.01 of the Revised Code.

(C) Except for adjustments required to be reported for federal purposes pursuant to section 6225(a)(2) of the Internal Revenue Code and adjustments that are taken into account on a federal amended return or similar report filed pursuant to section 6225(c)(2) of the Internal Revenue Code, partnerships and partners shall report final federal adjustments and make payments as required under division (C) of this section.

(1) With respect to an action required or permitted to be taken by a partnership under this section, and any petition for reassessment or appeal to the board of tax appeals or any court with respect to such an action, the state partnership representative shall have the sole authority to act on behalf of the audited partnership, and the partnership's direct and indirect investors shall be bound by those actions.

(2) Unless an audited partnership makes the election under division (C)(3) of this section:

(a) The audited partnership, through its state partnership representative, shall do all of the following within ninety days after the federal adjustment is final:

(i) File a federal adjustments return with the tax commissioner, including a copy of the notifications provided under division (C)(2)(a)(ii) of this section;

(ii) Notify each of its direct investors, on a form prescribed by the commissioner, of the investor's distributive share of the final federal adjustments;

(iii) File an amended tax return on behalf of its nonresident direct investors and pay any additional tax that would have been due under sections 5733.41 and 5747.41, or division (D) of section 5747.08, of the Revised Code with respect to those direct investors had the final federal adjustments been reported properly on the original filing.

(b) Each direct investor that is subject to the tax imposed by section 5747.02 of the Revised Code shall file an original or amended tax return to include the investor's distributive share of the adjustments reported to the direct investor under division (C)(2)(a) of this section, and pay any additional tax due, within ninety days after the audited partnership files its federal adjustments return with the commissioner.

(c)(i) Each direct and indirect investor of an audited partnership that is a pass-through entity and all investors in such a pass-through entity that are subject to the filing and payment requirements of Chapters 5733. and 5747. of the Revised Code are subject to the reporting and payment requirements of division (C)(2) or, upon a timely election, division (C)(3) of this section.

(ii) Such direct and indirect investors shall make the required returns and payments within ninety days after the deadline for filing and furnishing statements under section 6226(b)(4) of the Internal Revenue Code and applicable treasury regulations.

(3) If an audited partnership makes the election under this division, the audited partnership, through its state partnership representative, shall do all of the following within ninety days after all federal adjustments are final:

(a) File a federal adjustments return with the tax commissioner indicating the partnership has made the election under division (C)(3) of this section;

(b) Pay the amount of combined additional tax due under division (D)(2) of this section, calculated by multiplying the highest rate of tax set forth in section 5747.02 of the Revised Code by the sum of the following:

(i) The distributive shares of the final federal adjustments that are allocable or apportionable to this state of each investor who is a nonresident taxpayer or pass-through entity;

(ii) The distributive share of the final federal adjustments for each investor who is a resident taxpayer.

(c) Notify each of its direct investors, on a form prescribed by the commissioner, of the investor's distributive share of the final federal adjustments and the amount paid on their behalf pursuant to division (C)(3)(b) of this section.

(4)(a) A direct investor of an audited partnership is not required to file an amended return or pay tax otherwise due under section 5747.02 of the Revised Code if the audited partnership properly reports and pays the tax under division (C)(3) of this section.

(b)(i) Nothing in division (C) of this section precludes a direct or indirect investor in the audited partnership from filing a return to report the investor's share of the final federal adjustments. Such an investor who files a return and reports the income related to the final federal adjustments is entitled to a refundable credit for taxes paid by the audited partnership under division (C)(3)(b) of this section. The credit shall be computed and claimed in the same manner as the credit allowed under division (I) of section 5747.08 of the Revised Code.

(ii) Notwithstanding division (C)(4)(b)(i) of this section, an exempt partner, whether a direct or indirect investor, may file an application for refund of its proportionate share of the amounts erroneously paid by the audited partnership pursuant to division (C)(3)(b) of this section on the exempt partner's behalf.

(5) Upon request by an audited partnership, the tax commissioner may agree, in writing, to allow an alternative method of reporting and payment than required by division (C)(2) or (3) of this section. The request must be submitted to the commissioner in writing before the applicable deadline for filing a return under division (C)(2)(a) or (3) of this section. The commissioner's decision on whether to enter into an agreement under this division is not subject to further administrative review or appeal.

(6) Nothing in division (C) of this section precludes either of the following:

(a) A resident taxpayer from filing a return to claim the credit under division (B) of section 5747.05 or division (D)(2) of section 5747.02 of the Revised Code based upon any amounts paid by the audited partnership on such investor's behalf to another state.

(b) The tax commissioner from issuing an assessment under this chapter against any direct or indirect investor for taxes due from the investor if an audited partnership, or direct and indirect investor of an audited partnership that is a pass-through entity, fails to timely file any return or remit any payment required by this section or underreports income or underpays tax on behalf of an indirect investor who is a resident taxpayer.

(D) In the case of an underpayment, and unless otherwise agreed to in writing by the tax commissioner:

(1) The taxpayer's amended return shall be accompanied by payment of any combined additional tax due together with interest thereon. An amended return required by this section is a return subject to assessment under section 5747.13 of the Revised Code for the purpose of assessing any additional tax due under this section, together with any applicable penalty and interest. It shall not reopen those facts, figures, computations, or attachments from a previously filed return no longer subject to assessment that are not affected, either directly or indirectly, by the final federal adjustment to the taxpayer's federal income tax return.

(2) The audited partnership's federal adjustments return shall be accompanied by payment of any combined additional tax due together with interest thereon. The federal adjustments return required by this section is a return subject to assessment under section 5747.13 of the Revised Code for the purpose of assessing any additional tax due under this section, together with any applicable penalty and interest. It shall not reopen those facts, figures, computations, or attachments from a previously filed return no longer subject to assessment that are not affected, either directly or indirectly, by the final federal adjustment.

(3) The tax commissioner may accept estimated payments of the tax arising from pending federal adjustments before the date for filing a federal adjustments return. The commissioner may adopt rules for the payment of such estimated taxes.

(E) In the case of an overpayment, and unless otherwise agreed to in writing by the tax commissioner:

(1) A taxpayer may file an application for refund under this division within the ninety-day period prescribed for filing the amended return even if it is filed beyond the period prescribed in section 5747.11 of the Revised Code if it otherwise conforms to the requirements of such section. An application filed under this division shall claim refund of overpayments resulting from alterations to only those facts, figures, computations, or attachments required in the taxpayer's annual return that are affected, either directly or indirectly, by the final federal adjustment to the taxpayer's federal income tax return unless it is also filed within the time prescribed in section 5747.11 of the Revised Code. It shall not reopen those facts, figures, computations, or attachments that are not affected, either directly or indirectly, by the adjustment to the taxpayer's federal income tax return.

(2)(a) Except as otherwise provided in division (E)(2)(b) of this section, an audited partnership may file an application for a refund under this division within the ninety-day period prescribed for filing the federal adjustments return, even if it is filed beyond the period prescribed by section 5747.11 of the Revised Code, if it otherwise conforms to the requirements of that section. An application filed under this division may claim a refund of overpayments resulting only from final federal adjustments unless it is also filed within the time prescribed by section 5747.11 of the Revised Code. It shall not reopen those facts, figures, computations, or attachments that are not affected, either directly or indirectly, by the federal adjustment.

(b) An audited partnership may not file an application for refund under division (E) of this section based on final federal adjustments described in section 6225(a)(2) of the Internal Revenue Code.

(3) Any refund granted to a pass-through entity filing an application for refund under division (E) of this section shall be reduced by amounts previously claimed as a credit under section 5747.059 or division (I) of section 5747.08 of the Revised Code by the pass-through entity's direct or indirect investors.

(F) Excluding the deadline in division (C)(2)(c)(ii) of this section, an audited partnership, or a direct or indirect investor of an audited partnership that is a pass-through entity, may automatically extend the deadline for reporting, payments, and refunds under this section by sixty days if the entity has ten thousand or more direct investors and notifies the commissioner of such extension, in writing, before the unextended deadline.

Last updated February 7, 2023 at 11:43 AM

Section 5747.11 | Refunds - interest.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

(A) The tax commissioner shall refund to employers, qualifying entities, electing pass-through entities, or taxpayers subject to a tax imposed under section 5733.41, 5747.02, 5747.38, or 5747.41, or Chapter 5748. of the Revised Code amounts that were overpaid, paid illegally or erroneously, or paid on an illegal or erroneous assessment.

(B)(1) Except as otherwise provided under divisions (D) and (E) of this section, applications for refund shall be filed with the tax commissioner, on the form prescribed by the commissioner, within four years from the date of the illegal, erroneous, or excessive payment, or within any additional period allowed by division (B)(4)(b) of section 5747.05, division (E) of section 5747.10, division (A) of section 5747.13, or division (C) of section 5747.45 of the Revised Code.

On filing of the refund application, the commissioner shall determine the amount of refund due and, if that amount exceeds one dollar, certify such amount to the director of budget and management and treasurer of state for payment from the tax refund fund created by section 5703.052 of the Revised Code. Payment shall be made as provided in division (C) of section 126.35 of the Revised Code.

(2) If an individual taxpayer is deceased, a refund may be issued in the name of the decedent and of the executor, administrator, or other person charged with the decedent's property, upon the request of that person. Such a request shall include any documentation, including a copy of the taxpayer's death certificate and any fiduciary or court documents, that the tax commissioner considers necessary to prove that the person making the request is qualified to receive the refund. If the request is for a refund that was previously issued in only the decedent's name, the person making the request must also provide the previously issued payment to the commissioner.

(C)(1) Interest shall be allowed and paid at the rate per annum prescribed by section 5703.47 of the Revised Code on amounts refunded with respect to the tax imposed under section 5747.02 or Chapter 5748. of the Revised Code from the date of the overpayment until the date of the refund of the overpayment, except that if any overpayment is refunded within ninety days after the final filing date of the annual return or ninety days after the return is filed, whichever is later, no interest shall be allowed on such overpayment. If the overpayment results from the carryback of a net operating loss or net capital loss to a previous taxable year, the overpayment is deemed not to have been made prior to the filing date, including any extension thereof, for the taxable year in which the net operating loss or net capital loss arises. For purposes of the payment of interest on overpayments, no amount of tax, for any taxable year, shall be treated as having been paid before the date on which the tax return for that year was due without regard to any extension of time for filing such return.

(2) Interest shall be allowed at the rate per annum prescribed by section 5703.47 of the Revised Code on amounts refunded with respect to the taxes imposed under sections 5733.41 and 5747.41 or under section 5747.38 of the Revised Code. The interest shall run from whichever of the following days is the latest until the day the refund is paid: the day the illegal, erroneous, or excessive payment was made; the ninetieth day after the final day the annual report was required to be filed under section 5747.42 of the Revised Code; or the ninetieth day after the day that report was filed.

(D) "Ninety days" shall be substituted for "four years" in division (B) of this section if the taxpayer satisfies both of the following conditions:

(1) The taxpayer has applied for a refund based in whole or in part upon section 5747.059 of the Revised Code;

(2) The taxpayer asserts that either the imposition or collection of the tax imposed or charged by this chapter or any portion of such tax violates the Constitution of the United States or the Constitution of Ohio.

(E)(1) Division (E)(2) of this section applies only if all of the following conditions are satisfied:

(a) A qualifying entity pays an amount of the tax imposed by section 5733.41 or 5747.41 of the Revised Code;

(b) The taxpayer is a qualifying investor as to that qualifying entity;

(c) The taxpayer did not claim the credit provided for in section 5747.059 of the Revised Code as to the tax described in division (E)(1)(a) of this section;

(d) The four-year period described in division (B) of this section has ended as to the taxable year for which the taxpayer otherwise would have claimed that credit.

(2) A taxpayer shall file an application for refund pursuant to division (E) of this section within one year after the date the payment described in division (E)(1)(a) of this section is made. An application filed under division (E)(2) of this section shall claim refund only of overpayments resulting from the taxpayer's failure to claim the credit described in division (E)(1)(c) of this section. Nothing in division (E) of this section shall be construed to relieve a taxpayer from complying with division (A)(15) of section 5747.01 of the Revised Code.

Last updated September 5, 2023 at 3:32 PM

Section 5747.112 | Paying refund of school district income taxes.

• Effective: July 1, 1985
• Latest Legislation: House Bill 201 - 116th General Assembly

For payment of any refund of school district income taxes illegally, erroneously, or excessively paid, the treasurer of state shall place one thousand dollars collected in a separate fund in the state treasury for each school district. As required by the depletion of each fund, the treasurer of state shall place to the credit thereof an amount sufficient to make the total of the school district's fund at the time of such credit amount to one thousand dollars.

Section 5747.113 | Income tax refund contribution system.

• Effective: September 29, 2017
• Latest Legislation: House Bill 49 - 132nd General Assembly

(A) Any taxpayer claiming a refund under section 5747.11 of the Revised Code who wishes to contribute any part of the taxpayer's refund to the natural areas and preserves fund created in section 1517.11 of the Revised Code, the nongame and endangered wildlife fund created in section 1531.26 of the Revised Code, the military injury relief fund created in section 5902.05 of the Revised Code, the Ohio history fund created in section 149.308 of the Revised Code, the breast and cervical cancer project income tax contribution fund created in section 3701.601 of the Revised Code, the wishes for sick children income tax contribution fund created in section 3701.602 of the Revised Code, or all of those funds may designate on the taxpayer's income tax return the amount that the taxpayer wishes to contribute to the fund or funds. A designated contribution is irrevocable upon the filing of the return and shall be made in the full amount designated if the refund found due the taxpayer upon the initial processing of the taxpayer's return, after any deductions including those required by section 5747.12 of the Revised Code, is greater than or equal to the designated contribution. If the refund due as initially determined is less than the designated contribution, the contribution shall be made in the full amount of the refund. The tax commissioner shall subtract the amount of the contribution from the amount of the refund initially found due the taxpayer and shall certify the difference to the director of budget and management and treasurer of state for payment to the taxpayer in accordance with section 5747.11 of the Revised Code. For the purpose of any subsequent determination of the taxpayer's net tax payment, the contribution shall be considered a part of the refund paid to the taxpayer.

(B) The tax commissioner shall provide a space on the income tax return form in which a taxpayer may indicate that the taxpayer wishes to make a donation in accordance with this section. The tax commissioner shall also print in the instructions accompanying the income tax return form a description of the purposes for which the natural areas and preserves fund, the nongame and endangered wildlife fund, the military injury relief fund, the Ohio history fund, the breast and cervical cancer project income tax contribution fund, and the wishes for sick children income tax contribution fund were created and the use of moneys from the income tax refund contribution system established in this section. No person shall designate on the person's income tax return any part of a refund claimed under section 5747.11 of the Revised Code as a contribution to any fund other than the natural areas and preserves fund, the nongame and endangered wildlife fund, the military injury relief fund, the Ohio history fund, the breast and cervical cancer project income tax contribution fund, or the wishes for sick children income tax contribution fund.

(C) The money collected under the income tax refund contribution system established in this section shall be deposited by the tax commissioner into the natural areas and preserves fund, the nongame and endangered wildlife fund, the military injury relief fund, the Ohio history fund, the breast and cervical cancer project income tax contribution fund, and the wishes for sick children income tax contribution fund in the amounts designated on the tax returns.

(D) If the total amount contributed to a fund under this section, as annually determined by the tax commissioner, is less than fifty thousand dollars in each of five consecutive calendar years, no person may designate a contribution to that fund for any taxable year ending after the last day of that five-year period. In such a case, the commissioner shall remove the space dedicated to the fund on the income tax return and the description of the fund in the instructions accompanying the income tax return.

(E) The general assembly may authorize taxpayer refund contributions to no more than six funds under the income tax refund contribution system established in this section. If the general assembly authorizes income tax refund contributions to a fund other than the natural areas and preserves fund, the nongame and endangered wildlife fund, the military injury relief fund, the Ohio history fund, the breast and cervical cancer project income tax contribution fund, or the wishes for sick children income tax contribution fund, such contributions may be authorized only for a period of two calendar years.

With the exception of the Ohio history fund, the general assembly may authorize income tax refund contributions to a fund only if all the money in the fund will be expended or distributed by a state agency as defined in section 1.60 of the Revised Code.

(F)(1) The director of natural resources, in January of every odd-numbered year, shall report to the general assembly on the effectiveness of the income tax refund contribution system as it pertains to the natural areas and preserves fund and the nongame and endangered wildlife fund. The report shall include the amount of money contributed to each fund in each of the previous five years, the amount of money contributed directly to each fund in addition to or independently of the income tax refund contribution system in each of the previous five years, and the purposes for which the money was expended.

(2) The director of veterans services, the director of the Ohio history connection, and the director of health, in January of every odd-numbered year, each shall report to the general assembly on the effectiveness of the income tax refund contribution system as it pertains to the military injury relief fund, the Ohio history fund, the breast and cervical cancer project income tax contribution fund, and the wishes for sick children income tax contribution fund respectively. The report shall include the amount of money contributed to the fund in each of the previous five years, the amount of money contributed directly to the fund in addition to or independently of the income tax refund contribution system in each of the previous five years, and the purposes for which the money was expended.

Section 5747.12 | Applying refund to satisfy debt to state.

• Effective: April 7, 2021
• Latest Legislation: Senate Bill 10 - 133rd General Assembly

(A) If a person entitled to a refund under section 5747.11 or 5747.13 of the Revised Code is indebted for any of the following, the amount refundable may be applied in satisfaction of the debt:

(1) To this state for any tax, workers' compensation premium due under section 4123.35 of the Revised Code, or unemployment compensation contribution due under section 4141.25 of the Revised Code;

(2) To the state or a political subdivision for a certified claim under section 131.02 or 131.021 of the Revised Code or a finding for recovery included in a certified report that has been filed with the attorney general pursuant to sections 117.28 and 117.30 of the Revised Code;

(3) For a fee that is paid to the state or to the clerk of courts pursuant to section 4505.06 of the Revised Code;

(4) For any charge, penalty, collection cost, or interest arising from a debt listed in divisions (A)(1) to (3) of this section.

(B) If the amount refundable is less than the amount of the debt owed under division (A) of this section, it may be applied in partial satisfaction of the debt. If the amount refundable is greater than the amount of that debt, the amount remaining after satisfaction of the debt shall be refunded. If the person has more than one debt listed in division (A) of this section, any debt subject to section 5739.33 or division (G) of section 5747.07 of the Revised Code or arising under section 5747.063 or 5747.064 of the Revised Code shall be satisfied first.

(C) Except as provided in section 131.021 of the Revised Code, this section applies only to debts that have become final.

(D) The tax commissioner may charge each respective agency of the state for the commissioner's cost in applying refunds to debts due to the state and may charge the attorney general for the commissioner's cost in applying refunds to certified claims.

(E) The commissioner may promulgate rules to implement this section. The rules may address, among other things, situations such as those where persons may jointly be entitled to a refund but do not jointly owe a debt or certified claim.

(F) The commissioner may, with the consent of the taxpayer, provide for the crediting, against tax imposed under this chapter or Chapter 5748. of the Revised Code and due for any taxable year, of the amount of any refund due the taxpayer under this chapter or Chapter 5748. of the Revised Code, as appropriate, for a preceding taxable year.

Section 5747.121 | Collecting child support from refunds.

• Effective: March 22, 2001
• Latest Legislation: Senate Bill 180 - 123rd General Assembly

(A) In accordance with sections 3123.821 to 3123.823 of the Revised Code, the tax commissioner shall cooperate with the department of job and family services in establishing and then implementing procedures for the collection of overdue child support from refunds of paid state income taxes under this chapter that are payable to obligors. The tax commissioner shall deposit money collected from such refunds into the child support intercept fund.

(B) At the request of the department of job and family services in connection with the collection of overdue child support from a refund of paid state income taxes pursuant to sections 3123.821 to 3123.823 of the Revised Code and division (A) of this section, the tax commissioner shall release to the department the home address and social security number of any obligor whose overdue child support may be collected from a refund of paid state income taxes pursuant to sections 3123.821 to 3123.823 of the Revised Code and division (A) of this section.

(C) In the case of persons filing a joint income tax return, the amount of the refund available for the collection of overdue child support shall be based on the proportion of the refund due to the obligor only. Any obligor's spouse who objects to the amount of the refund to be used for the collection of overdue child support may file a complaint with the tax commissioner within twenty-one days after receiving notice of the collection. The commissioner shall afford a complainant an opportunity to be heard. The burden of proving an error by the commissioner in determining the amount of a refund to be used for the collection of overdue child support shall be on the complainant.

(D) There is hereby created in the state treasury the child support intercept fund, which shall consist of moneys paid into it by the tax commissioner under division (A) of this section. Moneys in the fund shall be disbursed pursuant to vouchers approved by the director of job and family services for use by the division of child support to meet the requirements of section 666 of Title IV-D of the "Social Security Act," 98 Stat. 1306 (1975), 42 U.S.C. 666, as amended, and any rules promulgated under Title IV-D. Moneys appropriated from the fund are not intended to replace other moneys appropriated for this purpose.

(E) As used in this section, "obligor" has the same meaning as in section 3123.82 of the Revised Code.

Section 5747.122 | Collecting overpayments of public assistance from refunds.

• Effective: December 31, 2017
• Latest Legislation: House Bill 49 - 132nd General Assembly

(A) The tax commissioner, in accordance with section 5101.184 of the Revised Code, shall cooperate with the director of job and family services to collect overpayments of assistance under Chapter 5107., former Chapter 5115., former Chapter 5113., or section 5101.54 of the Revised Code from refunds of state income taxes for taxable year 1992 and thereafter that are payable to the recipients of such overpayments.

(B) At the request of the department of job and family services in connection with the collection of an overpayment of assistance from a refund of state income taxes pursuant to this section and section 5101.184 of the Revised Code, the tax commissioner shall release to the department the home address and social security number of any recipient of assistance whose overpayment may be collected from a refund of state income taxes under those sections.

(C) In the case of a joint income tax return for two people who were not married to each other at the time one of them received an overpayment of assistance, only the portion of a refund that is due to the recipient of the overpayment shall be available for collection of the overpayment under this section and section 5101.184 of the Revised Code. The tax commissioner shall determine such portion. A recipient's spouse who objects to the portion as determined by the commissioner may file a complaint with the commissioner within twenty-one days after receiving notice of the collection, and the commissioner shall afford the spouse an opportunity to be heard on the complaint. The commissioner shall waive or extend the twenty-one-day period if the recipient's spouse establishes that such action is necessary to avoid unjust, unfair, or unreasonable results. After the hearing, the commissioner shall make a final determination of the portion of the refund available for collection of the overpayment.

(D) The welfare overpayment intercept fund is hereby created in the state treasury. The tax commissioner shall deposit amounts collected from income tax refunds under this section to the credit of the welfare overpayment intercept fund. The director of job and family services shall distribute money in the fund in accordance with appropriate federal or state laws and procedures regarding collection of welfare overpayments.

Section 5747.123 | Collecting overpaid child support from refunds.

• Effective: March 22, 2001
• Latest Legislation: Senate Bill 180 - 123rd General Assembly

(A) As used in this section:

(1) "Obligee" and "obligor" have the same meanings as in section 3119.01 of the Revised Code;

(2) "Overpaid child support" has the same meaning as in section 3123.82 of the Revised Code.

(B) In accordance with sections 3123.821 to 3123.823 of the Revised Code, the tax commissioner shall cooperate with the department of job and family services in establishing and implementing procedures for the collection of overpaid child support from refunds of paid state income taxes under this chapter that are payable to obligees. The tax commissioner shall collect the refunds and send the amounts to the department of job and family services for distribution to obligors who made the overpayment.

(C) In the case of persons filing a joint income tax return, the amount of the refund available for the collection of overpaid child support shall be based on the proportion of the refund due the obligee only. An obligee's spouse who objects to the amount of the refund to be used for the collection of overpaid child support may file a complaint with the tax commissioner within twenty-one days after receiving notice of the collection. The commissioner shall afford a complainant an opportunity to be heard. The burden of proving an error by the commissioner in determining the amount of the refund to be used for the collection of overpaid child support shall be on the complainant.

Section 5747.13 | Liability of employer for failure to file return or collect or remit tax.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

(A) If any employer collects the tax imposed by section 5747.02 or under Chapter 5748. of the Revised Code and fails to remit the tax as required by law, or fails to collect the tax, the employer is personally liable for any amount collected that the employer fails to remit, or any amount that the employer fails to collect. If any taxpayer fails to file a return or fails to pay the tax imposed by section 5747.02 or under Chapter 5748. of the Revised Code, the taxpayer is personally liable for the amount of the tax.

If any employer, taxpayer, qualifying entity, or electing pass-through entity required to file a return under this chapter fails to file the return within the time prescribed, files an incorrect return, fails to remit the full amount of the taxes due for the period covered by the return, or fails to remit any additional tax due as a result of a reduction in the amount of the credit allowed under division (B) of section 5747.05 of the Revised Code together with interest on the additional tax within the time prescribed by that division, the tax commissioner may make an assessment against any person liable for any deficiency for the period for which the return is or taxes are due, based upon any information in the commissioner's possession.

An assessment issued against either the employer or the taxpayer pursuant to this section shall not be considered an election of remedies or a bar to an assessment against the other for failure to report or pay the same tax. No assessment shall be issued against any person if the tax actually has been paid by another.

No assessment shall be made or issued against an employer, a taxpayer, a qualifying entity, or an electing pass-through entity more than four years after the final date the return subject to assessment was required to be filed or the date the return was filed, whichever is later. However, the commissioner may assess any balance due as the result of a reduction in the credit allowed under division (B) of section 5747.05 of the Revised Code, including applicable penalty and interest, within four years of the date on which the taxpayer reports a change in either the portion of the taxpayer's adjusted gross income subjected to an income tax or tax measured by income in another state or the District of Columbia, or the amount of liability for an income tax or tax measured by income to another state or the District of Columbia, as required by division (B)(4) of section 5747.05 of the Revised Code. Such time limits may be extended if both the employer, taxpayer, qualifying entity, or electing pass-through entity and the commissioner consent in writing to the extension or if an agreement waiving or extending the time limits has been entered into pursuant to section 122.171 of the Revised Code. Any such extension shall extend the four-year time limit in division (B) of section 5747.11 of the Revised Code for the same period of time. There shall be no bar or limit to an assessment against an employer for taxes withheld from employees and not remitted to the state, against an employer, a taxpayer, a qualifying entity, or an electing pass-through entity that fails to file a return subject to assessment as required by this chapter, or against an employer, a taxpayer, a qualifying entity, or an electing pass-through entity that files a fraudulent return.

The commissioner shall give the party assessed written notice of the assessment in the manner provided in section 5703.37 of the Revised Code. With the notice, the commissioner shall provide instructions on how to petition for reassessment and request a hearing on the petition.

(B) Unless the party assessed files with the tax commissioner within sixty days after service of the notice of assessment, either personally or by certified mail, a written petition for reassessment, signed by the party assessed or that party's authorized agent having knowledge of the facts, the assessment becomes final, and the amount of the assessment is due and payable from the party assessed to the commissioner with remittance made payable to the treasurer of state. The petition shall indicate the objections of the party assessed, but additional objections may be raised in writing if received by the commissioner prior to the date shown on the final determination. If the petition has been properly filed, the commissioner shall proceed under section 5703.60 of the Revised Code.

(C) After an assessment becomes final, if any portion of the assessment remains unpaid, including accrued interest, a certified copy of the tax commissioner's entry making the assessment final may be filed in the office of the clerk of the court of common pleas in the county in which the employer's, taxpayer's, qualifying entity's, or electing pass-through entity's place of business is located or the county in which the party assessed resides. If the party assessed is not a resident of this state, the certified copy of the entry may be filed in the office of the clerk of the court of common pleas of Franklin county.

Immediately upon the filing of the entry, the clerk shall enter a judgment against the party assessed in the amount shown on the entry. The judgment shall be filed by the clerk in one of two loose-leaf books, one entitled "special judgments for state and school district income taxes," and the other entitled "special judgments for qualifying entity and electing pass-through entity taxes." The judgment shall have the same effect as other judgments. Execution shall issue upon the judgment upon the request of the tax commissioner, and all laws applicable to sales on execution shall apply to sales made under the judgment.

If the assessment is not paid in its entirety within sixty days after the assessment was issued, the portion of the assessment consisting of tax due shall bear interest at the rate per annum prescribed by section 5703.47 of the Revised Code from the day the tax commissioner issues the assessment until it is paid or until it is certified to the attorney general for collection under section 131.02 of the Revised Code, whichever comes first. If the unpaid portion of the assessment is certified to the attorney general for collection, the entire unpaid portion of the assessment shall bear interest at the rate per annum prescribed by section 5703.47 of the Revised Code from the date of certification until the date it is paid in its entirety. Interest shall be paid in the same manner as the tax and may be collected by the issuance of an assessment under this section.

(D) All money collected under this section shall be considered as revenue arising from the taxes imposed by this chapter or Chapter 5733. or 5748. of the Revised Code, as appropriate.

(E) If the party assessed files a petition for reassessment under division (B) of this section, the person, on or before the last day the petition may be filed, shall pay the assessed amount, including assessed interest and assessed penalties, if any of the following conditions exists:

(1) The person files a tax return reporting Ohio adjusted gross income, less the exemptions allowed by section 5747.025 of the Revised Code, in an amount less than one cent, and the reported amount is not based on the computations required under division (A) of section 5747.01 or section 5747.025 of the Revised Code.

(2) The person files a tax return that the tax commissioner determines to be incomplete, false, fraudulent, or frivolous.

(3) The person fails to file a tax return, and the basis for this failure is not either of the following:

(a) An assertion that the person has no nexus with this state;

(b) The computations required under division (A) of section 5747.01 of the Revised Code or the application of credits allowed under this chapter has the result that the person's tax liability is less than one dollar and one cent.

(F) Notwithstanding the fact that a petition for reassessment is pending, the petitioner may pay all or a portion of the assessment that is the subject of the petition. The acceptance of a payment by the treasurer of state does not prejudice any claim for refund upon final determination of the petition.

If upon final determination of the petition an error in the assessment is corrected by the tax commissioner, upon petition so filed or pursuant to a decision of the board of tax appeals or any court to which the determination or decision has been appealed, so that the amount due from the party assessed under the corrected assessment is less than the portion paid, there shall be issued to the petitioner or to the petitioner's assigns or legal representative a refund in the amount of the overpayment as provided by section 5747.11 of the Revised Code, with interest on that amount as provided by such section, subject to section 5747.12 of the Revised Code.

Last updated September 5, 2023 at 3:31 PM

Section 5747.132 | Eliminating interest or penalty on qualifying refund overpayment.

• Effective: June 14, 2022
• Latest Legislation: Senate Bill 246 - 134th General Assembly

(A) As used in this section:

(1) "Qualifying taxpayer" means a taxpayer, an employer, a qualifying entity, or an electing pass-through entity.

(2) "Qualifying refund overpayment" means an amount received by a qualifying taxpayer in excess of a refund or request for payment claimed or made by or on behalf of the qualifying taxpayer on a return, report, or other document filed with the tax commissioner.

(B) A qualifying taxpayer is not liable for any interest or penalty with respect to the repayment of a qualifying refund overpayment if the taxpayer pays the entire amount of the overpayment to the tax commissioner not later than thirty days after the taxpayer receives an assessment for it. If the taxpayer does not pay the entire amount of the overpayment to the commissioner within the time prescribed by this section, interest shall accrue on the amount of the deficiency pursuant to section 5747.13 of the Revised Code from the day the commissioner issues the assessment until the deficiency is paid.

Last updated July 28, 2022 at 3:59 PM

Section 5747.14 | Imposing jeopardy assessments.

• Effective: June 14, 2022
• Latest Legislation: Senate Bill 246 - 134th General Assembly

If the tax commissioner finds that an employer, a qualifying entity, an electing pass-through entity, or a taxpayer liable for any tax imposed under section 5733.41, this chapter, or Chapter 5748. of the Revised Code is about to depart from the state, to remove the employer's, qualifying entity's, electing pass-through entity's, or taxpayer's property therefrom, to conceal the employer's, qualifying entity's, electing pass-through entity's, or taxpayer's self or the employer's, qualifying entity's, electing pass-through entity's, or taxpayer's property, or to do any other act tending to prejudice or render wholly or partly ineffectual proceedings to collect such tax, unless such proceedings are brought without delay, or if the commissioner believes that the collection of the amount due from any employer, qualifying entity, electing pass-through entity, or taxpayer will be jeopardized by delay, the commissioner shall give notice of such findings to such employer, qualifying entity, electing pass-through entity, or taxpayer together with the demand for an immediate return and immediate payment of such tax, with an assessment and penalty, if applicable as provided in section 5747.13 of the Revised Code, whereupon such tax shall become immediately due and payable. In such cases the commissioner may immediately file the commissioner's entry with the clerk of the court of common pleas in the same manner and with the same effect as provided in section 5747.13 of the Revised Code, provided that if such employer, qualifying entity, electing pass-through entity, or taxpayer, within five days from notice of the assessment, furnishes evidence satisfactory to the commissioner, under the rules prescribed by the commissioner, that the employer, qualifying entity, electing pass-through entity, or taxpayer is not in default in making returns or paying or collecting any tax prescribed by this chapter or that the employer, qualifying entity, electing pass-through entity, or taxpayer will duly return and pay, or post bond satisfactory to the commissioner conditioned upon payment of the tax finally determined to be due, such tax shall not be payable prior to the time and manner otherwise fixed for payment under section 5747.13 of the Revised Code, and the person assessed shall be restored to the rights granted the person under such section. Upon satisfaction of the assessment the commissioner shall order the bond canceled, securities released, and judgment vacated.

Last updated July 28, 2022 at 4:00 PM

Section 5747.15 | Failure to file or remit tax - filing frivolous, dilatory or fraudulent claim.

• Effective: June 14, 2022
• Latest Legislation: Senate Bill 246 - 134th General Assembly

(A) In addition to any other penalty imposed by this chapter or Chapter 5703. of the Revised Code, the following penalties shall apply:

(1) If a taxpayer, a qualifying entity, an electing pass-through entity, or an employer required to file any report or return, including an informational notice, report, or return, under this chapter fails to make and file the report or return within the time prescribed, including any extensions of time granted by the tax commissioner, a penalty may be imposed not exceeding the greater of fifty dollars per month or fraction of a month, not to exceed five hundred dollars, or five per cent per month or fraction of a month, not to exceed fifty per cent, of the sum of the taxes required to be shown on the report or return, for each month or fraction of a month elapsing between the due date, including extensions of the due date, and the date on which filed.

(2) If a taxpayer fails to pay any amount of tax required to be paid under section 5733.41 or Chapters 5747. or 5748. of the Revised Code, except estimated tax under section 5747.09 or 5747.43 of the Revised Code, by the dates prescribed for payment, a penalty may be imposed not exceeding twice the applicable interest charged under division (G) of section 5747.08 of the Revised Code for the delinquent payment.

(3)(a) If an employer fails to pay any amount of tax imposed by section 5747.02 of the Revised Code and required to be paid under this chapter by the dates prescribed for payment, a penalty may be imposed not exceeding the sum of ten per cent of the delinquent payment plus twice the interest charged under division (F)(5) of section 5747.07 of the Revised Code for the delinquent payment.

(b) If a qualifying entity or an electing pass-through entity fails to pay any amount of tax imposed by section 5733.41, 5747.38, or 5747.41 of the Revised Code and required to be paid under this chapter by the dates prescribed for payment, a penalty may be imposed not exceeding the sum of ten per cent of the delinquent payment plus twice the applicable interest charged under division (G) of section 5747.08 of the Revised Code for the delinquent payment.

(4)(a) If an employer withholds from employees the tax imposed by section 5747.02 of the Revised Code and fails to remit the tax withheld to the state as required by this chapter on or before the dates prescribed for payment, a penalty may be imposed not exceeding fifty per cent of the delinquent payment.

(b) If a qualifying entity withholds any amount of tax imposed under section 5747.41 of the Revised Code from an individual's qualifying amount and fails to remit that amount to the state as required by sections 5747.42 to 5747.453 of the Revised Code on or before the dates prescribed for payment, a penalty may be imposed not exceeding fifty per cent of the delinquent payment.

(5) If a taxpayer, a qualifying entity, an electing pass-through entity, or an employer files what purports to be a return required by this chapter that does not contain information upon which the substantial correctness of the return may be judged or contains information that on its face indicates that the return is substantially incorrect, and the filing of the return in that manner is due to a position that is frivolous or a desire that is apparent from the return to delay or impede the administration of the tax levied by section 5733.41, 5747.02, 5747.38, or 5747.41, or Chapter 5748. of the Revised Code, a penalty of up to five hundred dollars may be imposed.

(6) If a taxpayer, a qualifying entity, or an electing pass-through entity makes a fraudulent attempt to evade the reporting or payment of the tax required to be shown on any return required under this chapter, a penalty may be imposed not exceeding the greater of one thousand dollars or one hundred per cent of the tax required to be shown on the return.

(7) If any person makes a false or fraudulent claim for a refund under this chapter, a penalty may be imposed not exceeding the greater of one thousand dollars or one hundred per cent of the claim. The penalty imposed under division (A)(7) of this section, any refund issued on the claim, and interest on any refund from the date of the refund, may be assessed under section 5747.13 of the Revised Code as tax, penalty, or interest imposed under section 5733.41, 5747.02, 5747.38, or 5747.41 of the Revised Code, without regard to whether the person making the claim is otherwise subject to the provisions of this chapter or Chapter 5733. of the Revised Code, and without regard to any time limitation for the assessment imposed by division (A) of section 5747.13 of the Revised Code.

(B) For purposes of this section, the taxes required to be shown on the return shall be reduced by the amount of any part of the taxes paid on or before the date, including any extensions of the date, prescribed for filing the return.

(C) Any penalty imposed under this section shall be in addition to all other penalties imposed under this section. All or part of any penalty imposed under this section may be abated by the commissioner. All or part of any penalty imposed under this section may be abated by the commissioner if the taxpayer, qualifying entity, electing pass-through entity, or employer shows that the failure to comply with the provisions of this chapter is due to reasonable cause and not willful neglect.

Last updated July 28, 2022 at 4:01 PM

Section 5747.16 | Secretary of state agent for service of process on nonresidents.

• Effective: October 16, 2009
• Latest Legislation: House Bill 1 - 128th General Assembly

Any nonresident who accepts the privileges extended by the laws of this state to nonresidents earning or receiving income in this state, and any resident who becomes a nonresident or conceals the person's whereabouts thereby makes the secretary of state the person's agent for the service of process or notice in any assessment, action, or proceedings instituted in this state against such person under this chapter, such process or notice shall be served as provided under section 5703.37 of the Revised Code.

Section 5747.17 | Maintaining records.

• Effective: November 15, 1981
• Latest Legislation: House Bill 694 - 114th General Assembly

The tax commissioner may prescribe requirements as to the keeping of records and other pertinent documents, and the filing of copies of federal income tax returns and determinations. The commissioner may require any person, by rule or notice served on such person, to keep such records as the commissioner determines necessary to show whether or not such person is liable, and the extent of liability, under this chapter or Chapter 5748. of the Revised Code, for tax or for the withholding of tax. Such records and other documents shall be open to the commissioner's inspection during business hours and shall be preserved for a period of four years unless the commissioner, in writing, consents to their destruction within that period, or by order requires that they be kept longer.

Section 5747.18 | Powers of tax commissioner.

• Effective: April 3, 2023
• Latest Legislation: Senate Bill 302 - 134th General Assembly

The tax commissioner shall enforce and administer this chapter. In addition to any other powers conferred upon the commissioner by law, the commissioner may:

(A) Prescribe all forms required to be filed pursuant to this chapter;

(B) Adopt such rules as the commissioner finds necessary to carry out this chapter;

(C) Appoint and employ such personnel as are necessary to carry out the duties imposed upon the commissioner by this chapter.

Any information gained as the result of returns, investigations, hearings, or verifications required or authorized by this chapter is confidential, and no person shall disclose such information, except for official purposes, or as provided by section 3125.43, 4123.271, 4123.591, 4141.163, 4141.28, 4507.023, 5101.182, or 5703.21 of the Revised Code, or in accordance with a proper judicial order. The tax commissioner may furnish the internal revenue service with copies of returns or reports filed and may furnish the officer of a municipal corporation charged with the duty of enforcing a tax subject to Chapter 718. of the Revised Code with the names, addresses, and identification numbers of taxpayers who may be subject to such tax. A municipal corporation shall use this information for tax collection purposes only. This section does not prohibit the publication of statistics in a form which does not disclose information with respect to individual taxpayers.

Last updated March 22, 2023 at 5:25 PM

Section 5747.19 | Filing incomplete, false, and fraudulent returns.

• Effective: January 1, 1972
• Latest Legislation: House Bill 475 - 109th General Assembly

No person shall knowingly fail to file any return or report required to be filed by this chapter, or file or knowingly cause to be filed any incomplete, false, or fraudulent return, report, or statement, or aid or abet another in the filing of any false or fraudulent return, report, or statement.

Section 5747.20 | Allocating nonbusiness income or deduction.

• Effective: March 23, 2022
• Latest Legislation: House Bill 29 - 134th General Assembly

This section applies solely for the purposes of computing the credit allowed under division (A) of section 5747.05 of the Revised Code and computing income taxable in this state under division (D) of section 5747.08 of the Revised Code.

All items of nonbusiness income or deduction shall be allocated in this state as follows:

(A) All items of nonbusiness income or deduction taken into account in the computation of adjusted gross income for the taxable year by a resident shall be allocated to this state.

(B) All items of nonbusiness income or deduction taken into account in the computation of adjusted gross income for the taxable year by a nonresident shall be allocated to this state as follows:

(1) All items of compensation paid to an individual for personal services performed in this state who was a nonresident at the time of payment and all items of deduction directly allocated thereto shall be allocated to this state.

(2) All gains or losses from the sale of real property, tangible personal property, or intangible property shall be allocated as follows:

(a) Capital gains or losses from the sale or other transfer of real property are allocable to this state if the property is located physically in this state.

(b) Capital gains or losses from the sale or other transfer of tangible personal property are allocable to this state if, at the time of such sale or other transfer, the property had its physical location in this state.

(c) Capital gains or losses from the sale or other transfer of intangible personal property are allocable to this state if the taxpayer's domicile was in this state at the time of such sale or other transfer.

(3) All rents and royalties of real or tangible personal property shall be allocated to this state as follows:

(a) Rents and royalties derived from real property are allocable to this state if the property is physically located in this state.

(b) Rents and royalties derived from tangible personal property are allocable to this state to the extent that such property is utilized in this state.

The extent of utilization of tangible personal property in a state is determined by multiplying the rents or royalties derived from such property by a fraction, the numerator of which is the number of days of physical location of the property in this state during the rental or royalty period in the taxable year and the denominator of which is the number of days of physical location of the property everywhere during all rental or royalty periods in the taxable year. If the physical location of the property during the rental or royalty period is unknown or unascertainable by the nonresident, tangible personal property is utilized in the state in which the property was located at the time the rental or royalty payor obtained possession.

(4) All patent and copyright royalties shall be allocated to this state to the extent the patent or copyright was utilized by the payor in this state.

A patent is utilized in a state to the extent that it is employed in production, fabrication, manufacturing, or other processing in the state, or to the extent that a patented product is produced in the state. If the basis of receipts from patent royalties does not permit allocation to states or if the accounting procedures do not reflect states of utilization, the patent is utilized in this state if the taxpayer's domicile was in this state at the time such royalties were paid or accrued.

A copyright is utilized in a state to the extent that printing or other publication originates in the state. If the basis of receipts from copyright royalties does not permit allocation to states or if the accounting procedures do not reflect states of utilization, the copyright is utilized in this state if the taxpayer's domicile was in this state at the time such royalties were paid or accrued.

(5)(a) All lottery prize awards paid by the state lottery commission pursuant to Chapter 3770. of the Revised Code shall be allocated to this state.

(b) All earnings, profit, income, and gain from the sale, exchange, or other disposition of lottery prize awards paid or to be paid to any person by the state lottery commission pursuant to Chapter 3770. of the Revised Code shall be allocated to this state.

(c) All earnings, profit, income, and gain from the direct or indirect ownership of lottery prize awards paid or to be paid to any person by the state lottery commission pursuant to Chapter 3770. of the Revised Code shall be allocated to this state.

(d) All earnings, profit, income, and gain from the direct or indirect interest in any right in or to any lottery prize awards paid or to be paid to any person by the state lottery commission pursuant to Chapter 3770. of the Revised Code shall be allocated to this state.

(6) Any item of income or deduction which has been taken into account in the computation of adjusted gross income for the taxable year by a nonresident and which is not otherwise specifically allocated or apportioned pursuant to sections 5747.20 to 5747.23 of the Revised Code, including, without limitation, interest, dividends and distributions, items of income taken into account under the provisions of sections 401 to 425 of the Internal Revenue Code, and benefit payments received by a beneficiary of a supplemental unemployment trust which is referred to in section 501(c)(17) of the Internal Revenue Code, shall not be allocated to this state unless the taxpayer's domicile was in this state at the time such income was paid or accrued.

(7) All winnings from casino gaming or sports gaming conducted in this state shall be allocated to the state.

(C) If an individual is a resident for part of the taxable year and a nonresident for the remainder of the taxable year, all items of nonbusiness income or deduction shall be allocated under division (A) of this section for the part of the taxable year that the individual is a resident and under division (B) of this section for the part of the taxable year that the individual is a nonresident.

Last updated January 24, 2022 at 12:04 PM

Section 5747.21 | Apportioning business income or deduction.

• Effective: November 15, 2015
• Latest Legislation: Senate Bill 208 - 131st General Assembly

(A) This section applies solely for the purposes of computing the credit allowed under division (A) of section 5747.05 of the Revised Code and computing income taxable in this state under division (D) of section 5747.08 of the Revised Code.

(B) Except as otherwise provided under section 5747.212 of the Revised Code, all items of business income and business deduction shall be apportioned to this state by multiplying business income by the fraction calculated under division (B)(2) of section 5733.05 and section 5733.057 of the Revised Code as if the taxpayer's business were a corporation subject to the tax imposed by section 5733.06 of the Revised Code.

(C) If the allocation and apportionment provisions of sections 5747.20 to 5747.23 of the Revised Code or of any rule adopted by the tax commissioner, do not fairly represent the extent of business activity in this state of a taxpayer or pass-through entity, the taxpayer or pass-through entity may request, which request must be in writing accompanying a timely filed return or timely filed amended return, or the tax commissioner may require, in respect of all or any part of the business activity, if reasonable, any one or more of the following:

(1) Separate accounting;

(2) The exclusion of one or more factors;

(3) The inclusion of one or more additional factors which will fairly represent the business activity in this state;

(4) The employment of any other method to effectuate an equitable allocation and apportionment of such business in this state. An alternative method will be effective only with approval of the tax commissioner.

The tax commissioner may adopt rules in the manner provided by sections 5703.14 and 5747.18 of the Revised Code providing for alternative methods of calculating business income and nonbusiness income applicable to all taxpayers and pass-through entities, to classes of taxpayers and pass-through entities, or only to taxpayers and pass-through entities within a certain industry.

Section 5747.212 | Apportioning gain recognized by nonresident equity investor selling an investment in a closely-held business.

• Effective: November 15, 2015
• Latest Legislation: Senate Bill 208 - 131st General Assembly

(A) This section applies solely for the purpose of computing the credit allowed under division (A) of section 5747.05 of the Revised Code and computing income taxable in this state under division (D) of section 5747.08 of the Revised Code.

(B) A taxpayer, directly or indirectly, owning at any time during the three-year period ending on the last day of the taxpayer's taxable year at least twenty per cent of the equity voting rights of a section 5747.212 entity shall apportion any income, including gain or loss, realized from each sale, exchange, or other disposition of a debt or equity interest in that entity as prescribed in this section. For such purposes, in lieu of using the method prescribed by sections 5747.20 and 5747.21 of the Revised Code, the investor shall apportion the income using the average of the section 5747.212 entity's apportionment fractions otherwise applicable under section 5733.05, 5733.056, or 5747.21 of the Revised Code for the current and two preceding taxable years. If the section 5747.212 entity was not in business for one or more of those years, each year that the entity was not in business shall be excluded in determining the average.

(C) For the purposes of this section:

(1) A "section 5747.212 entity" is any qualifying person if, on at least one day of the three-year period ending on the last day of the taxpayer's taxable year, any of the following apply:

(a) The qualifying person is a pass-through entity;

(b) Five or fewer persons directly or indirectly own all the equity interests, with voting rights, of the qualifying person;

(c) One person directly or indirectly owns at least fifty per cent of the qualifying person's equity interests with voting rights.

(2) A "qualifying person" is any person other than an individual, estate, or trust.

(3) "Estate" and "trust" do not include any person classified for federal income tax purposes as an association taxable as a corporation.

Section 5747.22 | Apportioning and allocating income and deductions of pass-through entities.

• Effective: November 15, 2015
• Latest Legislation: Senate Bill 208 - 131st General Assembly

(A) This section applies solely for the purposes of computing the credit allowed under division (A) of section 5747.05 of the Revised Code and computing income taxable in this state under division (D) of section 5747.08 of the Revised Code.

(B) With respect to a pass-through entity, one or more of the pass-through entity investors of which are liable for the tax imposed by section 5747.02 of the Revised Code, the business income and deductions of the pass-through entity shall be apportioned to this state in the hands of the pass-through entity investors pursuant to section 5747.21 of the Revised Code. The business income and deductions as thus apportioned to this state then shall be allocated to the pass-through entity investors in proportion to their right to share in that business income.

(C) With respect to a pass-through entity described in division (B) of this section, the nonbusiness income and deductions of the pass-through entity shall be allocated to the pass-through entity investors in proportion to their right to share in the nonbusiness income, and then the pass-through entity shares shall be allocated to this state in the hands of each pass-through entity investor pursuant to section 5747.20 of the Revised Code.

Section 5747.221 | Items of income and deductions not to be allocated or apportioned to Ohio.

• Effective: September 5, 2001
• Latest Legislation: House Bill 94 - 124th General Assembly

(A) As used in this section, "investment pass-through entity" has the same meaning as in section 5733.401 of the Revised Code.

(B) Except as provided in division (C) of this section, for the purposes of sections 5747.20, 5747.21, and 5747.22 of the Revised Code, no item of income or deduction shall be allocated or apportioned to this state to the extent that such item represents the portion of an adjusted qualifying amount for which the withholding tax is not imposed under section 5747.41 of the Revised Code by reason of division (C) of section 5733.401 of the Revised Code. This section shall be applied without regard to division (I) of section 5733.40 of the Revised Code.

(C) If a taxpayer has a direct or indirect investment in an investment pass-through entity that has a direct or indirect investment in any other pass-through entity, division (B) of this section does not apply to any item of income, gain, deduction, or loss where, under section 5747.231 of the Revised Code, the item is directly or indirectly attributable to either of the following:

(1) A distributive share of income or gain from a pass-through entity that does not qualify as an investment pass-through entity;

(2) A pass-through entity's income or gain to which division (C) of section 5733.401 of the Revised Code does not apply.

An indirect investment includes any interest that a person constructively owns on account of the attribution rules set forth in section 267, 318, or 1563 of the Internal Revenue Code.

Section 5747.23 | Taxing trust income.

• Effective: July 20, 1973
• Latest Legislation: House Bill 95 - 110th General Assembly

(A) With respect to a trust, one or more of the beneficiaries of which are liable for the tax imposed by section 5747.02 of the Revised Code, the business income and deductions included in the income of such trust shall be allocated to this state in the hands of such trust pursuant to section 5747.21 of the Revised Code. Such trust business income and deductions shall then be allocated to the beneficiaries in proportion to their right to share in the business income of such trust to the extent of the distribution made to the beneficiary.

(B) With respect to a trust described in division (A) of this section, the nonbusiness income and deductions included in the income of such trust shall be allocated to the beneficiaries in proportion to their right to share in such income and deductions of the trust, and then the share of each beneficiary shall be allocated to this state in the hands of such beneficiary pursuant to section 5747.20 of the Revised Code.

Section 5747.231 | Including taxpayer's entire distributive or proportionate share attributable to pass-through entity.

• Effective: March 27, 2020
• Latest Legislation: House Bill 197 - 133rd General Assembly

As used in this section, "adjusted qualifying amount" has the same meaning as in section 5733.40 of the Revised Code.

This section does not apply to division (AA)(5)(a)(ii) of section 5747.01 of the Revised Code.

Except as set forth in this section and except as otherwise provided in divisions (A) and (B) of section 5733.401 of the Revised Code, in making all apportionment, allocation, income, gain, loss, deduction, tax, and credit computations under this chapter, each person shall include in that person's items of business income, nonbusiness income, adjusted qualifying amounts, allocable income or loss, apportionable income or loss, property, compensation, and sales, the person's entire distributive share or proportionate share of the items of business income, nonbusiness income, adjusted qualifying amounts, allocable income or loss, apportionable income or loss, property, compensation, and sales of any pass-through entity in which the person has a direct or indirect ownership interest at any time during the person's taxable year. A pass-through entity's direct or indirect distributive share or proportionate share of any other pass-through entity's items of business income, nonbusiness income, adjusted qualifying amounts, allocable income or loss, apportionable income or loss, property, compensation, and sales shall be included for the purposes of computing the person's distributive share or proportionate share of the pass-through entity's items of business income, nonbusiness income, adjusted qualifying amounts, allocable income or loss, apportionable income or loss, property, compensation, and sales under this section. Those items shall be in the same form as was recognized by the pass-through entity.

Section 5747.24 | Presumption of domicile.

• Effective: September 13, 2018
• Latest Legislation: House Bill 292 - 132nd General Assembly

This section is to be applied solely for the purposes of Chapters 5747. and 5748. of the Revised Code.

(A) As used in this section:

(1) An individual "has one contact period in this state" if the individual is away overnight from the individual's abode located outside this state and while away overnight from that abode spends at least some portion, however minimal, of each of two consecutive days in this state.

(2) An individual is considered to be "away overnight from the individual's abode located outside this state" if the individual is away from the individual's abode located outside this state for a continuous period of time, however minimal, beginning at any time on one day and ending at any time on the next day.

(B)(1) Except as provided in division (B)(4) of this section, an individual is presumed to be not domiciled in this state for the entirety of any taxable year for which the individual files a statement with the tax commissioner under division (B)(2) of this section and meets all of the following requirements:

(a) The individual has no more than two hundred twelve contact periods in this state, which need not be consecutive, during the taxable year.

(b) The individual, during the entire taxable year, has at least one abode outside this state for which the individual did not claim a depreciation deduction under section 167 of the Internal Revenue Code on the individual's federal income tax return for the taxable year.

(c) The individual did not hold a valid Ohio driver's license or identification card at any time during the taxable year. An individual shall not be deemed to have held a valid Ohio driver's license or identification card for the purposes of this division if, before the beginning of the taxable year, the individual surrendered the license or card to the bureau of motor vehicles or to the motor vehicle licensing authority of a jurisdiction outside this state. As used in division (B)(1)(c) of this section, "driver's license" and "identification card" have the same meanings as in section 4507.01 of the Revised Code.

(d) The individual did not receive a reduction in real property taxes under section 323.152 of the Revised Code or a reduction in manufactured home taxes under section 4503.065 of the Revised Code, based on the individual's occupation of an abode in this state, for a property tax year the tax lien date of which is included in the taxable year.

(e) If the individual attended or was enrolled in a state institution of higher education, as defined in section 3345.011 of the Revised Code, in this state at any time during the taxable year, the amount of tuition charged or incurred for such attendance or enrollment was not based on an abode being located in this state.

(2) On or before the fifteenth day of the tenth month following the close of the taxable year, an individual that meets the requirements prescribed by division (B)(1) of this section may file with the tax commissioner, on the form prescribed by the commissioner, a statement from the individual verifying that the individual meets such requirements.

In the case of an individual who dies before the statement would otherwise be due, the personal representative of the estate of the deceased individual may comply with this division by making to the best of the representative's knowledge and belief the statement with respect to the deceased individual, and filing the statement with the commissioner within the later of the date the statement would otherwise be due or sixty days after the date of the individual's death.

An individual or personal representative of an estate who knowingly makes a false statement under this division is guilty of perjury under section 2921.11 of the Revised Code.

(3) The presumption that the individual was not domiciled in this state is irrebuttable unless the statement filed under division (B)(2) of this section is false with respect to the requirements prescribed by division (B)(1) of this section. If the individual or personal representative of an estate fails to file such a statement or the statement is false, the individual is presumed under division (C) or (D) of this section to have been domiciled in this state the entire taxable year.

(4) Division (B) of this section does not apply to an individual whose domicile with respect to this state changes during the taxable year. Such an individual is domiciled in this state for that portion of the taxable year before or after the change, as applicable.

(C) An individual who during a taxable year has fewer than two hundred thirteen contact periods in this state, which need not be consecutive, who has an abode in this state at any time during that taxable year, and who is not irrebuttably presumed under division (B) of this section to be not domiciled in this state with respect to that taxable year, is presumed to be domiciled in this state for the entire taxable year, except as provided in division (B)(4) of this section. An individual can rebut this presumption for any portion of the taxable year only with a preponderance of the evidence to the contrary. An individual who rebuts the presumption under this division for any portion of the taxable year is presumed to be domiciled in this state for the remainder of the taxable year for which the individual does not provide a preponderance of the evidence to the contrary.

(D) An individual who during a taxable year has at least two hundred thirteen contact periods in this state, which need not be consecutive, and who has an abode in this state at any time during that taxable year is presumed to be domiciled in this state for the entire taxable year, except as provided in division (B)(4) of this section. An individual can rebut this presumption for any portion of the taxable year only with clear and convincing evidence to the contrary. An individual who rebuts the presumption under this division for any portion of the taxable year is presumed to be domiciled in this state for the remainder of the taxable year for which the individual does not provide clear and convincing evidence to the contrary.

(E) If the tax commissioner challenges the number of contact periods an individual claims to have in this state during a taxable year, the individual bears the burden of proof to verify such number, by a preponderance of the evidence. An individual challenged by the commissioner is presumed to have a contact period in this state for any period for which the individual does not prove by a preponderance of the evidence that the individual had no such contact period.

Section 5747.26 | Lead abatement tax credit.

• Effective: October 17, 2019
• Latest Legislation: House Bill 166 - 133rd General Assembly

(A) Terms used in this section have the same meanings as in section 3742.50 of the Revised Code.

(B) There is hereby allowed a nonrefundable credit against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for a taxpayer to whom a lead abatement tax credit certificate was issued under section 3742.50 of the Revised Code. The credit equals the amount listed on the certificate and shall be claimed for the taxable year in which the certificate was issued.

The credit shall be claimed in the order required under section 5747.98 of the Revised Code. If the credit exceeds the taxpayer's aggregate tax due under section 5747.02 of the Revised Code for that taxable year after allowing for credits that precede the credit under this section in that order, such excess shall be allowed as a credit in each of the ensuing seven taxable years, but the amount of any excess credit allowed in any such taxable year shall be deducted from the balance carried forward to the ensuing taxable year.

(C) The taxpayer shall provide, upon request of the tax commissioner, any documentation necessary to verify the taxpayer is entitled to the credit under this section.

Section 5747.27 | Credit for displaced worker who pays for job training to enhance ability to get new job.

• Effective: February 15, 2016
• Latest Legislation: Senate Bill 208 - 131st General Assembly

As used in this section, "displaced worker" means an individual who has lost or left the individual's job due to the closing or moving of the facility at which the individual was employed or the abolishment of the individual's position or shift at that facility and who has not obtained another job at which the individual works more than twenty hours a week.

A nonrefundable credit is allowed against the aggregate tax liability under section 5747.02 of the Revised Code of a displaced worker who pays for job training to enhance the displaced worker's ability to get a new job. The amount of the credit equals the lesser of five hundred dollars or fifty per cent of the amount the individual actually paid less any reimbursements for job training during the twelve-month period beginning when the individual became a displaced worker. The credit shall be claimed for the taxable year in which the worker pays for the job training. If the twelve-month period after the individual becomes a displaced worker extends over two taxable years, the worker may claim all or a portion of the credit, not to exceed five hundred dollars, for both taxable years. The displaced worker shall claim the credit in the order required under section 5747.98 of the Revised Code. The credit for a taxable year shall not exceed the displaced worker's tax liability for that year after allowing for any other credit that precedes the credit under this section in that order.

Section 5747.28 | Credit for purchase of qualifying property by taxpayer engaged in the business of producing grapes.

• Effective: February 15, 2016
• Latest Legislation: Senate Bill 208 - 131st General Assembly

(A) As used in this section:

(1) "Qualifying property" means any property, plant, or equipment used to produce grapes in this state, and includes but is not limited to land and improvements to land, grape seeds and vines, stakes, wiring, tractors, and other machinery used in the growth, harvesting, or producing of grapes.

(2) "Related member" has the same meaning as in division (A)(6) of section 5733.042 of the Revised Code, without regard to division (B) of that section.

(B) A nonrefundable credit is allowed against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for a taxpayer engaged in the business of producing grapes who purchases qualifying property on or after January 1, 1994. The amount of the credit equals ten per cent of the cost of purchasing and installing or constructing the qualifying property. The taxpayer shall claim the credit in the taxable year in which the qualifying property is placed in operation. The taxpayer shall claim the credit in the order required under section 5747.98 of the Revised Code. The taxpayer may carry forward for the ensuing seven taxable years any credit amount in excess of its aggregate tax due under section 5747.02 of the Revised Code in the taxable year in which the qualifying property is placed in operation after allowing for any other credits that precede the credit under this section in that order, and shall deduct the amount of the excess credit allowed in any such year from the balance carried forward to the next year. However, if the taxpayer is subject to a recapture tax under division (C)(1) of this section because the taxpayer disposes of the qualifying property or ceases to use it as qualifying property during the seven-year recapture period prescribed under that division, the taxpayer may claim no credit in connection with that property in the taxable year of disposal or cessation or any ensuing taxable year.

(C)(1) If, within the seven-year period after qualifying property is placed in operation, the taxpayer disposes of the property or ceases to use it as qualifying property, the amount of tax otherwise imposed on the taxpayer by section 5747.02 of the Revised Code shall be increased in the taxable year in which the property is disposed of or ceases to be used as qualifying property. The amount of the increase shall equal the recapture percentage multiplied by the aggregate credit the taxpayer has been allowed under this section in all prior taxable years in connection with that property. The recapture percentage shall be determined in accordance with the following table:

If the property is disposed of or ceases to be used as qualifying property within this amount of time after being placed in operation:	The recapture percentage is:
One year	100%
Two years	86%
Three years	72%
Four years	58%
Five years	44%
Six years	30%
Seven years	15%

(2) Division (C)(1) of this section does not apply in any of the following circumstances:

(a) The qualifying property is transferred to a related member and the related member continues to use the property to produce grapes in this state;

(b) The qualifying property is transferred to a family member and the family member continues to use the property to produce grapes in this state;

(c) There is an involuntary disposition of the qualifying property. The involuntary disposition may be due to, without limitation, a bankruptcy, a receivership, or destruction by natural forces.

(D) The tax commissioner, by rule, may prescribe guidelines for taxpayers to use in determining if their property is qualifying property for the purposes of this section.

Section 5747.29 | Political campaign contribution tax credit.

• Effective: December 29, 2020
• Latest Legislation: Senate Bill 39 - 133rd General Assembly

(A) As used in this section:

(1) "Candidate" has the same meaning as in section 3517.01 of the Revised Code, but is limited to candidates for the public offices specified in this section.

(2) "Contribution" has the same meaning as in section 3517.01 of the Revised Code, but is limited to contributions of money only.

(B) A nonrefundable credit is allowed against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for contributions of money made to the campaign committee of candidates for any of the following public offices: governor, lieutenant governor, secretary of state, auditor of state, treasurer of state, attorney general, member of the state board of education, chief justice of the supreme court, justice of the supreme court, or member of the general assembly. The amount of the credit for a taxable year equals the lesser of the combined total contributions made during the taxable year by each taxpayer filing a return required to be filed under section 5747.08 of the Revised Code or the amount of fifty dollars, in the case of an individual return, or one hundred dollars, in the case of a joint return.

The taxpayer shall claim the credit in the order required under section 5747.98 of the Revised Code. The credit for a taxable year shall not exceed the aggregate amount of tax otherwise due for that year after allowing for any other credits that precede the credit under this section in that order.

Section 5747.30 | Exemption for nonresident pass-through entities as to commercial printing.

• Effective: September 29, 1997
• Latest Legislation: House Bill 215 - 122nd General Assembly

(A) As used in this section:

(1) "Commercial printer," "commercial printing," "contract for printing," "intangible property located at the premises of a commercial printer," and "printed material" have the same meanings as in division (D) of section 5733.09 of the Revised Code.

(2) "Related member" has the same meaning as in division (A)(6) of section 5733.042 of the Revised Code without regard to division (B) of that section.

(B) Except as provided in divisions (C) and (D) of this section, a nonresident not otherwise subject to the tax imposed by section 5747.02 of the Revised Code for a taxable year does not become subject to that tax for the taxable year solely by reason of any one or more of the following occurring in this state during all or any portion of the taxable year:

(1) Ownership by the nonresident, a pass-through entity in which the nonresident has directly or indirectly invested, or a related member of the nonresident, of tangible personal property or intangible property located during all or any portion of the taxable year at the premises of a commercial printer with which the nonresident, pass-through entity, or nonresident's related member has a contract for printing with respect to such property or the premises of a commercial printer's related member with which the nonresident, pass-through entity, or nonresident's related member has a contract for printing with respect to such property;

(2) Sales by the nonresident, a pass-through entity in which the nonresident has directly or indirectly invested, or a related member of the nonresident, of property produced at and shipped or distributed from the premises of a commercial printer with which the nonresident, pass-through entity, or nonresident's related member has a contract for printing with respect to such property or the premises of a commercial printer's related member with which the nonresident, pass-through entity, or nonresident's related member has a contract for printing with respect to such property;

(3) Activities of employees, officers, agents, or contractors of the nonresident, a pass-through entity in which the nonresident has directly or indirectly invested, or a related member of the nonresident, on the premises of a commercial printer with which the nonresident, pass-through entity, or nonresident's related member has a contract for printing or the premises of a commercial printer's related member with which the nonresident, pass-through entity, or nonresident's related member has a contract for printing, where such activities are directly and solely related to quality control, distribution, or printing services, or any combination thereof, performed by or at the direction of the commercial printer or the commercial printer's related member.

(C) The exemption under this section does not apply to a taxable year during any portion of which the individual or estate directly or indirectly owned or invested in a pass-through entity which during any portion of the taxable year of the individual or estate owned or used all or a portion of its property or capital in this state or earned or received income in this state or was doing business in this state. The exemption under this section also does not apply to any individual or estate for a taxable year during any portion of which the individual or estate directly or indirectly owned or invested in a pass-through entity which during any portion of such taxable year was a related member to any entity which during any portion of such taxable year owned or used all or a portion of its property or capital in this state or earned or received income in this state or was doing business in this state.

(D) With respect to allowing the exemption under this section, the tax commissioner shall be guided by the doctrines of "economic reality," "sham transaction," "step transaction," and "substance over form." A nonresident shall bear the burden of establishing by a preponderance of the evidence that any transaction giving rise to an exemption claimed under this section did not have as a principal purpose the avoidance of any portion of the tax imposed by section 5747.02 of the Revised Code.

Application of the doctrines listed in this division is not limited to this section.

Section 5747.331 | Nonrefundable credit equal to borrower's qualified research and development loan payments.

• Effective: February 15, 2016
• Latest Legislation: Senate Bill 208 - 131st General Assembly

(A) As used in this section:

(1) "Borrower" means any person that receives a loan from the director of development under section 166.21 of the Revised Code, regardless of whether the borrower is subject to the tax imposed by section 5747.02 of the Revised Code.

(2) "Related member" has the same meaning as in section 5733.042 of the Revised Code.

(3) "Qualified research and development loan payments" has the same meaning as in section 166.21 of the Revised Code.

(B) Beginning with taxable years beginning in 2003, a nonrefundable credit is allowed against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code equal to a borrower's qualified research and development loan payments made during the calendar year that includes the last day of the taxable year for which the credit is claimed. The amount of the credit for a taxable year shall not exceed one hundred fifty thousand dollars. No taxpayer is entitled to claim a credit under this section unless it has obtained a certificate issued by the director of development under division (D) of section 166.21 of the Revised Code and submits a copy of the certificate with its report for the taxable year. Failure to submit a copy of the certificate with the report does not invalidate a claim for a credit if the taxpayer submits a copy of the certificate within sixty days after the tax commissioner requests it. The credit shall be claimed in the order required under section 5747.98 of the Revised Code. No credit shall be allowed under this section if the credit was available against the tax imposed by Chapter 5751. of the Revised Code except to the extent the credit was not applied against that tax. The credit, to the extent it exceeds the taxpayer's aggregate tax liability for the taxable year after allowance for any other credits that precede the credit under this section in that order, shall be carried forward to the next succeeding taxable year or years until fully used.

(C) A borrower entitled to a credit under this section may assign the credit, or a portion thereof, to any of the following:

(1) A related member of that borrower;

(2) The owner or lessee of the eligible research and development project;

(3) A related member of the owner or lessee of the eligible research and development project.

A borrower making an assignment under this division shall provide written notice of the assignment to the tax commissioner and the director of development, in such form as the tax commissioner prescribes, before the credit that was assigned is used. The assignor may not claim the credit to the extent it was assigned to an assignee. The assignee may claim the credit only to the extent the assignor has not claimed it.

(D) If any taxpayer is a shareholder in an S corporation, a partner in a partnership, or a member in a limited liability company treated as a partnership for federal income tax purposes, the taxpayer shall be allowed the taxpayer's distributive or proportionate share of the credit available through the S corporation, partnership, or limited liability company.

(E) The aggregate credit against the taxes imposed by section 5747.02 and Chapter 5751. of the Revised Code that may be claimed under this section and section 5751.52 of the Revised Code by a borrower as a result of qualified research and development loan payments attributable during a calendar year to any one loan shall not exceed one hundred fifty thousand dollars.

Section 5747.38 | Pass-through entity income tax.

• Effective: June 14, 2022
• Latest Legislation: Senate Bill 246 - 134th General Assembly

(A) As used in this section and section 5747.39 of the Revised Code and in other sections of Chapter 5747. of the Revised Code in the context of the tax imposed under this section:

(1) "Electing pass-through entity" means a qualifying pass-through entity that elects to be subject to the tax levied under this section for a taxable year pursuant to division (C) of this section.

(2) "Owner" means a person that is a partner, member, shareholder, or investor in an electing pass-through entity for any portion of the taxable year.

(3) "Income" means the sum of owners' distributive shares of the income, gain, expense, or loss of an electing pass-through entity for the taxable year, as reported for federal income tax purposes.

(4) "Qualifying taxable income" means the sum of the following:

(a) The portion of an electing pass-through entity's income that is business income, subject to the applicable adjustments in divisions (A)(2) to (7) of section 5733.40 of the Revised Code, multiplied by the fraction described in division (B)(1) of that section;

(b) The portion of the electing pass-through entity's income that is nonbusiness income allocated to this state under section 5747.20 of the Revised Code.

(B) For the same purposes for which the tax is levied under section 5747.02 of the Revised Code, a tax is hereby levied on each electing pass-through entity on the entity's qualifying taxable income for the taxable year, at the following rates:

(1) For an electing pass-through entity's taxable year that begins in 2022, five per cent;

(2) For an electing pass-through entity's taxable year that begins in 2023 and in any year thereafter, the rate equal to the tax rate imposed on taxable business income under division (A)(4)(a) of section 5747.02 of the Revised Code applicable to that taxable year.

(C) A pass-through entity that is not a disregarded entity, as defined in section 5733.01 of the Revised Code, may elect to be subject to the tax levied under this section by filing with the tax commissioner a form prescribed by the commissioner making such election on or before the deadline to file the return under section 5747.42 of the Revised Code for the taxable year. Such election applies only to the taxable year for which the election is made and is, once made, irrevocable for that year.

(D) The tax levied under this section shall be calculated without regard to any deductions or credits otherwise permitted to be claimed by an owner of the electing pass-through entity in computing the owner's aggregate tax liability under section 5747.02 of the Revised Code.

(E) The tax levied under this section is intended to comply with the provisions of internal revenue service notice 2020-75 in which such tax paid by an electing pass-through entity is deductible to the entity for federal income tax purposes.

(F) The tax commissioner shall adopt rules to administer the tax levied under this section. Such rules shall include a description of how the adjustments to income under divisions (A)(36) and (S)(15) of section 5747.01 of the Revised Code and the credit under section 5747.39 of the Revised Code apply to direct or indirect owners of an electing pass-through entity based on various ownership structures. Any rule adopted under this section is not a regulatory restriction for the purpose of section 121.95 of the Revised Code.

Last updated October 6, 2022 at 4:01 PM

Section 5747.39 | Pass-through entity owner credit.

• Effective: June 14, 2022
• Latest Legislation: Senate Bill 246 - 134th General Assembly

There is hereby allowed a refundable credit against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for a taxpayer who is an owner of an electing pass-through entity. The credit shall equal the owner's proportionate share of the tax levied under section 5747.38 of the Revised Code remitted by the owner's electing pass-through entity for the taxable year.

The credit shall be claimed for the taxpayer's taxable year that includes the last day of the electing pass-through entity's taxable year for which the tax levied under that section was paid and in the order required under section 5747.98 of the Revised Code. If the credit exceeds the aggregate amount of tax otherwise due, the excess shall be refunded to the taxpayer.

The tax commissioner may request that a taxpayer claiming a credit under this section furnish information as is necessary to support the claim for the credit under this section, and no credit shall be allowed unless the requested information is provided.

Last updated October 6, 2022 at 4:02 PM

Section 5747.40 | Definitions relating to qualified pass-through entities.

• Effective: June 30, 1997
• Latest Legislation: House Bill 215 - 122nd General Assembly

Any term used in sections 5747.40 to 5747.43 of the Revised Code has the same meaning as defined in section 5733.40 of the Revised Code.

The purpose of sections 5747.40 to 5747.43 of the Revised Code is to complement and to reinforce the tax levied under section 5747.02 of the Revised Code. Those sections do not apply to a pass-through entity if all of the investors of the pass-through entity are resident taxpayers for the purposes of this chapter for the entire qualifying taxable year of the pass-through entity, or to a trust if all of the beneficiaries of the trust are resident taxpayers for the purposes of this chapter for the entire qualifying taxable year of the trust.

Section 5747.401 | Deemed investors in investment pass-through entity are deemed investors in any other pass-through entity in which investment pass-through entity is direct investor.

• Effective: September 16, 1998
• Latest Legislation: House Bill 770 - 122nd General Assembly

(A)(1) Except as otherwise provided in division (B) of this section, for the purposes of sections 5733.40, 5733.401, 5733.402, 5733.41, and 5747.40 to 5747.457 of the Revised Code, the investors in an investment pass-through entity as defined in section 5733.401 of the Revised Code, hereinafter the "deemed investors," shall be deemed to be investors in any other pass-through entity in which the investment pass-through entity is a direct investor without regard to sections 5733.057 or 5747.231 of the Revised Code. Each deemed investor's portion of such other pass-through entity's adjusted qualifying amount shall be the adjusted qualifying amount that, without regard to this section, passes through from such other pass-through entity to the investment pass-through entity multiplied by the percentage of the deemed investor's direct ownership in the investment pass-through entity without regard to sections 5733.057 or 5747.231 of the Revised Code.

(2) For the purposes of sections 5733.40, 5733.401, 5733.402, 5733.41, and 5747.40 to 5747.457 of the Revised Code, the investment pass-through entity shall not be deemed to be an investor in such other pass-through entity.

(3) If the taxable year of the investment pass-through entity ends on a day other than the last day of such other pass-through entity's taxable year, division (A)(1) of this section applies to those persons who are investors in the investment pass-through entity on the last day of such other pass-through entity's taxable year ending within the investment pass-through entity's taxable year.

(B) Division (A) of this section applies only to the extent to which the investment pass-through entity provides on a timely basis to such other pass-through entity the name, address, and social security number or federal identification number for each direct investor in the investment pass-through entity without regard to sections 5733.057 and 5747.231 of the Revised Code. Once such other pass-through entity receives such information from the investment pass-through entity, division (A) of this section applies for such other pass-through entity's taxable year unless the tax commissioner permits the investment pass-through entity to revoke the notice that the investment pass-through entity previously provided to such other pass-through entity.

Section 5747.41 | Withholding tax on qualifying pass-through entity or trust having individual qualifying investor or beneficiary.

• Effective: June 14, 2022
• Latest Legislation: Senate Bill 246 - 134th General Assembly

For the same purposes for which the tax is levied under section 5747.02 of the Revised Code, there is hereby levied a withholding tax on every qualifying pass-through entity having at least one qualifying investor who is an individual and on every qualifying trust having at least one qualifying beneficiary who is an individual. The withholding tax imposed by this section is imposed on the sum of the adjusted qualifying amounts of a qualifying pass-through entity's qualifying investors who are individuals and on the sum of the adjusted qualifying amounts of a qualifying trust's qualifying beneficiaries, at a rate equal to the tax rate imposed on taxable business income under division (A)(4)(a) of section 5747.02 of the Revised Code.

The tax imposed by this section applies only if the qualifying entity has nexus with this state under the Constitution of the United States for any portion of the qualifying entity's qualifying taxable year, and the sum of the qualifying entity's adjusted qualifying amounts exceeds one thousand dollars for the qualifying entity's qualifying taxable year.

The tax imposed under this section does not apply to a qualifying pass-through entity that makes an election under division (C) of section 5747.38 of the Revised Code to be subject to the tax levied under that section for the entity's qualifying taxable year.

Last updated July 28, 2022 at 4:03 PM

Section 5747.42 | Filing annual return.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

(A) In addition to the other returns required to be filed and other remittances required to be made pursuant to this chapter, every qualifying entity or electing pass-through entity that is subject to the tax imposed by section 5733.41, 5747.38, or 5747.41 of the Revised Code shall file an annual return as follows:

(1) For a qualifying entity, on or before the fifteenth day of the fourth month following the end of the entity's qualifying taxable year;

(2) For an electing pass-through entity, on or before the fifteenth day of April following the end of the entity's taxable year that ends in the preceding calendar year.

Each entity shall also remit to the tax commissioner, with the remittance made payable to the treasurer of state, the amount of the taxes shown to be due on the return, less the amount paid for the taxable year on a declaration of estimated tax report filed by the taxpayer as provided by section 5747.43 of the Revised Code. Remittance shall be made in the form prescribed by the tax commissioner, including electronically if required by section 5747.44 of the Revised Code.

A domestic qualifying entity shall not dissolve, and a foreign qualifying entity shall not withdraw or retire from business in this state, without filing the tax returns and paying the taxes charged for the year in which such dissolution or withdrawal occurs.

(B) The tax commissioner shall furnish qualifying entities or electing pass-through entities, upon request, copies of the forms prescribed by the commissioner for the purpose of making the returns required by sections 5747.42 to 5747.453 of the Revised Code.

(C) The annual return required by this section shall be signed by the applicable entity's trustee or other fiduciary, or president, vice-president, secretary, treasurer, general manager, general partner, superintendent, or managing agent in this state. The annual return shall contain the facts, figures, computations, and attachments that result in the tax charged by section 5733.41, 5747.38, or 5747.41 of the Revised Code. Each entity also shall file with its annual return all of the following:

(1) In the case of the tax charged by section 5733.41 or 5747.41 of the Revised Code, the full name and address of each qualifying investor or qualifying beneficiary unless the qualifying entity submits such information in accordance with division (D) of this section;

(2) In the case of the tax charged by section 5733.41 or 5747.41 of the Revised Code, the social security number, federal employer identification number, or other identifying number of each qualifying investor or qualifying beneficiary, unless the taxpayer submits that information in accordance with division (D) of this section;

(3) In the case of the tax charged by section 5747.38 of the Revised Code, the full name and address and the social security number, federal employer identification number, or other identifying number of each owner of the electing pass-through entity, unless the entity submits such information in accordance with division (D) of this section;

(4) The amount of tax imposed by sections 5733.41 and 5747.41 or by section 5747.38 of the Revised Code, and the amount of the tax paid by the entity, for the applicable taxable year covered by the annual return;

(5) The amount of tax imposed by sections 5733.41 and 5747.41 or by section 5747.38 of the Revised Code that is attributable to each qualifying investor, qualifying beneficiary, or owner, as applicable, unless the entity submits this information in accordance with division (D) of this section.

(D) On the date the annual return is due, including extensions of time, if any, the applicable entity may be required by rule to transmit electronically or by magnetic media the information set forth in division (C) of this section. The tax commissioner may adopt rules governing the format for the transmission of such information. The tax commissioner may exempt an entity or a class of entities from the requirements imposed by this division.

(E) Upon good cause shown, the tax commissioner may extend the period for filing any return required to be filed under this section or section 5747.43 or 5747.44 of the Revised Code and for transmitting any information required to be transmitted under those sections. The tax commissioner may adopt rules relating to extensions of time to file and to transmit. At the time an entity pays any tax imposed under section 5733.41, 5747.38, or 5747.41 of the Revised Code or estimated tax as required under section 5747.43 of the Revised Code, the entity also shall pay interest computed at the rate per annum prescribed by section 5703.47 of the Revised Code on that tax or estimated tax, from the time the tax or estimated tax originally was required to be paid, without consideration of any filing extensions, to the time of actual payment. Nothing in this division shall be construed to abate, modify, or limit the imposition of any penalties imposed for the failure to timely pay taxes under this chapter or Chapter 5733. of the Revised Code without consideration of any filing extensions.

Last updated September 6, 2023 at 3:52 PM

Section 5747.43 | Filing estimated tax return and making estimated payments.

• Effective: June 14, 2022
• Latest Legislation: Senate Bill 246 - 134th General Assembly

(A) As used in this section:

(1) "Estimated taxes" means the amount that a qualifying entity or electing pass-through entity estimates to be the sum of its liability under sections 5733.41 and 5747.41 or section 5747.38 of the Revised Code for its current qualifying taxable year or taxable year, as applicable.

(2) "Tax liability" means the total of the taxes and withholding taxes due under sections 5733.41 and 5747.41 of the Revised Code or the tax due under section 5747.38 of the Revised Code for the applicable taxable year prior to applying any estimated tax payment or refund from another year.

(3) "Taxes paid" includes payments of estimated taxes made under division (C) of this section and tax refunds applied by the qualifying entity or electing pass-through entity in payment of estimated taxes.

(4) "Required installment" means a payment equal to twenty-five per cent of the lesser of the following:

(a) Ninety per cent of the tax liability for the qualifying taxable year;

(b) One hundred per cent of the tax liability shown on the return of a qualifying entity or an electing pass-through entity for the preceding taxable year.

Division (A)(4)(b) of this section applies only if the entity filed a return under section 5747.42 of the Revised Code for the preceding taxable year and if the preceding taxable year was a twelve-month taxable year.

(B) In addition to the return required to be filed pursuant to section 5747.42 of the Revised Code, each qualifying entity or electing pass-through entity that is subject to the tax imposed under section 5733.41 and to the withholding tax imposed by section 5747.41 of the Revised Code or that is subject to the tax imposed under section 5747.38 of the Revised Code shall file an estimated tax return and pay a portion of the entity's tax liability for its taxable year. The portion of those taxes required to be paid, and the last day prescribed for payment thereof, shall be as prescribed by divisions (B)(1), (2), (3), and (4) of this section:

(1) On or before the fifteenth day of the month following the last day of the first quarter of the entity's taxable year, twenty-two and one-half per cent of the entity's estimated tax liability for that taxable year;

(2) On or before the fifteenth day of the month following the last day of the second quarter of the entity's taxable year, forty-five per cent of the entity's estimated tax liability for that taxable year;

(3) On or before the fifteenth day of the month following the last day of the third quarter of the entity's taxable year, sixty-seven and one-half per cent of the entity's estimated tax liability for that taxable year;

(4) On or before the fifteenth day of the month following the last day of the fourth quarter of the entity's taxable year, ninety per cent of the entity's estimated tax liability for that taxable year.

Payments of estimated taxes shall be made payable to the treasurer of state.

(C) If a payment of estimated taxes is not paid in the full amount required under division (B) of this section, a penalty shall be added to the taxes charged for the qualifying taxable year or taxable year, as applicable, unless the underpayment is due to reasonable cause as described in division (D) of this section. The penalty shall accrue at the rate per annum prescribed by section 5703.47 of the Revised Code upon the amount of underpayment from the day the estimated payment was required to be made to the day the payment is made.

The amount of the underpayment upon which the penalty shall accrue shall be determined as follows:

(1) For the first payment of estimated taxes each year, the required installment less the amount of taxes paid by the date prescribed for that payment;

(2) For the second payment of estimated taxes each year, the required installment less the amount of taxes paid by the date prescribed for that payment;

(3) For the third payment of estimated taxes each year, the required installment less the amount of taxes paid by the date prescribed for that payment;

(4) For the fourth payment of estimated taxes each year, the required installment less the amount of taxes paid by the date prescribed for that payment.

For the purposes of this section, a payment of estimated taxes on or before any payment date shall be considered a payment of a previous underpayment only to the extent the payment of estimated taxes exceeds the amount of the payment presently required to be paid to avoid any penalty.

The penalty imposed under division (C) of this section is in lieu of any other interest charge or penalty imposed for failure to file a declaration of estimated tax report and make estimated payments as required by this section.

(D) An underpayment of estimated taxes determined under division (C) of this section is due to reasonable cause if any of the following apply:

(1) The amount of tax that was paid equals at least ninety per cent of the tax liability for the current taxable year, determined by annualizing the income received during that year up to the end of the month immediately preceding the month in which the payment is due;

(2) The amount of tax liability that was paid equals at least ninety per cent of the tax liability for the current taxable year;

(3) The amount of tax liability that was paid equals at least one hundred per cent of the tax liability shown on the return of the entity for the preceding taxable year, provided that the immediately preceding taxable year reflected a period of twelve months and the entity filed a return under section 5747.42 of the Revised Code for that year.

(E)(1) Divisions (B) and (C) of this section do not apply for a taxable year if either of the following applies to the entity:

(a) For the immediately preceding taxable year, the entity computes in good faith and in a reasonable manner that the sum of its adjusted qualifying amounts or its qualifying taxable income, as applicable, is ten thousand dollars or less.

(b) For the taxable year the entity computes in good faith and in a reasonable manner that the sum of its adjusted qualifying amounts or its qualifying taxable income, as applicable, is ten thousand dollars or less.

(2) Notwithstanding any other provision of Title LVII of the Revised Code to the contrary, the entity shall establish by a preponderance of the evidence that its computation of the adjusted qualifying amounts or qualifying taxable income, as applicable, for the immediately preceding taxable year and the taxable year was, in fact, made in good faith and in a reasonable manner.

(F) The tax commissioner may waive the requirement for filing a declaration of estimated taxes for any class of qualifying entities if the commissioner finds the waiver is reasonable and proper in view of administrative costs and other factors.

(G) Estimated taxes paid by a qualifying entity or an electing pass-through entity may be applied to satisfy the entity's tax liability under section 5733.41, 5747.38, or 5747.41 of the Revised Code. Nothing in this section authorizes such an entity to apply estimated taxes paid against more than one tax.

Last updated July 28, 2022 at 4:04 PM

Section 5747.44 | Tax payment by electronic funds transfer.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

(A) If a qualifying entity's or an electing pass-through entity's total liability for taxes imposed under sections 5733.41 and 5747.41 or under section 5747.38 of the Revised Code exceeds one hundred eighty thousand dollars for the second preceding taxable year or qualifying taxable year, as applicable, the entity shall make all payments required under sections 5747.42 and 5747.43 or under section 5747.38 of the Revised Code electronically in the manner prescribed by the tax commissioner.

The tax commissioner shall notify each qualifying entity and electing pass-through entity required to remit taxes electronically of the entity's obligation to do so. Failure by the commissioner to notify an entity subject to this section to remit taxes electronically does not relieve the entity of its obligation to remit taxes in that manner.

(B) Except as otherwise provided in this division, the payment of taxes electronically does not affect a qualifying entity's or an electing pass-through entity's obligation to file the returns required under sections 5747.42 and 5747.43 of the Revised Code.

(C) A qualifying entity or an electing pass-through entity required by this section to remit taxes electronically may apply to the tax commissioner in the manner prescribed by the commissioner to be excused from that requirement. The commissioner may excuse the entity from electronic remittance for good cause shown for the period of time requested by the entity or for a portion of that period. The commissioner shall notify the entity of the commissioner's decision as soon as is practicable.

(D) If a qualifying entity or an electing pass-through entity required by this section to remit taxes electronically remits those taxes by some means other than electronically as prescribed by this section, and the tax commissioner determines that such failure was not due to reasonable cause or was due to willful neglect, the commissioner may collect an additional charge by assessment in the manner prescribed by section 5747.13 of the Revised Code. The additional charge shall equal five per cent of the amount of the taxes required to be paid electronically, but shall not exceed five thousand dollars. Any additional charge assessed under this section is in addition to any other penalty or charge imposed under this chapter or Chapter 5733. of the Revised Code, and shall be considered as revenue arising from the taxes imposed under sections 5733.41 and 5747.41 or under section 5747.38 of the Revised Code. The commissioner may remit all or a portion of such a charge and may adopt rules governing such remission.

No additional charge shall be assessed under this division against a qualifying entity or an electing pass-through entity that has been notified of its obligation to remit taxes electronically under this section and that remits its first two tax payments after such notification by some other means. The additional charge may be assessed upon the remittance of any subsequent tax payment that the entity remits by some means other than electronically.

Last updated September 6, 2023 at 3:54 PM

Section 5747.45 | Taxable year; method of accounting; amended reports with payment or application for refund.

• Effective: June 14, 2022
• Latest Legislation: Senate Bill 246 - 134th General Assembly

(A) A qualifying entity's qualifying taxable year is the same as its taxable year for federal income tax purposes. If a qualifying entity's taxable year is changed for federal income tax purposes, the qualifying taxable year for purposes of this chapter and sections 5733.40 and 5733.41 of the Revised Code is changed accordingly.

(B) A qualifying entity's and an electing pass-through entity's method of accounting shall be the same as its method of accounting for federal income tax purposes. In the absence of any method of accounting for federal income tax purposes, income shall be computed under such method as in the opinion of the tax commissioner clearly reflects income.

If a qualifying entity's or an electing pass-through entity's method of accounting is changed for federal income tax purposes, its method of accounting for purposes of this chapter shall be changed accordingly.

(C) If any of the facts, figures, computations, or attachments required in a qualifying entity's or an electing pass-through entity's annual report to determine the taxes imposed by section 5733.41, 5747.38, or 5747.41 of the Revised Code must be altered as the result of an adjustment to the entity's federal income tax return, whether the adjustment is initiated by the entity or the internal revenue service, and such alteration affects the entity's tax liability under any of those sections, the entity shall file an amended report with the tax commissioner in such form as the commissioner requires. The amended report shall be filed not later than one year after the adjustment has been agreed to or finally determined for federal income tax purposes or any federal income tax deficiency or refund, or the abatement or credit resulting therefrom, has been assessed or paid, whichever occurs first.

(1) In the case of an underpayment, the amended report shall be accompanied by payment of an additional tax and interest due and is a report subject to assessment under section 5747.13 of the Revised Code for the purpose of assessing any additional tax due under this division, together with any applicable penalty and interest. It shall not reopen those facts, figures, computations, or attachments from a previously filed report no longer subject to assessment that are not affected, either directly or indirectly, by the adjustment to the qualifying entity's or electing pass-through entity's federal income tax return.

(2) In the case of an overpayment, an application for refund may be filed under this division within the one-year period prescribed for filing the amended report even if it is filed beyond the period prescribed in division (B) of section 5747.11 of the Revised Code if it otherwise conforms to the requirements of that section. An application filed under this division shall claim refund of overpayments resulting from alterations to only those facts, figures, computations, or attachments required in the qualifying entity's or electing pass-through entity's annual report that are affected, either directly or indirectly, by the adjustment to the entity's federal income tax return unless it is also filed within the time prescribed in division (B) of section 5747.11 of the Revised Code. It shall not reopen those facts, figures, computations, or attachments that are not affected, either directly or indirectly, by the adjustment to the qualifying entity's federal income tax return.

Last updated July 28, 2022 at 4:05 PM

Section 5747.451 | Requirements of qualifying entity upon retirement from business, voluntary dissolution or transfer to successor.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

(A) The mere retirement from business or voluntary dissolution of a domestic or foreign qualifying entity or electing pass-through entity does not exempt it from the requirements to make reports as required under sections 5747.42 to 5747.44 or to pay the taxes imposed under section 5733.41, 5747.38, or 5747.41 of the Revised Code. If any qualifying entity or electing pass-through entity subject to the taxes imposed under section 5733.41, 5747.38, or 5747.41 of the Revised Code sells its business or stock of merchandise or quits its business, the taxes required to be paid prior to that time, together with any interest or penalty thereon, become due and payable immediately, and the entity shall make a final return within fifteen days after the date of selling or quitting business. The successor of the qualifying entity or electing pass-through entity shall withhold a sufficient amount of the purchase money to cover the amount of such taxes, interest, and penalties due and unpaid until the entity produces a receipt from the tax commissioner showing that the taxes, interest, and penalties have been paid, or a certificate indicating that no taxes are due. If the purchaser of the business or stock of goods fails to withhold purchase money, the purchaser is personally liable for the payment of the taxes, interest, and penalties accrued and unpaid during the operation of the business by the entity. If the amount of those taxes, interest, and penalty unpaid at the time of the purchase exceeds the total purchase money, the tax commissioner may adjust the entity's liability for those taxes, interest, and penalty, or adjust the responsibility of the purchaser to pay that liability, in a manner calculated to maximize the collection of those liabilities.

(B) Annually, on the last day of each qualifying taxable year of a qualifying entity or taxable year of an electing pass-through entity, the taxes imposed under section 5733.41, 5747.38, or 5747.41 of the Revised Code, together with any penalties subsequently accruing thereon, become a lien on all property in this state of the entity, whether such property is employed by the entity in the prosecution of its business or is in the hands of an assignee, trustee, or receiver for the benefit of the entity's creditors and investors. The lien shall continue until those taxes, together with any penalties subsequently accruing, are paid.

Upon failure of such a qualifying entity or an electing pass-through entity to pay those taxes on the day fixed for payment, the tax commissioner may file, in the office of the county recorder in each county in this state in which the entity owns or has a beneficial interest in real estate, notice of the lien containing a brief description of such real estate. No fee shall be charged for such a filing. The lien is not valid as against any mortgagee, purchaser, or judgment creditor whose rights have attached prior to the time the notice is so filed in the county in which the real estate which is the subject of such mortgage, purchase, or judgment lien is located. The notice shall be recorded in the official records kept by the county recorder and indexed under the name of the entity charged with the tax. When the tax, together with any penalties subsequently accruing thereon, have been paid, the tax commissioner shall furnish to the entity an acknowledgment of such payment that the entity may record with the county recorder of each county in which notice of such lien has been filed, for which recording the county recorder shall charge and receive a fee of two dollars.

(C) In addition to all other remedies for the collection of any taxes or penalties due under law, whenever any taxes, interest, or penalties due from any qualifying entity or electing pass-through entity under section 5733.41 of the Revised Code or this chapter have remained unpaid for a period of ninety days, or whenever any qualifying entity or electing pass-through entity has failed for a period of ninety days to make any report or return required by law, or to pay any penalty for failure to make or file such report or return, the attorney general, upon the request of the tax commissioner, shall file a petition in the court of common pleas in the county of the state in which such entity has its principal place of business for a judgment for the amount of the taxes, interest, or penalties appearing to be due, the enforcement of any lien in favor of the state, and an injunction to restrain such entity and its officers, directors, and managing agents from the transaction of any business within this state, other than such acts as are incidental to liquidation or winding up, until the payment of such taxes, interest, and penalties, and the costs of the proceeding fixed by the court, or the making and filing of such report or return.

The petition shall be in the name of the state. Any of the qualifying entities or electing pass-through entities having its principal places of business in the county may be joined in one suit. On the motion of the attorney general, the court of common pleas shall enter an order requiring all defendants to answer by a day certain, and may appoint a special master commissioner to take testimony, with such other power and authority as the court confers, and permitting process to be served by registered mail and by publication in a newspaper of general circulation in the county, which publication need not be made more than once, setting forth the name of each delinquent entity, the matter in which the entity is delinquent, the names of its officers, directors, and managing agents, if set forth in the petition, and the amount of any taxes, fees, or penalties claimed to be owing by the entity.

All or any of the trustees or other fiduciaries, officers, directors, investors, beneficiaries, or managing agents of any qualifying entity or electing pass-through entity may be joined as defendants with such entity.

If it appears to the court upon hearing that any qualifying entity or electing pass-through entity that is a party to the proceeding is indebted to the state for taxes imposed under section 5733.41, 5747.38, or 5747.41 of the Revised Code, or interest or penalties thereon, judgment shall be entered therefor with interest; and if it appears that any qualifying entity or electing pass-through entity has failed to make or file any report or return, a mandatory injunction may be issued against the entity, its trustees or other fiduciaries, officers, directors, and managing agents, enjoining them from the transaction of any business within this state, other than acts incidental to liquidation or winding up, until the making and filing of all proper reports or returns and until the payment in full of all taxes, interest, and penalties.

If the trustees or other fiduciaries, officers, directors, investors, beneficiaries, or managing agents of a qualifying entity or an electing pass-through entity are not made parties in the first instance, and a judgment or an injunction is rendered or issued against the entity, those officers, directors, investors, or managing agents may be made parties to such proceedings upon the motion of the attorney general, and, upon notice to them of the form and terms of such injunction, they shall be bound thereby as fully as if they had been made parties in the first instance.

In any action authorized by this division, a statement of the tax commissioner, or the secretary of state, when duly certified, shall be prima-facie evidence of the amount of taxes, interest, or penalties due from any qualifying entity or electing pass-through entity, or of the failure of any such entity to file with the commissioner or the secretary of state any report required by law, and any such certificate of the commissioner or the secretary of state may be required in evidence in any such proceeding.

On the application of any defendant and for good cause shown, the court may order a separate hearing of the issues as to any defendant.

The costs of the proceeding shall be apportioned among the parties as the court deems proper.

The court in such proceeding may make, enter, and enforce such other judgments and orders and grant such other relief as is necessary or incidental to the enforcement of the claims and lien of the state.

In the performance of the duties enjoined upon the attorney general by this division, the attorney general may direct any prosecuting attorney to bring an action, as authorized by this division, in the name of the state with respect to any delinquent qualifying entities or delinquent electing pass-through entities within the prosecuting attorney's county, and like proceedings and orders shall be had as if such action were instituted by the attorney general.

(D) If any qualifying entity or electing pass-through entity fails to make and file the reports or returns required under this chapter, or to pay the penalties provided by law for failure to make and file such reports or returns for a period of ninety days after the time prescribed by this chapter, the attorney general, on the request of the tax commissioner, shall commence an action in quo warranto in the court of appeals of the county in which that entity has its principal place of business to forfeit and annul its privileges and franchises. If the court is satisfied that any such entity is in default, it shall render judgment ousting such entity from the exercise of its privileges and franchises within this state, and shall otherwise proceed as provided in sections 2733.02 to 2733.39 of the Revised Code.

Last updated September 6, 2023 at 3:55 PM

Section 5747.453 | Personal liability of employee or beneficiary of, or investor in, a qualifying entity for failure to file report or pay tax.

• Effective: June 14, 2022
• Latest Legislation: Senate Bill 246 - 134th General Assembly

An employee, an owner, or a beneficiary of, or an investor in, a qualifying entity or an electing pass-through entity having control or supervision of, or charged with the responsibility for, filing returns and making payments, or any trustee or other fiduciary, officer, member, or manager of the entity who is responsible for the execution of the entity's fiscal responsibilities, is personally liable for the failure to file any report or to pay any tax due as required by sections 5747.40 to 5747.453 of the Revised Code. The dissolution, termination, or bankruptcy of a qualifying entity or an electing pass-through entity does not discharge a responsible trustee's, fiduciary's, officer's, member's, manager's, employee's, investor's, owner's, or beneficiary's liability for failure of the entity to file any report or pay any tax due as required by those sections. The sum due for the liability may be collected by assessment in the manner provided in section 5747.13 of the Revised Code.

Last updated July 28, 2022 at 4:07 PM

Section 5747.46 | Library and local government support fund definitions.

• Effective: June 30, 2011
• Latest Legislation: House Bill 153 - 129th General Assembly

As used in sections 5747.46 and 5747.47 of the Revised Code:

(A) "Year's fund balance" means the amount credited to the public library fund during a calendar year.

(B) "Distribution year" means the calendar year during which a year's fund balance is distributed under section 5747.47 of the Revised Code.

(C) "CPI" means the consumer price index for all urban consumers (United States city average, all items), prepared by the United States department of labor, bureau of labor statistics.

(D) "Inflation factor" means the quotient obtained by dividing the CPI for May of the year preceding the distribution year by the CPI for May of the second preceding year. If the quotient so obtained is less than one, the inflation factor shall equal one.

(E) "Population" means whichever of the following has most recently been issued, as of the first day of June preceding the distribution year:

(1) The most recent decennial census figures that include population figures for each county in the state;

(2) The most current issue of "Current Population Reports: Local Population Estimates" issued by the United States bureau of the census that contains population estimates for each county in the state and the state.

(F) "County's equalization ratio for a distribution year" means a percentage computed for that county as follows:

(1) Square the per cent that the county's population is of the state's population;

(2) Divide the product so obtained by the per cent that the county's total entitlement for the preceding year is of all counties' total entitlements for the preceding year;

(3) Divide the quotient so obtained by the sum of the quotients so obtained for all counties.

(G) "Total entitlement" means, with respect to a distribution year, the sum of a county's guaranteed share plus its share of the excess. For the 2012 distribution year, "total entitlement" equals the sum of payments made to a county public library fund during that year.

(1) "Guaranteed share" means, for a distribution year, the product obtained by multiplying a county's total entitlement for the preceding distribution year by the inflation factor. If the sum of the guaranteed shares for all counties exceeds the year's fund balance, the guaranteed shares of all counties shall be reduced by a percentage that will result in the sum of such guaranteed shares being equal to the year's fund balance.

(2) "Share of excess" means, for a distribution year, the product obtained by multiplying a county's equalization ratio by the difference between the year's fund balance and the sum of the guaranteed shares for all counties. If the sum of the guaranteed shares for all counties exceeds the year's fund balance the share of the excess for all counties is zero.

(H) "Net distribution" means the sum of the payments made to a county's public library fund during a distribution year, adjusted as follows:

(1) If the county received an overpayment during the preceding distribution year, add the amount of the overpayment;

(2) If the county received an underpayment during the preceding distribution year, deduct the amount of the underpayment.

(I) "Overpayment" or "underpayment" for a distribution year means the amount by which the net distribution to a county's public library fund during that distribution year exceeded or was less than the county's total entitlement for that year.

All computations made under this section shall be rounded to the nearest one-hundredth of one per cent.

Section 5747.47 | Estimating, certifying and distributing of county's share of library and local government support fund.

• Effective: September 29, 2013
• Latest Legislation: House Bill 59 - 130th General Assembly

(A)(1) By the twenty-fifth day of July of each year, the tax commissioner shall estimate and certify the following for each county to its county auditor:

(a) Its guaranteed share of the ensuing year's fund balance;

(b) Its share of the excess of the ensuing year's fund balance;

(c) Its total entitlement.

(2) In December and in June following such estimations and certifications, the commissioner shall revise such estimates and certify such revised estimates to the respective county auditors.

(B) By the tenth day of each month the commissioner shall distribute the amount credited to the public library fund in the current month under section 131.51 of the Revised Code. The distributions shall be made as follows:

(1) During the first six months of each year, each county shall be paid a percentage of the balance that is the same per cent that the revised estimate of the county's total entitlement certified in December under division (A)(2) of this section is of the sum of such revised estimates of the total entitlements for all counties.

(2) During the last six months, each county shall be paid a percentage of the balance that is the same per cent that the revised estimate of the county's total entitlement certified in June under division (A)(2) of this section is of the sum of such revised estimates of the total entitlements for all counties.

(3) During each of the first six months of each year, the payments made to each county shall be adjusted as follows:

(a) If the county received an overpayment during the preceding distribution year, reduce the sum of the payments by the amount of such overpayment. The reduction shall be apportioned over the six months.

(b) If the county received an underpayment during the preceding distribution year, increase the sum of the payments by the amount of such underpayment. The increase shall be apportioned over the six months.

(C) By the twentieth day of December of each year, the tax commissioner shall determine and certify to the auditor of each county each of the following with respect to the current distribution year:

(1) The year's fund balance;

(2) Each county's guaranteed share;

(3) Each county's share of the excess;

(4) Each county's total entitlement;

(5) Each county's net distribution;

(6) The amount by which each county's net distribution exceeded or was less than its total entitlement, which amount shall constitute the county's overpayment or underpayment for purposes of division (B)(3) of this section in the ensuing distribution year.

Section 5747.48 | Distribution of county library and local government support fund.

• Effective: June 20, 2008
• Latest Legislation: Senate Bill 185 - 127th General Assembly

On the fifteenth day of each month, the county treasurer shall distribute the balance in the county public library fund among the county, boards of public library trustees, municipal corporations, and boards of township park commissioners for which the county budget commission has fixed an allocation from the fund in that year in accordance with section 5705.32 of the Revised Code in the same proportions that each such entity's allocation as fixed by the commission is of the total of all such allocations in that year.

All money received into the treasury of a municipal corporation or county shall be credited to the general fund therein, provided that in a municipal corporation there shall be credited to the funds established under division (D) of section 5705.09 of the Revised Code a portion of the total amount to be credited to funds of the municipal corporation, which portion shall be determined by multiplying the total amount to be credited by the percentage that the funds credited under division (D) of said section in 1938 bore to all the funds credited under said section in 1938. If a municipal corporation is in default with respect to the principal or interest of any outstanding notes or bonds, the moneys distributed under this section shall be credited to the funds established under divisions (A), (B), (C), and (D) of section 5705.09 of the Revised Code, in the same proportion in which the funds derived from the levy for the previous year on the general tax list and duplicate are divided.

Section 5747.49 | Prohibiting later performance of duties.

• Effective: September 11, 1985
• Latest Legislation: House Bill 201 - 116th General Assembly

No county auditor or county treasurer, or the tax commissioner shall fail to perform any duty imposed on such officer by sections 5747.46 to 5747.48 of the Revised Code on or before the date specified by law for the performance of that duty.

Section 5747.50 | Apportioning local government fund to political subdivision or eligible taxing district.

• Effective: July 18, 2019
• Latest Legislation: House Bill 166 - 133rd General Assembly

(A) As used in this section:

(1) "County's proportionate share of the calendar year 2007 LGF and LGRAF distributions" means the percentage computed for the county under division (B)(1)(a) of section 5747.501 of the Revised Code.

(2) "County's proportionate share of the total amount of the local government fund additional revenue formula" means each county's proportionate share of the state's population as determined for and certified to the county for distributions to be made during the current calendar year under division (B)(2)(a) of section 5747.501 of the Revised Code. If prior to the first day of January of the current calendar year the federal government has issued a revision to the population figures reflected in the estimate produced pursuant to division (B)(2)(a) of section 5747.501 of the Revised Code, such revised population figures shall be used for making the distributions during the current calendar year.

(3) "2007 LGF and LGRAF county distribution base available in that month" means the lesser of the amounts described in division (A)(3)(a) and (b) of this section, provided that the amount shall not be less than zero:

(a) The total amount available for distribution to counties from the local government fund during the current month.

(b) The total amount distributed to counties from the local government fund and the local government revenue assistance fund to counties in calendar year 2007 less the total amount distributed to counties under division (B)(1) of this section during previous months of the current calendar year.

(4) "Local government fund additional revenue distribution base available during that month" means the total amount available for distribution to counties during the month from the local government fund, less any amounts to be distributed in that month from the local government fund under division (B)(1) of this section, provided that the local government fund additional revenue distribution base available during that month shall not be less than zero.

(5) "Total amount available for distribution to counties" means the total amount available for distribution from the local government fund during the current month less the total amount available for distribution to municipal corporations during the current month under division (C) of this section.

(B) On or before the tenth day of each month, the tax commissioner shall provide for payment to each county an amount equal to the sum of:

(1) The county's proportionate share of the calendar year 2007 LGF and LGRAF distributions multiplied by the 2007 LGF and LGRAF county distribution base available in that month, provided that if the 2007 LGF and LGRAF county distribution base available in that month is zero, no payment shall be made under division (B)(1) of this section for the month or the remainder of the calendar year; and

(2) The county's proportionate share of the total amount of the local government fund additional revenue formula multiplied by the local government fund additional revenue distribution base available during that month.

Money received into the treasury of a county under this division shall be credited to the undivided local government fund in the treasury of the county on or before the fifteenth day of each month. On or before the twentieth day of each month, the county auditor shall issue warrants against all of the undivided local government fund in the county treasury in the respective amounts allowed as provided in section 5747.51 of the Revised Code, and the treasurer shall distribute and pay such sums to the subdivision therein.

(C)(1) As used in division (C) of this section:

(a) "Total amount available for distribution to municipalities during the current month" means the difference obtained by subtracting one million dollars from the product obtained by multiplying the total amount available for distribution from the local government fund during the current month by the aggregate municipal share.

(b) "Aggregate municipal share" means the quotient obtained by dividing the total amount distributed directly from the local government fund to municipal corporations during calendar year 2007 by the total distributions from the local government fund and local government revenue assistance fund during calendar year 2007.

(c) A municipal corporation's "distribution share" equals one of the following:

(i) For municipal corporations with a population of more than fifty thousand, fifty thousand;

(ii) For municipal corporations with a population of less than one thousand, zero;

(iii) For all other municipal corporations, the municipal corporation's population.

(d) A municipal corporation's "distribution percentage" equals the percentage that a municipal corporation's distribution share is of the total of all municipal corporations' distribution shares.

(2) On or before the tenth day of each month, the tax commissioner shall provide for payment from the local government fund to each municipal corporation an amount equal to the product derived by multiplying the municipal corporation's distribution percentage by the total amount available for distribution to municipal corporations during the current month.

(3) Payments received by a municipal corporation under this division shall be paid into its general fund and may be used for any lawful purpose.

(4) The amount distributed to municipal corporations under this division during any calendar year shall not exceed the amount distributed directly from the local government fund to municipal corporations during calendar year 2007. If that maximum amount is reached during any month, distributions to municipal corporations in that month shall be as provided in divisions (C)(1) and (2) of this section, but no further distributions shall be made to municipal corporations under division (C) of this section during the remainder of the calendar year.

(5) Upon being informed of a municipal corporation's dissolution, the tax commissioner shall cease providing for payments to that municipal corporation under division (C) of this section. The proportionate shares of the total amount available for distribution to each of the remaining municipal corporations under this division shall be increased on a pro rata basis.

The tax commissioner shall reduce payments under division (C) of this section to municipal corporations for which reduced payments are required under section 5747.502 of the Revised Code.

(D) Each municipal corporation which has in effect a tax imposed under Chapter 718. of the Revised Code shall, no later than the thirty-first day of August of each year, certify to the tax commissioner, on a form prescribed by the commissioner, the amount of income tax revenue collected and refunded by such municipal corporation pursuant to such chapter during the preceding calendar year, arranged, when possible, by the type of income from which the revenue was collected or the refund was issued. The municipal corporation shall also report the amount of income tax revenue collected and refunded on behalf of a joint economic development district or a joint economic development zone that levies an income tax administered by the municipal corporation and the amount of such revenue distributed to contracting parties during the preceding calendar year. The tax commissioner may withhold payment of local government fund moneys pursuant to division (C) of this section from any municipal corporation for failure to comply with this reporting requirement.

(E)(1) For the purposes of division (E) of this section:

(a) "Eligible taxing district" means a township, township fire district, or joint fire district for which the total taxable value of eligible power plants for tax year 2017 is at least thirty per cent less than the total taxable value of eligible power plants for tax year 2016.

(b) "Eligible power plant" means a power plant that is subject to the requirements of 10 C.F.R. part 73.

(c) "Total taxable value of eligible power plants" of an eligible taxing district means the total taxable value of the taxable property of eligible power plants apportioned to the district as shown in a preliminary assessment or amended preliminary assessment and listed on the tax list of real and public utility property.

(d) "Taxable property" has the same meaning as in section 5727.01 of the Revised Code.

(e) "Tax rate" of an eligible taxing district means one of the following:

(i) For townships, the sum of the rates of levies imposed under section 505.39, 505.51, or division (I), (J), (U), or (JJ) of section 5705.19 of the Revised Code and extended on the tax list of real and public utility property for tax year 2017, excluding any levy imposed at whatever rate is required to raise a fixed sum of money;

(ii) For township fire districts and joint fire districts, the sum of the rates of levies extended on the tax list of real and public utility property for tax year 2017, excluding any levy imposed at whatever rate is required to raise a fixed sum of money.

(2) Each fiscal year from fiscal year 2018 through fiscal year 2028, the tax commissioner shall compute the following amount for each eligible taxing district:

(a) For fiscal years 2018 and 2019, the amount obtained by multiplying the eligible taxing district's tax rate by the difference obtained by subtracting (i) the total taxable value of eligible power plants of the district for tax year 2017 from (ii) the total taxable value of eligible power plants of the district for tax year 2016;

(b) For fiscal years 2020 through 2028, ninety per cent of the amount calculated for the district under division (E)(2)(a) or (b) of this section for the preceding fiscal year.

The commissioner shall certify the sum of the amounts calculated for all eligible taxing districts under this division for a fiscal year to the director of budget and management who, on or before the seventh day of each month of that fiscal year, shall transfer from the general revenue fund to the local government fund one-twelfth of the amount certified.

(3) On or before the tenth day of each month, the tax commissioner shall provide for payment to each county treasury in which an eligible taxing district is located an amount equal to one-twelfth of the amount computed for the district for that fiscal year under division (E)(2) of this section.

Money received into the treasury of a county under division (E) of this section shall be credited to the undivided local government fund in the treasury of the county on or before the fifteenth day of each month. On or before the twentieth day of each month, the county auditor shall issue warrants against the undivided local government fund for the amounts attributable to each eligible taxing district, and the treasurer shall distribute and pay such amounts to each eligible taxing district. Money received by a township fire district or joint fire district under this division shall be credited to the district's general fund and may be used for any lawful purpose of the district. Money received by a township under this division shall be credited to the township's general fund and shall be used for the purpose of funding fire, police, emergency medical, or ambulance services.

Section 5747.501 | Estimating and certifying amount for distribution into local government fund.

• Effective: April 30, 2024
• Latest Legislation: House Bill 101 - 135th General Assembly

(A) On or before the twenty-fifth day of July of each year, the tax commissioner shall estimate and certify to each county auditor the amount to be distributed from the local government fund to each undivided local government fund during the following calendar year under section 5747.50 of the Revised Code. The estimate shall equal the sum of the separate amounts computed under divisions (B)(1) and (2) of this section.

(B)(1) The product obtained by multiplying the percentage described in division (B)(1)(a) of this section by the amount described in division (B)(1)(b) of this section.

(a) Each county's proportionate share of the total amount distributed to the counties from the local government fund and the local government revenue assistance fund during calendar year 2007. In each fiscal year, the amount distributed to any county undivided local government fund shall be an amount not less than eight hundred fifty thousand dollars. To the extent necessary to implement this minimum distribution requirement, the proportionate shares computed under this division shall be adjusted accordingly.

(b) The total amount distributed to counties from the local government fund and the local government revenue assistance fund during calendar year 2007 adjusted downward if, and to the extent that, total local government fund distributions to counties for the following year are projected to be less than what was distributed to counties from the local government fund and local government revenue assistance fund during calendar year 2007.

(2) The product obtained by multiplying the percentage described in division (B)(2)(a) of this section by the amount described in division (B)(2)(b) of this section.

(a) Each county's proportionate share of the state's population as reflected in the most recent federal decennial census or the federal government's most recent census estimates, whichever represents the most recent year.

(b) The amount by which total estimated distributions from the local government fund during the immediately succeeding calendar year, less the total estimated amount to be distributed from the fund to municipal corporations under division (C) of section 5747.50 of the Revised Code during the immediately succeeding calendar year, exceed the total amount distributed to counties from the local government fund and local government revenue assistance fund during calendar year 2007.

Last updated February 12, 2024 at 9:20 AM

Section 5747.502 | Reports on fines resulting from traffic law photo-monitoring devices.

• Effective: October 22, 2020
• Latest Legislation: Senate Bill 163 - 133rd General Assembly

(A) As used in this section:

(1) "Local authority" and "traffic law photo-monitoring device" have the same meanings as in section 4511.092 of the Revised Code.

(2) "School zone" has the same meaning as in section 4511.21 of the Revised Code.

(3) "Transportation district" means a territorial district established by the director of transportation under section 5501.14 of the Revised Code.

(4) "District deputy director" means the person appointed and assigned by the director of transportation under section 5501.14 of the Revised Code to administer the activities of a transportation district.

(5) "Gross amount" means the entire amount of traffic camera fines and fees paid by a driver.

(6) "Local government fund adjustment" or "LGF adjustment" means the sum of:

(a) The gross amount of all traffic camera fines collected by a local authority during the preceding fiscal year, as reported under division (B)(1) of this section, if such a report is required; plus

(b) The residual adjustment computed for the local authority under division (B)(4) of this section, if such an adjustment applies.

(7) "Local government fund payments" or "LGF payments" means the payments a local authority would receive under sections 5747.502, 5747.51, and 5747.53, and division (C) of section 5747.50 of the Revised Code, as applicable, if not for the reductions required by divisions (C) and (D) of this section.

(8) "Residual adjustment" means the most recent LGF adjustment computed for a local authority under division (B)(2) or (3) of this section minus the sum of the reductions applied after that computation under division (C) of this section to the local authority's LGF payments.

(9) "Traffic camera fines" means civil fines for any violation of any local ordinance or resolution that are based upon evidence recorded by a traffic law photo-monitoring device.

(10) "Qualifying village" has the same meaning as in section 5747.503 of the Revised Code.

(B)(1) Annually, on or before the thirty-first day of July, any local authority that directly or indirectly collected traffic camera fines during the preceding fiscal year shall file a report with the tax commissioner that includes a detailed statement of the gross amount of all traffic camera fines the local authority collected during that period and the gross amount of such fines that the local authority collected for violations that occurred within a school zone.

(2) Annually, on or before the tenth day of August, the commissioner shall compute a local government fund adjustment for each local authority that files a report under division (B)(1) of this section or with respect to which a residual adjustment applies. Subject to division (B)(3) of this section, the LGF adjustment shall be used by the commissioner to determine the amount of the reductions required under division (C) of this section for each of the next twelve months, starting with the month in which the LGF adjustment is computed. After those twelve months, the LGF adjustment ceases to apply and, if an LGF adjustment continues to be required, the amount of the reductions required under division (C) of this section shall be determined based on an updated LGF adjustment computed under this division.

(3) Upon receipt of a report described by division (B)(1) of this section that is not timely filed, the commissioner shall do both of the following:

(a) If one or more payments to the local authority has been withheld under division (D) of this section because of the local authority's failure to file the report, notify the county auditor and county treasurer of the appropriate county that the report has been received and that, subject to division (C) of this section, payments to the local authority from the undivided local government fund are to resume.

(b) Compute the local authority's LGF adjustment using the information in the report. An LGF adjustment computed under this division shall be used by the commissioner to determine the amount of the reductions required under division (C) of this section starting with the next required reduction. The LGF adjustment ceases to apply on the thirty-first day of the ensuing July, following which, if an LGF adjustment continues to be required, the amount of the reductions required under division (C) of this section shall be determined based on an updated LGF adjustment computed under division (B)(2) of this section.

(4) Annually, on or before the tenth day of August, the commissioner shall compute a residual adjustment for each local authority whose LGF adjustment for the preceding year exceeds the amount by which the local authority's LGF payments were reduced during that year under division (C) of this section. The residual adjustment shall be used to compute the LGF adjustment for the ensuing year under division (B)(2) of this section.

(C) The commissioner shall do the following, as applicable, respecting any local authority to which an LGF adjustment computed under division (B) of this section applies:

(1) If the local authority is a municipal corporation with a population of one thousand or more, reduce payments to the municipal corporation under division (C) of section 5747.50 of the Revised Code by one-twelfth of the LGF adjustment. If one-twelfth of the LGF adjustment exceeds the amount of money the municipal corporation would otherwise receive under division (C) of section 5747.50 of the Revised Code, the commissioner also shall reduce payments to the appropriate county undivided local government fund under division (B) of section 5747.50 of the Revised Code by an amount equal to the lesser of (a) one-twelfth of the excess, or (b) the amount of the payment the municipal corporation would otherwise receive from the fund under section 5747.51 or 5747.53 of the Revised Code.

(2) If the local authority is a township or qualifying village, reduce the supplemental payments to the appropriate county undivided local government fund under section 5747.503 of the Revised Code by the lesser of one-twelfth of the LGF adjustment, or the amount of money the township or qualifying village would otherwise receive under that section. If one-twelfth of the LGF adjustment exceeds the amount of money the township or qualifying village would otherwise receive under section 5747.503 of the Revised Code, the commissioner also shall reduce payments to the appropriate county undivided local government fund under division (B) of section 5747.50 of the Revised Code by an amount equal to the lesser of (a) one-twelfth of the excess, or (b) the amount of the payment the township or qualifying village would otherwise receive from the fund under section 5747.51 or 5747.53 of the Revised Code.

(3) If the local authority is a county, reduce payments to the appropriate county undivided local government fund under division (B) of section 5747.50 of the Revised Code by an amount equal to the lesser of (a) one-twelfth of the LGF adjustment, or (b) the amount of the payment the county would otherwise receive from the fund under section 5747.51 or 5747.53 of the Revised Code.

(4) For any local authority, on or before the tenth day of each month a reduction is made under division (C)(1), (2), or (3) of this section, make a payment to the local authority in an amount equal to the lesser of (a) one-twelfth of the gross amount of traffic camera fines the local authority collected in the preceding fiscal year for violations that occurred within a school zone, as indicated on the report filed by the local authority pursuant to division (B)(1) of this section, or (b) the amount by which the local authority's LGF payments were reduced that month pursuant to division (C)(1), (2), or (3) of this section. Payments received by a local authority under this division shall be used by the local authority for school safety purposes.

(D) Upon discovery, based on information in the commissioner's possession, that a local authority required to file a report under division (B)(1) of this section has failed to do so, the commissioner shall do the following, as applicable:

(1) If the local authority is a municipal corporation with a population of one thousand or more, cease providing for payments to the municipal corporation under section 5747.50 of the Revised Code beginning with the next required payment and until such time as the report is received by the commissioner;

(2) If the local authority is a township or qualifying village, reduce the supplemental payments to the appropriate county undivided local government fund under section 5747.503 of the Revised Code by an amount equal to the amount of such payments the local authority would otherwise receive under that section, beginning with the next required payment and until such time as the report is received by the commissioner;

(3) For any local authority, reduce payments to the appropriate county undivided local government fund under division (B) of section 5747.50 of the Revised Code by an amount equal to the amount of such payments the local authority would otherwise receive under section 5747.51 or 5747.53 of the Revised Code, beginning with the next required payment and until such time as the report is received by the commissioner;

(4) For any local authority, notify the county auditor and county treasurer that such payments are to cease until the commissioner notifies the auditor and treasurer under division (E) of this section that the payments are to resume.

(E) The commissioner shall notify the county auditor and county treasurer on or before the day the commissioner first reduces a county undivided local government fund payment to that county under division (C) of this section. The notice shall include the full amount of the reduction, a list of the local authorities to which the reduction applies, and the amount of reduction attributed to each such local authority. The commissioner shall send an updated notice to the county auditor and county treasurer any time the amount the reduction attributed to any local authority changes.

A county treasurer that receives a notice from the commissioner under this division or division (B)(3)(a) or (D)(4) of this section shall reduce, cease, or resume payments from the undivided local government fund to the local authority that is the subject of the notice as specified by the commissioner in the notice. Unless otherwise specified in the notice, the payments shall be reduced, ceased, or resumed beginning with the next required payment.

(F) There is hereby created in the state treasury the Ohio highway and transportation safety fund. On or before the tenth day of each month, the commissioner shall deposit in the fund an amount equal to the total amount by which payments to local authorities were reduced or ceased under division (C) or (D) of this section minus the total amount of payments made under division (C)(4) of this section. The amount deposited with respect to a local authority shall be credited to an account to be created in the fund for the transportation district in which that local authority is located. If the local authority is located within more than one transportation district, the amount credited to the account of each such transportation district shall be prorated on the basis of the number of centerline miles of public roads and highways in both the local authority and the respective districts. Amounts credited to a transportation district's account shall be used by the department of transportation and the district deputy director exclusively to enhance public safety on public roads and highways within that transportation district.

Last updated July 28, 2021 at 2:51 PM

Section 5747.503 | Payments to county undivided local government funds of supplement for townships.

• Effective: September 29, 2017
• Latest Legislation: House Bill 49 - 132nd General Assembly

(A) On or before the tenth day of each month, the tax commissioner shall provide for payment to each county undivided local government fund of a supplement for townships. The commissioner shall determine the amounts paid to each fund as follows:

(1) An amount equal to forty-one and sixty-seven one-hundredths per cent of one million dollars shall be divided among every county fund so that each township in the state receives an equal amount.

(2) An amount equal to forty-one and sixty-seven one-hundredths per cent of one million dollars shall be divided among every county fund so that each township receives a proportionate share based on the proportion that the total township road miles in the township is of the total township road miles in all townships in the state.

(B)(1) As used in this division, "qualifying village" means a village with a population of less than one thousand according to the most recent federal decennial census.

(2) On or before the tenth day of each month, the tax commissioner shall provide for payment to each county undivided local government fund of a supplement for qualifying villages. The commissioner shall determine the amounts paid to each fund as follows:

(a) An amount equal to eight and thirty-three one-hundredths per cent of one million dollars shall be divided among every county fund so that each qualifying village in the state receives an equal amount.

(b) An amount equal to eight and thirty-three one-hundredths per cent of one million dollars shall be divided among every county fund so that each qualifying village receives a proportionate share based on the proportion that the total village road miles in the qualifying village is of the total village road miles in all qualifying villages in the state.

(C) The tax commissioner shall separately identify to the county treasurer the amounts to be allocated to each township under divisions (A)(1) and (2) of this section and to each qualifying village under divisions (B)(2)(a) and (b) of this section. The treasurer shall transfer those amounts to townships and qualifying villages from the undivided local government fund.

(D) The tax commissioner shall update the road mile information used to determine payments under divisions (A) and (B) of this section at least once every five years, and may update such information more often at the commissioner's discretion.

Section 5747.51 | Allocating local government fund to county undivided local government funds.

• Effective: March 27, 2020
• Latest Legislation: House Bill 197 - 133rd General Assembly

(A) On or before the twenty-fifth day of July of each year, the tax commissioner shall make and certify to the county auditor of each county an estimate of the amount of the local government fund to be allocated to the undivided local government fund of each county for the ensuing calendar year, adjusting the total as required to account for subdivisions receiving local government funds under section 5747.502 of the Revised Code.

(B) At each annual regular session of the county budget commission convened pursuant to section 5705.27 of the Revised Code, each auditor shall present to the commission the certificate of the commissioner, the annual tax budget and estimates, and the records showing the action of the commission in its last preceding regular session. The commission, after extending to the representatives of each subdivision an opportunity to be heard, under oath administered by any member of the commission, and considering all the facts and information presented to it by the auditor, shall determine the amount of the undivided local government fund needed by and to be apportioned to each subdivision for current operating expenses, as shown in the tax budget of the subdivision. This determination shall be made pursuant to divisions (C) to (I) of this section, unless the commission has provided for a formula pursuant to section 5747.53 of the Revised Code. The commissioner shall reduce the amount of funds from the undivided local government fund to a subdivision required to receive reduced funds under section 5747.502 of the Revised Code.

Nothing in this section prevents the budget commission, for the purpose of apportioning the undivided local government fund, from inquiring into the claimed needs of any subdivision as stated in its tax budget, or from adjusting claimed needs to reflect actual needs. For the purposes of this section, "current operating expenses" means the lawful expenditures of a subdivision, except those for permanent improvements and except payments for interest, sinking fund, and retirement of bonds, notes, and certificates of indebtedness of the subdivision.

(C) The commission shall determine the combined total of the estimated expenditures, including transfers, from the general fund and any special funds other than special funds established for road and bridge; street construction, maintenance, and repair; state highway improvement; and gas, water, sewer, and electric public utilities operated by a subdivision, as shown in the subdivision's tax budget for the ensuing calendar year.

(D) From the combined total of expenditures calculated pursuant to division (C) of this section, the commission shall deduct the following expenditures, if included in these funds in the tax budget:

(1) Expenditures for permanent improvements as defined in division (E) of section 5705.01 of the Revised Code;

(2) In the case of counties and townships, transfers to the road and bridge fund, and in the case of municipalities, transfers to the street construction, maintenance, and repair fund and the state highway improvement fund;

(3) Expenditures for the payment of debt charges;

(4) Expenditures for the payment of judgments.

(E) In addition to the deductions made pursuant to division (D) of this section, revenues accruing to the general fund and any special fund considered under division (C) of this section from the following sources shall be deducted from the combined total of expenditures calculated pursuant to division (C) of this section:

(1) Taxes levied within the ten-mill limitation, as defined in section 5705.02 of the Revised Code;

(2) The budget commission allocation of estimated county public library fund revenues to be distributed pursuant to section 5747.48 of the Revised Code;

(3) Estimated unencumbered balances as shown on the tax budget as of the thirty-first day of December of the current year in the general fund, but not any estimated balance in any special fund considered in division (C) of this section;

(4) Revenue, including transfers, shown in the general fund and any special funds other than special funds established for road and bridge; street construction, maintenance, and repair; state highway improvement; and gas, water, sewer, and electric public utilities, from all other sources except those that a subdivision receives from an additional tax or service charge voted by its electorate or receives from special assessment or revenue bond collection. For the purposes of this division, where the charter of a municipal corporation prohibits the levy of an income tax, an income tax levied by the legislative authority of such municipal corporation pursuant to an amendment of the charter of that municipal corporation to authorize such a levy represents an additional tax voted by the electorate of that municipal corporation. For the purposes of this division, any measure adopted by a board of county commissioners pursuant to section 322.02, 4504.02, or 5739.021 of the Revised Code, including those measures upheld by the electorate in a referendum conducted pursuant to section 322.021, 4504.021, or 5739.022 of the Revised Code, shall not be considered an additional tax voted by the electorate.

Subject to division (F) of section 5705.29 of the Revised Code, money in a reserve balance account established by a county, township, or municipal corporation under section 5705.13 of the Revised Code shall not be considered an unencumbered balance or revenue under division (E)(3) or (4) of this section. Money in a reserve balance account established by a township under section 5705.132 of the Revised Code shall not be considered an unencumbered balance or revenue under division (E)(3) or (4) of this section.

If a county, township, or municipal corporation has created and maintains a nonexpendable trust fund under section 5705.131 of the Revised Code, the principal of the fund, and any additions to the principal arising from sources other than the reinvestment of investment earnings arising from such a fund, shall not be considered an unencumbered balance or revenue under division (E)(3) or (4) of this section. Only investment earnings arising from investment of the principal or investment of such additions to principal may be considered an unencumbered balance or revenue under those divisions.

(F) The total expenditures calculated pursuant to division (C) of this section, less the deductions authorized in divisions (D) and (E) of this section, shall be known as the "relative need" of the subdivision, for the purposes of this section.

(G) The budget commission shall total the relative need of all participating subdivisions in the county, and shall compute a relative need factor by dividing the total estimate of the undivided local government fund by the total relative need of all participating subdivisions.

(H) The relative need of each subdivision shall be multiplied by the relative need factor to determine the proportionate share of the subdivision in the undivided local government fund of the county; provided, that the maximum proportionate share of a county shall not exceed the following maximum percentages of the total estimate of the undivided local government fund governed by the relationship of the percentage of the population of the county that resides within municipal corporations within the county to the total population of the county as reported in the reports on population in Ohio by the department of development as of the twentieth day of July of the year in which the tax budget is filed with the budget commission:

Percentage of municipal population within the county:	Percentage share of the county shall not exceed:
Less than forty-one per cent	Sixty per cent
Forty-one per cent or more but less than eighty-one per cent	Fifty per cent
Eighty-one per cent or more	Thirty per cent

Where the proportionate share of the county exceeds the limitations established in this division, the budget commission shall adjust the proportionate shares determined pursuant to this division so that the proportionate share of the county does not exceed these limitations, and it shall increase the proportionate shares of all other subdivisions on a pro rata basis. In counties having a population of less than one hundred thousand, not less than ten per cent shall be distributed to the townships therein.

(I) The proportionate share of each subdivision in the undivided local government fund determined pursuant to division (H) of this section for any calendar year shall not be less than the product of the average of the percentages of the undivided local government fund of the county as apportioned to that subdivision for the calendar years 1968, 1969, and 1970, multiplied by the total amount of the undivided local government fund of the county apportioned pursuant to former section 5739.23 of the Revised Code for the calendar year 1970. For the purposes of this division, the total apportioned amount for the calendar year 1970 shall be the amount actually allocated to the county in 1970 from the state collected intangible tax as levied by section 5707.03 of the Revised Code and distributed pursuant to section 5725.24 of the Revised Code, plus the amount received by the county in the calendar year 1970 pursuant to division (B)(1) of former section 5739.21 of the Revised Code, and distributed pursuant to former section 5739.22 of the Revised Code. If the total amount of the undivided local government fund for any calendar year is less than the amount of the undivided local government fund apportioned pursuant to former section 5739.23 of the Revised Code for the calendar year 1970, the minimum amount guaranteed to each subdivision for that calendar year pursuant to this division shall be reduced on a basis proportionate to the amount by which the amount of the undivided local government fund for that calendar year is less than the amount of the undivided local government fund apportioned for the calendar year 1970.

(J) On the basis of such apportionment, the county auditor shall compute the percentage share of each such subdivision in the undivided local government fund and shall at the same time certify to the tax commissioner the percentage share of the county as a subdivision. No payment shall be made from the undivided local government fund, except in accordance with such percentage shares.

Within ten days after the budget commission has made its apportionment, whether conducted pursuant to section 5747.51 or 5747.53 of the Revised Code, the auditor shall publish a list of the subdivisions and the amount each is to receive from the undivided local government fund and the percentage share of each subdivision, in a newspaper or newspapers of countywide circulation, and send a copy of such allocation to the tax commissioner.

The county auditor shall also send a copy of such allocation by ordinary or electronic mail to the fiscal officer of each subdivision entitled to participate in the allocation of the undivided local government fund of the county. This copy shall constitute the official notice of the commission action referred to in section 5705.37 of the Revised Code.

All money received into the treasury of a subdivision from the undivided local government fund in a county treasury shall be paid into the general fund and used for the current operating expenses of the subdivision.

If a municipal corporation maintains a municipal university, such municipal university, when the board of trustees so requests the legislative authority of the municipal corporation, shall participate in the money apportioned to such municipal corporation from the total local government fund, however created and constituted, in such amount as requested by the board of trustees, provided such sum does not exceed nine per cent of the total amount paid to the municipal corporation.

If any public official fails to maintain the records required by sections 5747.50 to 5747.55 of the Revised Code or by the rules issued by the tax commissioner, the auditor of state, or the treasurer of state pursuant to such sections, or fails to comply with any law relating to the enforcement of such sections, the local government fund money allocated to the county may be withheld until such time as the public official has complied with such sections or such law or the rules issued pursuant thereto.

Section 5747.52 | Calculating subdivision share of undivided local government fund.

• Effective: March 27, 2020
• Latest Legislation: House Bill 197 - 133rd General Assembly

The form used by the county budget commission to calculate subdivision shares of the undivided local government fund as apportioned pursuant to section 5747.51 of the Revised Code shall be as follows:

Calculation of (name of subdivision) share of undivided local government fund for (name of county) county

Authorized expenditure for subdivision	Total
1. Estimated expenditures from general fund	_____
2. Estimated expenditures from special funds other than those established for road and bridge, street construction, maintenance, and state highway improvement, and for gas, water, sewer, and electric public utilities	_____
3. Total	_____
Deductions from authorized expenditures
4. Expenditures for permanent improvements	_____
5. Transfers to road and bridge fund (counties and townships only)	_____
6. Transfers to street construction, maintenance, and repair, and state highway improvements funds	_____
7. Expenditures for the payment of debt charges	_____
8. Expenditures for the payment of judgments	_____
9. Taxes levied inside the "ten-mill limitation"	_____
10. Budget commission allocation of estimated county public library fund revenues	_____
11. Estimated unencumbered balances as of December 31 of current year in the general funds as stated in the tax budget	_____
12. Revenue, including transfers, shown in the general fund or any special funds other than special funds established for road and bridge, street construction, maintenance, and repair, and state highway improvement, and for gas, water, sewer, and electric public utilities, from all other sources except those from additional taxes or service charges voted by electorate as defined in division (E)(4) of section 5747.51 of the Revised Code, and except revenue from special assessment and revenue bond collections	_____
13. Total	_____
Calculation of subdivision share
14. Relative need of subdivision (line 3 less line 13)	_____
15. Relative need factor for county (total estimate of undivided local government fund divided by total relative need of all participating subdivisions)	_____
16. Proportionate share of subdivision (relative need of subdivision multiplied by relative need factor)	_____
17. After any adjustments necessary to comply with statutory maximum share allowable to county	_____
18. After any adjustments necessary to comply with statutory minimum share allowable to townships	_____
19. After any adjustments necessary to comply with minimum guarantee in division (I) of section 5747.51 of the Revised Code	_____
20. Proportionate share of subdivision (line 16, 17, 18, or 19, whichever is appropriate)	_____

Section 5747.53 | Apportionment of undivided local government fund of county under an alternative method or on a formula basis.

• Effective: October 3, 2023
• Latest Legislation: House Bill 62 (GA 133), House Bill 33 (GA 135)

(A) As used in this section:

(1) "City, located wholly or partially in the county, with the greatest population" means the city, located wholly or partially in the county, with the greatest population residing in the county; however, if the county budget commission on or before January 1, 1998, adopted an alternative method of apportionment that was approved by the legislative authority of the city, located partially in the county, with the greatest population but not the greatest population residing in the county, "city, located wholly or partially in the county, with the greatest population" means the city, located wholly or partially in the county, with the greatest population whether residing in the county or not, if this alternative meaning is adopted by action of the board of county commissioners and a majority of the boards of township trustees and legislative authorities of municipal corporations located wholly or partially in the county.

(2) "Participating political subdivision" means a municipal corporation or township that satisfies all of the following:

(a) It is located wholly or partially in the county.

(b) It is not the city, located wholly or partially in the county, with the greatest population.

(c) Undivided local government fund moneys are apportioned to it under the county's alternative method or formula of apportionment in the current calendar year.

(B) In lieu of the method of apportionment of the undivided local government fund of the county provided by section 5747.51 of the Revised Code, the county budget commission may provide for the apportionment of the fund under an alternative method or on a formula basis as authorized by this section. The commissioner shall reduce the amount of funds from the undivided local government fund to a subdivision required to receive reduced funds under section 5747.502 of the Revised Code.

Except as otherwise provided in division (C) of this section, the alternative method of apportionment shall have first been approved by all of the following governmental units: the board of county commissioners; the legislative authority of the city, located wholly or partially in the county, with the greatest population; and a majority of the boards of township trustees and legislative authorities of municipal corporations, located wholly or partially in the county, excluding the legislative authority of the city, located wholly or partially in the county, with the greatest population. In granting or denying approval for an alternative method of apportionment, the board of county commissioners, boards of township trustees, and legislative authorities of municipal corporations shall act by motion. A motion to approve shall be passed upon a majority vote of the members of a board of county commissioners, board of township trustees, or legislative authority of a municipal corporation, shall take effect immediately, and need not be published.

Any alternative method of apportionment adopted and approved under this division shall be reviewed by the county budget commission at a public hearing held at least once in the year following the effective date of this amendment and in every fifth year thereafter. The county budget commission shall provide reasonable advance notice of the hearing to all political subdivisions eligible to participate in the fund and shall take public testimony from any such political subdivision that wishes to testify.

Any alternative method of apportionment adopted and approved under this division may be revised, amended, or repealed in the same manner as it may be adopted and approved. If an alternative method of apportionment adopted and approved under this division is repealed, the undivided local government fund of the county shall be apportioned among the subdivisions eligible to participate in the fund, commencing in the ensuing calendar year, under the apportionment provided in section 5747.52 of the Revised Code, unless the repeal occurs by operation of division (C) of this section or a new method for apportionment of the fund is provided in the action of repeal.

(C) This division applies only in counties in which the city, located wholly or partially in the county, with the greatest population has a population of twenty thousand or less and a population that is less than fifteen per cent of the total population of the county. In such a county, the legislative authorities or boards of township trustees of two or more participating political subdivisions, which together have a population residing in the county that is a majority of the total population of the county, each may adopt a resolution to exclude the approval otherwise required of the legislative authority of the city, located wholly or partially in the county, with the greatest population. All of the resolutions to exclude that approval shall be adopted not later than the first Monday of August of the year preceding the calendar year in which distributions are to be made under an alternative method of apportionment.

A motion granting or denying approval of an alternative method of apportionment under this division shall be adopted by a majority vote of the members of the board of county commissioners and by a majority vote of a majority of the boards of township trustees and legislative authorities of the municipal corporations located wholly or partially in the county, other than the city, located wholly or partially in the county, with the greatest population, shall take effect immediately, and need not be published. The alternative method of apportionment under this division shall be adopted and approved annually, not later than the first Monday of August of the year preceding the calendar year in which distributions are to be made under it. A motion granting approval of an alternative method of apportionment under this division repeals any existing alternative method of apportionment, effective with distributions to be made from the fund in the ensuing calendar year. An alternative method of apportionment under this division shall not be revised or amended after the first Monday of August of the year preceding the calendar year in which distributions are to be made under it.

(D) In determining an alternative method of apportionment authorized by this section, the county budget commission may include in the method any factor considered to be appropriate and reliable, in the sole discretion of the county budget commission.

(E) The limitations set forth in section 5747.51 of the Revised Code, stating the maximum amount that the county may receive from the undivided local government fund and the minimum amount the townships in counties having a population of less than one hundred thousand may receive from the fund, are applicable to any alternative method of apportionment authorized under this section.

(F) On the basis of any alternative method of apportionment adopted and approved as authorized by this section, as certified by the auditor to the county treasurer, the county treasurer shall make distribution of the money in the undivided local government fund to each subdivision eligible to participate in the fund, and the auditor, when the amount of those shares is in the custody of the treasurer in the amounts so computed to be due the respective subdivisions, shall at the same time certify to the tax commissioner the percentage share of the county as a subdivision. All money received into the treasury of a subdivision from the undivided local government fund in a county treasury shall be paid into the general fund and used for the current operating expenses of the subdivision. If a municipal corporation maintains a municipal university, the university, when the board of trustees so requests the legislative authority of the municipal corporation, shall participate in the money apportioned to the municipal corporation from the total local government fund, however created and constituted, in the amount requested by the board of trustees, provided that amount does not exceed nine per cent of the total amount paid to the municipal corporation.

(G) The actions of the county budget commission taken pursuant to this section are final and may not be appealed to the board of tax appeals, except on the issues of abuse of discretion and failure to comply with the formula.

The Legislative Service Commission presents the text of this section as a composite of the section as amended by multiple acts of the General Assembly. This presentation recognizes the principle stated in R.C. 1.52(B) that amendments are to be harmonized if reasonably capable of simultaneous operation.

Last updated August 18, 2023 at 4:29 PM

Section 5747.54 | Failure to certify percentage share of the undivided local government fund.

• Effective: June 30, 2007
• Latest Legislation: House Bill 119 - 127th General Assembly

The tax commissioner may withhold distributions of local government fund money to any county where the county auditor has failed to certify to the tax commissioner the percentage share of the undivided local government fund of the county as a subdivision for the year for which distribution is to be made. The director of budget and management may direct the tax commissioner to withhold from a county the percentage of the amount distributable thereto that constitutes the share of the county as a subdivision of the local government fund so long as such county is indebted or otherwise obligated to the state, until such indebtedness or other obligation has been duly paid, but no distribution of such percentage share of the local government fund shall be withheld unless an itemized statement of such indebtedness is furnished the county auditor of the county from which the indebtedness is due at least thirty days prior to the withholding of the distribution.

Any indebtedness or obligation of the state to a county shall be deducted from the amount owing to the state by such county in determining the indebtedness or obligation as to which distribution is withheld.

Section 5747.55 | Appealing county budget commission action.

• Effective: March 27, 2020
• Latest Legislation: House Bill 197 - 133rd General Assembly

The action of the county budget commission under section 5747.51 of the Revised Code may be appealed to the board of tax appeals in the manner and with the effect provided in section 5705.37 of the Revised Code, in accordance with the following rules:

(A) The notice of appeal shall be signed by the authorized fiscal officer and shall set forth in clear and concise language:

(1) A statement of the action of the budget commission appealed from, and the date of the receipt by the subdivision of the official certificate or notice of such action;

(2) The error or errors the taxing district believes the budget commission made;

(3) The specific relief sought by the taxing district.

(B) The notice of appeal shall have attached thereto:

(1) A certified copy of the resolution of the taxing authority authorizing the fiscal officer to file the appeal;

(2) An exact copy of the official certificate, or notice of the action of the budget commission appealed from;

(3) An exact copy of the budget request filed with the budget commission by the complaining subdivision, with the date of filing noted thereon.

(C) There shall also be attached to the notice of appeal a statement showing:

(1) The name of the fund involved, the total amount in dollars allocated, and the exact amount in dollars allocated to each participating subdivision;

(2) The amount in dollars which the complaining subdivision believes it should have received;

(3) The name of each participating subdivision, as well as the name and address of the fiscal officer thereof, that the complaining subdivision believes received more than its proper share of the allocation, and the exact amount in dollars of such alleged over-allocation.

(D) Only the participating subdivisions named pursuant to division (C) of this section are to be considered as appellees before the board of tax appeals and no change shall, in any amount, be made in the amount allocated to participating subdivisions not appellees.

(E) The total of the undivided local government fund or undivided local government revenue assistance fund to be allocated by the board of tax appeals upon appeal is the total of that fund allocated by the budget commission to those subdivisions which are appellants and appellees before the board of tax appeals.

Section 5747.60 | Delegating investigation powers of tax commissioner.

• Effective: December 2, 1996
• Latest Legislation: House Bill 670 - 121st General Assembly

For purposes of enforcing this chapter, the tax commissioner, in accordance with section 5743.45 of the Revised Code, may delegate any investigation powers of the commissioner to any employee of the department of taxation who has been certified by the Ohio peace officer training commission and who is engaged in the enforcement of this chapter. Upon such a delegation in accordance with that section, the provisions of that section relative to the powers and authority of the employee and the suspension or revocation of the delegation apply. No employee of the department shall divulge any information acquired as a result of any investigation pursuant to this chapter, except as may be required by the commissioner or a court.

The department shall cooperate with the attorney general, local law enforcement officials, and the appropriate agencies of the federal government and other states in the investigation and prosecution of violations of this chapter.

Section 5747.66 | Credit for any individual who is the certificate owner of a tax credit certificate.

• Effective: February 15, 2016
• Latest Legislation: Senate Bill 208 - 131st General Assembly

(A) Any term used in this section has the same meaning as in section 122.85 of the Revised Code.

(B) There is allowed a credit against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for any individual who, on the last day of the individual's taxable year, is the certificate owner of a tax credit certificate issued under section 122.85 of the Revised Code. The credit shall be claimed for the taxable year that includes the date the certificate was issued by the director of development. The credit amount equals the amount stated in the certificate. The credit shall be claimed in the order required under section 5747.98 of the Revised Code. If the credit amount exceeds the aggregate amount of tax otherwise due under section 5747.02 of the Revised Code after deducting all other credits in that order, the excess shall be refunded.

Nothing in this section limits or disallows pass-through treatment of the credit.

Section 5747.67 | Film and theater capital improvement tax credit.

• Effective: April 30, 2024
• Latest Legislation: House Bill 101 - 135th General Assembly

(A) Any term used in this section has the same meaning as in section 122.852 of the Revised Code.

(B) There is allowed a credit against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for any taxpayer who, on the last day of the taxpayer's taxable year, is the certificate owner of a tax credit certificate issued under section 122.852 of the Revised Code. The credit shall be claimed for the taxpayer's taxable year that includes the date the certificate was issued by the director of development. The credit amount equals the amount stated in the certificate or the portion of that amount owned by the certificate owner. The credit shall be claimed in the order required under section 5747.98 of the Revised Code. If the credit amount exceeds the aggregate amount of tax otherwise due under section 5747.02 of the Revised Code after deducting all other credits in that order, the excess shall be refunded.

(C) Nothing in this section limits or disallows pass-through treatment of the credit.

Last updated February 12, 2024 at 9:21 AM

Section 5747.70 | Deductions for contributions to college savings programs.

• Effective: April 3, 2023
• Latest Legislation: Senate Bill 33 - 134th General Assembly

(A) In computing Ohio adjusted gross income, a deduction from federal adjusted gross income is allowed to a taxpayer who contributes to or purchases tuition units under a qualified tuition program established in accordance with section 529 of the Internal Revenue Code. The amount of the deduction shall equal the amount contributed or purchased during the taxable year to the extent that the amounts of such contributions and purchases were not deducted in determining the contributor's or purchaser's federal adjusted gross income for the taxable year. The combined amount of contributions and purchases deducted in any taxable year by a taxpayer or the taxpayer and the taxpayer's spouse, regardless of whether the taxpayer and the taxpayer's spouse file separate returns or a joint return, is limited to four thousand dollars for each beneficiary for whom contributions or purchases are made. If the combined annual contributions and purchases for a beneficiary exceed four thousand dollars, the excess may be carried forward and deducted in future taxable years until the contributions and purchases have been fully deducted.

(B) In computing Ohio adjusted gross income, a deduction from federal adjusted gross income is allowed for:

(1) Income related to tuition units and contributions that as of the end of the taxable year have not been refunded pursuant to the termination of a qualified tuition program payment contract or account to the extent that such income is included in federal adjusted gross income.

(2) The excess of the total purchase price of tuition units refunded during the taxable year pursuant to the termination of a qualified tuition program payment contract over the amount of the refund, to the extent the amount of the excess was not deducted in determining federal adjusted gross income. Division (B)(2) of this section applies only to units for which no deduction was allowable under division (A) of this section.

(C) In computing Ohio adjusted gross income, there shall be added to federal adjusted gross income the amount of loss related to tuition units and contributions that as of the end of the taxable year have not been refunded pursuant to the termination of a qualified tuition program payment contract or account to the extent that such loss was deducted in determining federal adjusted gross income.

(D) For taxable years in which distributions or refunds are made under a qualified tuition program for any reason other than payment of higher education expenses, or the beneficiary's death, disability, or receipt of a scholarship as described in section 3334.10 of the Revised Code:

(1) If the distribution or refund is paid to the purchaser or contributor or beneficiary, any portion of the distribution or refund not included in the recipient's federal adjusted gross income shall be added to the recipient's federal adjusted gross income in determining the recipient's Ohio adjusted gross income, except that the amount added shall not exceed amounts previously deducted under division (A) of this section less any amounts added under division (D)(1) of this section in a prior taxable year.

(2) If amounts paid by a purchaser or contributor on or after January 1, 2000, are distributed or refunded to someone other than the purchaser or contributor or beneficiary, the amount of the payment not included in the recipient's federal adjusted gross income, less any amounts added under division (D) of this section in a prior taxable year, shall be added to the recipient's federal adjusted gross income in determining the recipient's Ohio adjusted gross income.

Last updated February 8, 2023 at 3:24 PM

Section 5747.71 | Earned income tax credit.

• Effective: July 3, 2019
• Latest Legislation: House Bill 62 - 133rd General Assembly

There is hereby allowed a nonrefundable credit against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for a taxpayer who is an "eligible individual" as defined in section 32 of the Internal Revenue Code. The credit shall equal thirty per cent of the federal credit allowed for the taxable year. The credit shall not exceed the aggregate amount of tax otherwise due under section 5747.02 of the Revised Code after deducting any other nonrefundable credits that precede the credit allowed under this section in the order prescribed by section 5747.98 of the Revised Code.

The credit shall be claimed in the order prescribed by section 5747.98 of the Revised Code.

Section 5747.72 | Credit for home instruction expenses.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

(A) As used in this section:

(1) "Qualifying taxpayer" means a taxpayer that is an individual with a dependent who is a qualifying student.

(2) "Qualifying student" means a student who is exempt from the compulsory attendance law for the purpose of home education under section 3321.042 of the Revised Code for the school year.

(3) "Education expenses" means expenses or fees for any of the following items used directly for home education of a qualifying student: books, supplementary materials, supplies, computer software, applications, or subscriptions. "Education expenses" does not include expenses or fees for computers or similar electronic devices or accessories thereto.

(B) There is hereby allowed a nonrefundable credit against a qualifying taxpayer's aggregate tax liability under section 5747.02 of the Revised Code equal to the lesser of two hundred fifty dollars or the amount of education expenses incurred by the taxpayer in the taxable year for the benefit of one or more of the taxpayer's qualifying students. The credit shall be claimed in the order required under section 5747.98 of the Revised Code.

The tax commissioner may request that a qualifying taxpayer claiming a credit under this section furnish information as is necessary to support the claim for the credit under this section, and no credit shall be allowed unless the requested information is provided.

Last updated September 20, 2023 at 4:43 PM

Section 5747.73 | Credit for donations to scholarship organizations.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

(A) As used in this section, "scholarship granting organization" means an entity that is certified as such by the attorney general under division (C) of this section.

(B) There is hereby allowed a nonrefundable credit against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for a taxpayer that donates cash to scholarship granting organizations during the taxable year or on or before the due date, unextended under division (G) of section 5747.08 of the Revised Code, for filing the tax return for the taxable year as described in that division. A credit may not be claimed for two taxable years on the basis of the same contribution. The credit shall equal the amount of cash donations made by the taxpayer and, if filing a joint return, the taxpayer's spouse, except that the credit shall not exceed, for any taxable year, one thousand five hundred dollars for spouses filing a joint return or seven hundred fifty dollars for all other taxpayers. If a taxpayer files a joint return, the credit amount attributable to donations made by each spouse shall not exceed seven hundred fifty dollars. The credit shall be claimed in the order required under section 5747.98 of the Revised Code.

If the taxpayer is a direct or indirect investor in a pass-through entity that donates cash to scholarship granting organizations during the taxable year, the taxpayer may claim its proportionate or distributive share of the credit allowed under this section, except that the share that may be claimed by all such investors may not exceed seven hundred fifty dollars for any taxable year.

The credit authorized by this section is not allowed unless the taxpayer claiming the credit provides to the tax commissioner, in the form and manner required by the commissioner, a copy of a receipt or other document issued by the scholarship granting organization acknowledging the taxpayer's contribution to the organization and the amount of the contribution. The commissioner may require a taxpayer to furnish any other information necessary to support a claim for the credit. No credit shall be allowed unless a copy of such document or other required information is provided.

(C) An entity may apply to the attorney general, on forms and in the manner prescribed by the attorney general, to be certified so that contributions to the entity qualify for the tax credit authorized under this section. The attorney general shall certify an entity as a scholarship granting organization if the entity submits information and documentation, to the attorney general's satisfaction, establishing that the entity satisfies the following:

(1) It is a religious or nonreligious nonprofit organization exempt from federal taxation under section 501(a) of the Internal Revenue Code as an organization described in section 501(c)(3) of the Internal Revenue Code.

(2) It primarily awards academic scholarships for primary and secondary school students.

(3) It prioritizes awarding its scholarships to low-income primary and secondary school students.

The attorney general shall notify the applicant of the attorney general's determination within thirty days after the attorney general receives the application. The attorney general shall maintain a list of all scholarship granting organizations. As soon as is practicable after compiling or updating this list, the attorney general shall furnish the list to the tax commissioner, who shall post the list or updated list to the department of taxation's web site.

The attorney general shall adopt rules necessary to determine eligibility for and administer the credit authorized under this section.

Last updated August 23, 2023 at 3:39 PM

Section 5747.75 | Credit for dependents who attend nonchartered nonpublic school.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

A nonrefundable credit is allowed against a taxpayer's aggregate liability under section 5747.02 of the Revised Code for taxpayers with one or more dependents who attend a nonchartered nonpublic school. The amount of the credit shall equal the lesser of the total tuition paid by the taxpayer and, if filing a joint return, the taxpayer's spouse during the taxable year for all of the taxpayer's dependents to attend such a school or the following amount, as applicable:

(A) If the taxpayer's or, if filing a joint return, the taxpayer's and the taxpayer's spouses' total federal adjusted gross income is less than fifty thousand dollars for the taxable year, one thousand dollars;

(B) If the taxpayer's or, if filing a joint return, the taxpayer's and the taxpayer's spouses' total federal adjusted gross income equals or exceeds fifty thousand dollars, one thousand five hundred dollars.

The credit shall be claimed in the order prescribed by section 5747.98 of the Revised Code.

Last updated November 4, 2024 at 11:25 AM

Section 5747.76 | Refundable income tax credit for owner of RC 149.311 certificate.

• Effective: February 15, 2016
• Latest Legislation: Senate Bill 208 - 131st General Assembly

(A) As used in this section, "certificate owner" has the same meaning as in section 149.311 of the Revised Code.

(B) There is allowed a credit against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for a taxpayer that is the certificate owner of a rehabilitation tax credit certificate issued under section 149.311 of the Revised Code. The credit shall equal twenty-five per cent of the dollar amount indicated on the certificate, but the amount of credit allowed for any taxpayer shall not exceed five million dollars. The credit shall be claimed for the taxable year specified in the certificate and in the order required under section 5747.98 of the Revised Code.

(C) Nothing in this section limits or disallows pass-through treatment of the credit if the certificate owner is a pass-through entity. If the certificate owner is a pass-through entity, the amount of the credit allowed for the pass-through entity shall not exceed five million dollars. If the certificate owner is a pass-through entity, the credit may be allocated among the entity's equity owners in proportion to their ownership interests or in such proportions or amounts as the equity owners mutually agree.

(D) If the credit allowed for any taxable year exceeds the aggregate amount of tax otherwise due under section 5747.02 of the Revised Code, after allowing for any other credits preceding the credit in the order prescribed by section 5747.98 of the Revised Code, the excess shall be refunded to the taxpayer but, if any amount of the credit is refunded, the sum of the amount refunded and the amount applied to reduce the aggregate amount of tax otherwise due for that year shall not exceed three million dollars or, if the certificate owner is a pass-through entity, shall not exceed the taxpayer's distributive or proportionate share, as allocated under division (C) of this section, of three million dollars. The taxpayer may carry forward any balance of the credit in excess of the amount claimed for that year for not more than five ensuing taxable years, and shall deduct any amount claimed for any such year from the amount claimed in an ensuing year.

(E) A taxpayer claiming a credit under this section shall retain the rehabilitation tax credit certificate for four years following the end of the taxable year to which the credit was applied, and shall make the certificate available for inspection by the tax commissioner upon the request of the tax commissioner during that period.

Section 5747.77 | Beginning farmer tax credits.

• Effective: July 18, 2022
• Latest Legislation: House Bill 95 - 134th General Assembly

(A) There is hereby allowed a nonrefundable credit against a taxpayer's aggregate liability under section 5747.02 of the Revised Code for a taxpayer that is issued a credit certificate under division (D) of section 901.61 of the Revised Code. The credit shall be claimed for the taxable year during which the certificate is issued.

The credit shall be claimed in the order required under section 5747.98 of the Revised Code. If a credit exceeds the aggregate amount of tax otherwise due for a taxable year, the excess may be carried forward and applied against the tax due for not more than seven succeeding taxable years, provided that the amount applied to the tax due for any taxable year shall be subtracted from the amount available to carry forward to succeeding years.

(B) There is hereby allowed a nonrefundable credit against a taxpayer's aggregate liability under section 5747.02 of the Revised Code for a taxpayer that is issued a credit certificate under division (E) of section 901.61 of the Revised Code. The credit shall be claimed for the taxable year during which the certificate is issued.

The credit shall be claimed in the order required under section 5747.98 of the Revised Code. If a credit exceeds the aggregate amount of tax otherwise due for the taxable year, the excess may be carried forward and applied against the tax due for not more than three succeeding taxable years, provided that the amount applied to the tax due for any taxable year shall be subtracted from the amount available to carry forward to succeeding years.

Last updated May 11, 2022 at 2:52 PM

Section 5747.78 | Deductions for amounts contributed to ABLE savings account.

• Effective: October 12, 2016
• Latest Legislation: House Bill 483 - 131st General Assembly

In computing Ohio adjusted gross income, a deduction from federal adjusted gross income is allowed to a contributor for amounts contributed during the taxable year to an ABLE savings account opened in accordance with sections 113.50 to 113.56 of the Revised Code to the extent that the amounts contributed have not been deducted in computing the contributor's federal adjusted gross income for the taxable year. The total amount of contributions deducted for any taxable year by a taxpayer or the taxpayer and the taxpayer's spouse, regardless of whether the taxpayer and the taxpayer's spouse file separate returns or a joint return, shall not exceed the annual contribution limit for each beneficiary for whom contributions are made. If the total annual contributions for a beneficiary exceed the annual contribution limit, the excess may be carried forward and deducted in future taxable years until the contributions have been fully deducted.

As used in this section, "annual contribution limit" means the limit prescribed in section 5747.70 of the Revised Code on the dollar amount of contributions and purchases that a taxpayer, or a taxpayer and the taxpayer's spouse, may deduct during a taxable year under that section with respect to each beneficiary for whom contributions or purchases are made.

Section 5747.79 | Deduction for capital gains from sale of business.

• Effective: September 30, 2021
• Latest Legislation: House Bill 110 - 134th General Assembly

(A) As used in this section and division (A)(34) of section 5747.01 of the Revised Code:

(1) "Qualifying capital gain" means a capital gain from the sale of an interest in an entity reported for the taxable year to the internal revenue service pursuant to the Internal Revenue Code, to the extent that such capital gain is not otherwise deducted or excluded in computing federal or Ohio adjusted gross income for the taxable year, provided that all of the following apply:

(a) The taxpayer that sold the interest either:

(i) Materially participated in the activities of the entity for the five years immediately preceding the time of sale. For the purposes of this division, a taxpayer materially participates in the activities of the entity if the taxpayer meets the requirements of divisions (a)(1), (2), (3), (4), or (7) of 26 C.F.R. 1.469-5T.

(ii) Directly or indirectly made a venture capital investment of at least one million dollars in the entity. As used in this division, "venture capital investment" has the same meaning as in division (d)(3) of 29 C.F.R. 2510.3-101.

(b) The entity is incorporated, registered, or organized in this state during the five years immediately preceding the time of sale.

(c) The entity is headquartered in this state during the five years immediately preceding the time of sale.

(2) A "sale of an interest in an entity" includes the sale, exchange, or other disposition of stock, a membership interest, or any other equity or ownership interest, owned directly or indirectly by the taxpayer, in an entity that conducts a trade or business in this state.

(3) "Qualifying payroll" means the amount of compensation used to determine the withholding obligations in division (A) of section 5747.06 of the Revised Code and paid over one of the following periods by the entity whose sale generated the qualifying capital gain:

(a) The five calendar years immediately preceding the time of sale for a taxpayer described in division (A)(1)(a)(i) of this section;

(b) The investment period, not to exceed the five calendar years, immediately preceding the time of sale for a taxpayer described in division (A)(1)(a)(ii) of this section.

"Qualifying payroll" does not include any amounts paid to the taxpayer, or the taxpayer's spouse, parents, grandparents, children, or grandchildren.

(4) "Deductible payroll" means the qualifying payroll of the entity in which a taxpayer sold an ownership interest multiplied by the percentage of the interest in the entity the taxpayer sold.

(B) In computing Ohio adjusted gross income for taxable years beginning in or after 2026, a deduction from federal adjusted gross income is allowed to a taxpayer that realizes a qualifying capital gain during the taxable year. The deduction shall equal the lesser of the taxpayer's qualifying capital gain or the deductible payroll.

(C) If a taxpayer has multiple capital gains from the sale of interests in different entities during the taxable year, the following apply:

(1) Each capital gain must meet the requirements of divisions (A)(1)(a) to (c) of this section to be classified as a qualifying capital gain.

(2) The deduction shall equal the lesser of the taxpayer's qualifying capital gain from the sale of each entity or the deductible payroll attributable to that entity. The deduction amounts related to each entity shall then be aggregated to determine the total deduction allowed.

(D) On request of the tax commissioner, the taxpayer shall provide any information that, in the commissioner's opinion, is necessary to establish the amount deducted under division (A)(34) of section 5747.01 of the Revised Code.

Last updated August 24, 2021 at 1:13 PM

Section 5747.80 | Issuance of tax credits by Ohio venture capital authority.

• Effective: February 15, 2016
• Latest Legislation: Senate Bill 208 - 131st General Assembly

Upon the issuance of a tax credit certificate by the Ohio venture capital authority under section 150.07 of the Revised Code, a refundable credit may be claimed against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code. The credit shall be claimed for the taxable year specified in the certificate issued by the authority and in the order required under section 5747.98 of the Revised Code.

Section 5747.81 | Tax credit for holders of small business investment certificate.

• Effective: February 15, 2016
• Latest Legislation: Senate Bill 208 - 131st General Assembly

(A) Any term used in this section that is defined in section 122.86 of the Revised Code has the same meaning as defined in that section.

(B) For the purpose of encouraging new capital investment in small businesses in this state and thereby promoting the economic welfare of all Ohioans, a nonrefundable credit is allowed against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for a taxpayer to whom a small business investment certificate was issued under section 122.86 of the Revised Code if the taxpayer did not sell or otherwise dispose of the qualifying investment before the conclusion of the applicable holding period and if the small business enterprise on the basis of which the certificate was issued is included in the register maintained under division (D) of section 122.86 of the Revised Code.

The credit shall be claimed for the taxpayer's taxable year that includes the last day of the holding period of the qualifying investment. If the certificate was issued to a pass-through entity that made the qualifying investment, a taxpayer that holds a direct or indirect equity interest in the pass-through entity on the last day of the entity's taxable year that includes the last day of the holding period may claim the taxpayer's distributive or proportionate share of the credit for the taxpayer's taxable year that includes the last day of the entity's taxable year.

The credit equals the amount of the taxpayer's qualifying investment as indicated on the certificate multiplied by ten per cent. If a taxpayer claims a credit on the basis of more than one small business investment certificate issued for the same fiscal biennium, including a certificate issued to a pass-through entity in which the taxpayer owns an equity interest, the total amount of credit claimed by the taxpayer on the basis of all such certificates shall not exceed one million dollars. If a taxpayer and the taxpayer's spouse file a joint return under section 5747.08 of the Revised Code, the credit shall be computed on the basis of the total qualifying investments made by both spouses or by any pass-through entities in which either spouse owns an equity interest, but the total amount of credit claimed on the basis of all certificates issued to the spouses or to such pass-through entities for a fiscal biennium shall not exceed two million dollars.

The credit shall be claimed in the order prescribed by section 5747.98 of the Revised Code. If the credit exceeds the aggregate amount of tax otherwise due for the taxable year, the excess may be carried forward and applied against the tax due for not more than seven succeeding taxable years, provided that the amount applied to the tax due for any taxable year shall be subtracted from the amount available to carry forward to succeeding years.

Section 5747.82 | Tax credit for holders of commercial driver training certificate.

• Effective: April 3, 2023
• Latest Legislation: House Bill 66 - 134th General Assembly

There is allowed a nonrefundable credit against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for a taxpayer that has been issued a tax credit certificate under section 122.91 of the Revised Code. The amount of the credit shall equal the credit amount stated on the certificate. The credit shall be claimed for the taxpayer's most recently concluded taxable year that ended before the issuance date stated on the certificate.

The credit shall be claimed in the order required under section 5747.98 of the Revised Code. Any credit amount in excess of the aggregate amount of tax due under section 5747.02 of the Revised Code, after allowing for any other credits preceding the credit in that order, may be carried forward for five taxable years, but the amount of the excess credit allowed in any such year shall be deducted from the balance carried forward to the next year.

Nothing in this section limits or disallows pass-through treatment of the credit if the credit certificate has been issued to a pass-through entity.

Last updated February 27, 2023 at 5:26 PM

Section 5747.83 | State low-income housing tax credit.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

(A) Terms used in this section have the same meanings as in section 175.16 of the Revised Code.

(B) There is hereby allowed a nonrefundable credit against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for a taxpayer that is allocated a credit issued by the executive director of the Ohio housing finance agency under section 175.16 of the Revised Code. The credit equals the amount allocated to such taxpayer for the taxable year that begins in the calendar year for which the designated reporter files the form prescribed by division (I) of section 175.16 of the Revised Code.

The credit shall be claimed in the order required under section 5747.98 of the Revised Code. If the credit exceeds the taxpayer's aggregate tax due under section 5747.02 of the Revised Code for that taxable year after allowing for credits that precede the credit under this section in that order, such excess shall be allowed as a credit in each of the ensuing five taxable years, but the amount of any excess credit allowed in any such taxable year shall be deducted from the balance carried forward to the ensuing taxable year.

No credit shall be claimed under this section to the extent the credit was claimed under section 5725.36, 5726.58, or 5729.19 of the Revised Code.

Last updated August 31, 2023 at 5:07 PM

Section 5747.84 | Tax credit for single-family housing development.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

(A) Terms used in this section have the same meanings as in section 175.17 of the Revised Code.

(B) There is allowed a nonrefundable credit against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for a taxpayer that is allocated a credit issued by the executive director of the Ohio housing finance agency under section 175.17 of the Revised Code. The credit equals the amount allocated to such taxpayer for the taxable year that begins in the calendar year for which the designated reporter files the form prescribed by division (H) of section 175.17 of the Revised Code that allocates the credit to the taxpayer.

The credit shall be claimed in the order required under section 5747.98 of the Revised Code. If the credit exceeds the taxpayer's aggregate tax due under section 5747.02 of the Revised Code for that taxable year after allowing for credits that precede the credit under this section in that order, such excess shall be allowed as a credit in each of the ensuing five taxable years, but the amount of any excess credit allowed in any such taxable year shall be deducted from the balance carried forward to the ensuing taxable year.

No credit shall be claimed under this section to the extent the credit was claimed under section 5725.37, 5726.60, or 5729.20 of the Revised Code.

Last updated August 31, 2023 at 5:08 PM

Section 5747.85 | Homeownership savings account deduction.

• Effective: April 30, 2024
• Latest Legislation: House Bill 101 - 135th General Assembly

(A) As used in this section:

(1) "Homeownership savings account" and "program period" have the same meanings as in section 135.70 of the Revised Code.

(2) "Account owner" means "eligible participant" as defined by section 135.70 of the Revised Code.

(3) "Contributor" means the account owner or a parent, spouse, sibling, stepparent, or grandparent of the account owner who deposits funds into the homeownership savings account.

(4) "Lifetime contribution limit" means twenty-five thousand dollars of contributions per contributor per homeownership savings account. If an account owner opens one or more additional homeownership savings accounts, a contributor's lifetime contribution limit for the additional accounts shall be reduced by any contributions previously made by the contributor to an account owned by that account owner.

(5) "Eligible expenses" means unreimbursed expenses paid by the account owner for home purchase costs for the account owner's primary residence and account fees imposed on the account owner.

(6) "Primary residence" means a homestead located in this state that is or will be the account owner's principal place of residence at the time the eligible expenses are incurred and for which the account owner receives or will receive a reduction in real property taxes or manufactured home taxes under division (B) of section 323.152 of the Revised Code.

(7) "Homestead" means a homestead, as defined in section 323.151 of the Revised Code, or a manufactured or mobile home that is owned and occupied as a home by an individual whose domicile is in this state and upon which the manufactured home tax is assessed pursuant to division (D)(2) of section 4503.06 of the Revised Code.

(8) "Home purchase costs" means "eligible home costs" as defined in section 135.70 of the Revised Code.

(9) "Employer contribution" means the amount an employer contributes to a homeownership savings account.

(B) In computing Ohio adjusted gross income, a deduction from federal adjusted gross income is allowed to a contributor for amounts contributed to a homeownership savings account to the extent that the amounts contributed have not already been deducted in computing the contributor's federal or Ohio adjusted gross income for the taxable year. The deduction shall equal the amount of contributions made by the taxpayer and, if filing a joint return, the taxpayer's spouse, except that the deduction shall not exceed, for any taxable year, ten thousand dollars for spouses filing a joint return or five thousand dollars for all other taxpayers for each homeownership savings account to which contributions are made. If a taxpayer files a joint return, the deduction amount attributable to contributions made by each spouse shall not exceed five thousand dollars for each homeownership savings account to which contributions are made. A contributor is not entitled to a deduction under this section to the extent the deduction causes the contributor to exceed the lifetime contribution limit. No deduction is allowed under this section for the transfer of funds from one homeownership savings account to another homeownership savings account.

(C) In computing Ohio adjusted gross income, a deduction from federal adjusted gross income is allowed to an account owner for the following items:

(1) Interest earned on a homeownership savings account to the extent the interest has not been otherwise deducted or excluded in computing an account owner's federal or Ohio adjusted gross income.

(2) Employer contributions made by an employer to an account owner's homeownership savings account to the extent the employer contributions have not been otherwise deducted or excluded in computing an account owner's federal or Ohio adjusted gross income.

(D) The tax commissioner may request that a taxpayer claiming a deduction calculated under division (B) or (C) of this section furnish information necessary to support the claim for the deduction under this section, and no deduction shall be allowed unless the requested information is provided.

(E) No deduction is permitted under division (B) or (C) of this section for contributions made or interest earned after the conclusion of a homeownership savings account's program period.

(F) The commissioner may adopt rules necessary to administer this section.

Last updated February 12, 2024 at 9:23 AM

Section 5747.98 | Order for claiming credits.

• Effective: October 3, 2023
• Latest Legislation: House Bill 33 - 135th General Assembly

(A) To provide a uniform procedure for calculating a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code, a taxpayer shall claim any credits to which the taxpayer is entitled in the following order:

Either the retirement income credit under division (B) of section 5747.055 of the Revised Code or the lump sum retirement income credits under divisions (C), (D), and (E) of that section;

Either the senior citizen credit under division (F) of section 5747.055 of the Revised Code or the lump sum distribution credit under division (G) of that section;

The dependent care credit under section 5747.054 of the Revised Code;

The credit for displaced workers who pay for job training under section 5747.27 of the Revised Code;

The campaign contribution credit under section 5747.29 of the Revised Code;

The twenty-dollar personal exemption credit under section 5747.022 of the Revised Code;

The joint filing credit under division (G) of section 5747.05 of the Revised Code;

The earned income credit under section 5747.71 of the Revised Code;

The nonrefundable credit for education expenses under section 5747.72 of the Revised Code;

The nonrefundable credit for donations to scholarship granting organizations under section 5747.73 of the Revised Code;

The nonrefundable credit for tuition paid to a nonchartered nonpublic school under section 5747.75 of the Revised Code;

The nonrefundable vocational job credit under section 5747.057 of the Revised Code;

The nonrefundable job retention credit under division (B) of section 5747.058 of the Revised Code;

The enterprise zone credit under section 5709.66 of the Revised Code;

The credit for beginning farmers who participate in a financial management program under division (B) of section 5747.77 of the Revised Code;

The credit for commercial vehicle operator training expenses under section 5747.82 of the Revised Code;

The nonrefundable welcome home Ohio (WHO) program credit under section 122.633 of the Revised Code;

The credit for selling or renting agricultural assets to beginning farmers under division (A) of section 5747.77 of the Revised Code;

The credit for purchases of qualifying grape production property under section 5747.28 of the Revised Code;

The small business investment credit under section 5747.81 of the Revised Code;

The nonrefundable lead abatement credit under section 5747.26 of the Revised Code;

The opportunity zone investment credit under section 122.84 of the Revised Code;

The enterprise zone credits under section 5709.65 of the Revised Code;

The research and development credit under section 5747.331 of the Revised Code;

The credit for rehabilitating a historic building under section 5747.76 of the Revised Code;

The nonrefundable Ohio low-income housing tax credit under section 5747.83 of the Revised Code;

The nonrefundable affordable single-family home credit under section 5747.84 of the Revised Code;

The nonresident credit under division (A) of section 5747.05 of the Revised Code;

The credit for a resident's out-of-state income under division (B) of section 5747.05 of the Revised Code;

The refundable motion picture and broadway theatrical production credit under section 5747.66 of the Revised Code;

The refundable credit for film and theater capital improvement projects under section 5747.67 of the Revised Code;

The refundable jobs creation credit or job retention credit under division (A) of section 5747.058 of the Revised Code;

The refundable credit for taxes paid by a qualifying entity granted under section 5747.059 of the Revised Code;

The refundable credits for taxes paid by a qualifying pass-through entity granted under division (I) of section 5747.08 of the Revised Code;

The refundable credit under section 5747.80 of the Revised Code for losses on loans made to the Ohio venture capital program under sections 150.01 to 150.10 of the Revised Code;

The refundable credit for rehabilitating a historic building under section 5747.76 of the Revised Code;

The refundable credit under section 5747.39 of the Revised Code for taxes levied under section 5747.38 of the Revised Code paid by an electing pass-through entity.

(B) For any credit, except the refundable credits enumerated in this section and the credit granted under division (H) of section 5747.08 of the Revised Code, the amount of the credit for a taxable year shall not exceed the taxpayer's aggregate amount of tax due under section 5747.02 of the Revised Code, after allowing for any other credit that precedes it in the order required under this section. Any excess amount of a particular credit may be carried forward if authorized under the section creating that credit. Nothing in this chapter shall be construed to allow a taxpayer to claim, directly or indirectly, a credit more than once for a taxable year.

Last updated August 3, 2023 at 3:10 PM

Section 5747.99 | Penalty.

• Effective: October 29, 2018
• Latest Legislation: Senate Bill 66 - 132nd General Assembly

(A) Whoever violates section 5747.19 of the Revised Code is guilty of a felony of the fifth degree.

(B) Whoever violates any provision of sections 5747.01 to 5747.19 of the Revised Code, or any lawful rule promulgated by the tax commissioner under authority of any provision of those sections, for the violation of which no other penalty is provided in this section, shall be fined not less than one hundred nor more than five thousand dollars.

(C) Whoever violates section 5747.49 of the Revised Code shall be fined not more than five dollars for each day that elapses between the date specified by law for performance and the date when the duty is actually performed.

(D) Whoever violates section 5747.06 or 5747.07 of the Revised Code by failing to remit state income taxes withheld from an employee shall be penalized as follows:

(1) Except as otherwise provided in division (D)(2) of this section, the offender shall be fined not less than one hundred dollars nor more than one thousand dollars, or imprisoned not more than sixty days, or both.

(2) If the offender previously has been convicted of or pleaded guilty to a violation of section 5747.06 or 5747.07 of the Revised Code involving a failure to remit state income taxes withheld from an employee, the offender is guilty of a felony of the fifth degree.