News and Analysis
This week the Ohio Department of Taxation (ODT) issued a second draft of potential revisions to the manufacturing sales and use tax rule (OAC 5703-9-21) in response to comments submitted by the OMA and other interested parties.
In its second round of comments developed by a work group of members, OMA focused on the treatment of materials and equipment that are integral to the entire manufacturing process and, therefore, should be treated favorably with respect to the tax.
ODT is planning to hold an interested party meeting at the end of August to discuss the newest draft version of the rule. Members interested in participating in the OMA work group should contact Rob Brundrett. 8/10/2017
In a recent letter to the editor of the Columbus Dispatch, OMA’s Rob Brundrett, Director, Public Policy Services, stressed the importance of achieving federal tax reform.
Brundrett wrote: “A simpler tax code would reduce the tax burden and revive manufacturing in the United States.
“Comprehensive tax reform would benefit American manufacturing companies because it would allow them to maximize profits and expand their business. When a company is able to grow, it will hire more employees and put more American families to work. In fact, pro-growth tax reform will add more than 6 million jobs and contribute $12 trillion in gross domestic product in a 10-year period.”
The OMA and The National Association of Manufacturers have designated federal corporate tax reform among must-do initiatives. 7/20/2017
A legislative task force charged with studying tax expenditures was seated this week. Created by legislation last session, the Tax Expenditure Review Committee consists of three members of the Ohio House and three members of the Ohio Senate together with the state tax commissioner:
House: Rep. Tim Schaffer (R-Lancaster), Rep. Gary Scherer (R-Circleville), Rep. John Rogers (D-Mentor)
Senate: Sen. John Eklund (R-Chardon), Sen. Scott Oelslager (R-N. Canton) and Sen. Vernon Sykes (D-Akron)
The group is charged with evaluating the merit of all tax credits, exclusions and carve-outs. The committee is to make recommendations to the General Assembly when it complete its study. 7/20/2017
On June 30, 2017, Governor John Kasich signed into law Ohio’s fiscal year 2018 – 2019 budget bill, Am. Sub. H.B. 49. The bill contains a number of important tax law changes of which taxpayers and tax preparers should be aware.
OMA Connections Partner, Clark Schaefer Hackett, has summarized them here. 7/14/2017
The state budget bill just enacted contains virtually none of Governor Kasich’s proposed tax changes. However, it does contain tax provisions of interest to manufacturers.
The bill touches the personal income tax, the sales and use tax, the municipal income tax, the real property tax, tax amnesty, economic development, and direct appeals to the Ohio Supreme Court.
Read a memo on the changes prepared by Mark Engle, OMA tax counsel from Bricker & Eckler. 7/6/2017
The General Assembly removed almost all of the governor’s budget tax proposals in the version of House Bill 49 that was returned to his desk. Instead of additional personal income tax reductions and increases to several other taxes including the sales tax, the legislature, working with a bleak tax revenue forecast, opted for the tax status quo.
However, the General Assembly did work with the OMA and governor’s office to allow for optional centralized business income tax filings at the municipal level and the elimination of the throw-back rule. Businesses will now have the option of filing one municipal income tax form through the Ohio Business Gateway, instead of filing returns in all the municipal corporations in which a business operates. 6/29/2017
During final state budget negotiations the conference committee amended a Senate provision which eliminated the direct appeal to the Supreme Court of Ohio from cases decided by the Board of Tax Appeals (BTA). In a letter to House and Senate leaders, the OMA stated that it could not support the elimination of this important appeal.
Instead of removing the provision, the conferees amended the provision to permit a party to request that a BTA appeal be transferred to the Supreme Court of Ohio if the appeal involves a “substantial constitutional question or a question of great general or public interest.” 6/28/2017
This week the OMA submitted a second round of comments to the Ohio Department of Taxation (ODT) regarding potential revisions to the manufacturing sales and use tax rule (OAC 5703-9-21). The comment period was opened as a result of the agency’s rule review.
In comments, the OMA focused on the treatment of materials and of equipment that are integral to the entire manufacturing process and should be treated favorably with respect to the tax.
ODT will be reviewing interested party comments and providing a revised rule draft to the public over the summer. 6/28/2017
On June 12, 2017, the U.S. Supreme Court refused to entertain an appeal from the U.S. Court of Appeals for the Eighth Circuit that upheld the dismissal of an action by Diversified Ingredients, Inc. in U.S. District Court in Missouri seeking declaratory and injunctive relief against the imposition of the commercial activity tax (CAT).
OMA’s tax counsel, Mark Engel, of Bricker & Eckler, wrote this brief analysis of the case and summed it up this way: “The decision does not reach the merits of whether the CAT may be imposed upon a taxpayer who does not have a physical presence in Ohio. However, it is noteworthy for some other reasons. First, the trial and appellate courts both recognized that Ohio provides a plain, speedy and efficient remedy with respect to assessments of CAT. … Second, and in some respect more important, it reflects the willingness of federal courts to refrain from interfering with state tax matters. … Third, it represents yet another failed attempt to bring the question of economic nexus in the realm of state taxation before the Supreme Court.”
All good news for the integrity of the Ohio CAT. 6/13/2017
This week Senator Rob Portman visited the OMA to discuss tax reform with OMA members. The senator, who is a leader on the tax reform issue, talked about the chances of reform and asked for input from members.
Portman said that the “perfect is the enemy of the good” with tax reform, and that passage will depend on all parties being willing to compromise. He emphasized the tremendous disadvantage the current tax regime places on American manufacturers relative to European and Asian competitors.
He invited OMA members to work with him and his staff to help move reform forward. 6/1/2017