News and Analysis
This week the House Ways and Means Committee heard sponsor testimony from Reps. Robert Sprague (R-Findlay) and Stephanie Howse (D-Cleveland) on House Bill 155, a bill that would make employers eligible for up to a 50% match of up to $50,000 in an annual tax credit against the commercial activity tax (CAT) to train new drivers. Statewide, the tax credit would be limited to $3,000,000 per year.
The bill is just another in a long line of CAT credit proposals that the General Assembly has considered since the inception of the CAT in 2005. All new carve outs or credits to the tax strain its low rate and increase the likelihood of a rate increase.
The OMA continues to work with allies to protect the broad base and low rate of the current tax structure. 5/18/2017
Among the topics on the Tax Committee agenda will be an in depth discussion about the Manufacturing Sales and Use Exemption, which is due for a review by the Ohio Department of Taxation. We’ll have a presentation from Matthew H. Chafin, Chief Counsel & Chief Ethics Officer, Ohio Department of Taxation, plus an action plan for achieving our proposed reforms.
Please note there is a change of location for the meeting on Tuesday, May 16 from 10:00 a.m. until 1:00 p.m. We will meet at the following location:
Athletic Club of Columbus (directions and parking)
136 E. Broad St.
Columbus, OH 43215
We’ll have a nice lunch provided by OMA.
The call-in option is available at: 866-362-9768, 552-970-8972#
Please register here for in-person or call-in attendance.
Last week, U.S. National Economic Director Gary Cohn and Treasury Secretary Steven Mnuchin, on behalf of the Trump Administration, revealed “core principles” of the president’s tax reform plan. Many of the proposals were similar to those he made on the campaign trail, including a cut in the tax rate for businesses to 15%.
Director Cohn and Secretary Mnuchin emphasized throughout the briefing that many details
were still being negotiated.
This week OMA submitted initial comments to the Ohio Department of Taxation regarding revisions to OAC 5703-9-21, the manufacturing sales tax rule. OMA requested in the comments that the department reconvene the working process initiated in the late 1980s that drafted the original rule. The rule itself has not been reviewed in almost 30 years.
This rule review provides a golden opportunity for manufacturers to work together to improve upon the original success of the rule and to ensure that the tax department fairly treats the manufacturing process.
On May 16 the OMA Tax Committee will focus on the rule and the process the association will take to ensure manufacturing’s voice is heard during the review. We will have a presentation from the tax department, as well as analysis from our subject matter experts. Register for the committee meeting here.
OMA will be creating a working group to help steer the association as discussions begin with the department. All members who would like to work through the OMA to review this very important rule please contact OMA’s Rob Brundrett. 4/27/2017
As part of the required review of its rules, Ohio Department of Taxation has proposed revisions to OAC 5703-9-21, the manufacturing sales tax rule. This is the first time since the rule was promulgated in 1989 that changes have been proposed. A memorandum from OMA tax counsel Mark Engel of Bricker & Eckler provides background and details of the rule and the proposed changes.
In 1989 the legislature enacted a sweeping revision to the manufacturing sales tax exemption to provide more certainty and reduce the amount of litigation associated with the tax exemption. At the same time, the Department of Taxation promulgated a rule providing guidance, including examples, regarding the application of the new rule. The rule revisions were the result of a lengthy process in which both industry and the department worked out provisions acceptable to both parties.
OMA and its members were heavily involved in the creation of this rule. Now for the first time since the rule was first enacted, the department is preparing for a required rule review. This is an opportunity for manufacturers to work together to revise portions of the rule that have been troublesome over the past two decades.
All members who would like to work through the OMA to review this very important and impactful rule please contact OMA’s Rob Brundrett. 4/20/2017
This week the OMA submitted testimony to the House Finance Committee in support of a provision in the governor’s budget proposal (HB 49) that would streamline and centralize the administration of the net business tax.
Despite recent progress Ohio has one of the country’s most administratively burdensome tax structures, mostly attributable to Ohio’s local income tax system. Ohio is one of a handful of states that taxes both individuals and businesses at the local level and the only state in which each municipal corporation makes its own rules and regulations.
The administrative costs of the system disadvantage Ohio compared to its peer states. The governor’s proposal seeks to minimize compliance costs associated with filing in multiple jurisdictions.
The proposal in the state budget bill to centralize collection and administration for business filers would significantly reduce the time and cost associated with multiple net profit return filings. 4/6/2017
The bill makes a variety of changes to the state’s tax system including cutting personal income taxes, reducing the number of personal income tax brackets, centralizing municipal business tax collections, and expanding the base and increasing the rate of the sales tax.
The OMA testimony highlighted support for centralizing municipal tax collections and reducing the income tax and brackets, but cautioned against increasing the sales tax rate in order to offset personal income tax reductions.
The bill is scheduled to be voted out of the House in mid-April. 3/23/2017
This week the OMA submitted testimony to the House Ways and Means Committee in support of a specific proposal in the governor’s budget (HB 49) that would streamline and centralize the administration of net business tax.
Ohio has one of the country’s most administratively burdensome taxing structures, mostly attributable to Ohio’s local income tax system. Ohio is one of a handful of states that taxes both individuals and businesses at the local level and the only state in which each municipal corporation makes its own rules and regulations.
The administrative costs of the system put Ohio at a disadvantage compared to its peer states and diverts Ohio manufacturers’ resources from productive activity. The proposal seeks to minimize compliance costs associated with filing in multiple jurisdictions.
The governor’s proposal to centralize collection and administration for business filers would significantly reduce the time and cost associated with multiple net profit return filings. 3/9/2017
Here’s a peek at the House Ways and Means Committee hearing schedule to deal with HB 49, the state’s biennial budget. 3/2/2017
In a recent post, OMA Connections Partner, RSM US, updates us about the federal tax reform proposal known as the Blueprint:
“The Republican leadership of the House of Representatives, and the leadership of the Ways and Means Committee, have advanced an innovative tax reform proposal that is commonly referred to as the Blueprint. As expected of nearly all income tax reform proposals, it would reduce individual income tax rates and the number of tax brackets, paying for those rate reductions with a broadening of the tax base. For example, the Blueprint would reduce the top individual income tax rate from 39.6 percent to 33 percent, eliminate the alternative minimum tax, and eliminate most individual, non-business deductions, other than those for mortgage interest and charitable donations. It does not appear that the existing social security tax on earnings above the “wage base” of approximately $120,000 would be affected. The Blueprint’s most important innovation, however, is its novel approach to the taxation of business and investment income, described more fully here.” 3/2/2017