Tax and Finance Management

No Changes Made to Ohio’s Temporary Income Tax Withholding Law

Among the issues that were not addressed during the Ohio General Assembly’s lame duck session were the proposed changes to the House Bill 197‘s income tax withholding laws. Among other things, HB 197 allows companies to continue to withhold employee income taxes from their main place of business while the state of emergency for COVID-19 is in place. As the pandemic has continued, this provision has come under heavy attack from some legislators and others.

An OMA working group was heavily involved in the crafting of HB 197, advocating to keep the withholding provision in place. It is anticipated that this issue will be addressed in the first half of 2021. If you are interested in learning more, email Rob Brundrett at the OMA. 12/23/2020

Effort to Expand CAT Carveouts Fails in Lame Duck

Score another victory in the ongoing effort to protect the commercial activity tax (CAT) from increased carveouts. This week, Ohio’s General Assembly failed to pass Senate Bill 95, which originally would have provided tax incentives for the operators and certain suppliers of a “mega-project” – such as a development project with at least $1 billion in investment, or a project that created at least $75 million in Ohio payroll.

Under the bill, one of the tax incentives would have been a CAT exclusion for gross receipts of a mega-project supplier from sales to a mega-project operator. The bill was loaded with a variety of other tax provisions in the final days of the legislative session. The OMA expects the bill to be reintroduced in the upcoming 134th General Assembly. 12/23/2020

Understanding the Key Provisions of the Latest COVID-19 Legislation

This week, Congress passed the first significant COVID-19 stimulus package since the CARES Act nearly nine months ago. On Tuesday evening, Dec. 22, President Donald Trump called the measure a “disgrace,” but did not issue a veto threat. The bill’s fate was uncertain at press time for this edition of the Leadership Briefing.

OMA Connections Partner Clark Schaefer Hackett has published this summary of the key business-related provisions in the 5,593-page measure, titled the Consolidated Appropriations Act (CAA).

To provide further insight, OMA Connections Partner RSM has published several summaries of the CAA’s provisions, including its:

• Paycheck Protection Program (PPP) tax fix and second-draw program;
• Direct payments to individuals and tax credits for businesses;
• Business assistance provisions; and
• Extensions of the CARES Act credits and incentives.

OMA Connections Partner Dinsmore reports that the CAA does not extend requirements for employers to provide emergency paid sick leave or emergency paid family and medical leave under the Families First Coronavirus Response Act (FFCRA) beyond the original Dec. 31 expiration date. However, Congress did extend employers’ ability to utilize the FFCRA tax credit until March 31, 2021, if employers voluntarily continue to provide FFCRA paid leave benefits to their employees. 12/22/2020

New COVID-19 Bill Addresses Deductibility of Expenses Paid With PPP Loans

The new federal COVID-19 stimulus package includes language that addresses the deductibility of expenses paid with Payroll Protection Program (PPP) loans.

According to this summary by OMA Connections Partner Calfee, the new bill overrules the IRS’ previous notices and provides tax-free forgiveness of PPP loan proceeds and deductibility of expenses paid with PPP funds. This rule applies to all borrowers, including those that have already applied for forgiveness. 12/22/2020

Paycheck Protection Program, Round Two

Although not yet signed into law by President Trump, the new federal COVID-19 bill provides for a second round of Paycheck Protection Program (PPP) loans worth $284 billion. The second round of PPP loans are more targeted and will be available to a smaller group of businesses.

Read more in this summary from OMA Connections Partner Benesch. Also, check out OMA Connections Partner GBQ Partners’ comprehensive summary of the new PPP provisions. 12/23/2020

At a Glance: Tax Provisions in New Federal COVID-19 Relief Bill

The new federal COVID-19 bill contains several tax-related provisions for businesses. They include:

• An enhanced employee retention credit;
• An extension for employers to repay their share of any deferred Social Security tax;
• Credits for paid sick and family leave; and
• Several tax extenders.

Read more in this summary from OMA Connections Partner CliftonLarsonAllen. 12/23/2020

Single Audits Expected to Increase Due to CARES Act

Direct federal aid to businesses during COVID-19 has likely increased the need for single audits to be performed in 2020 and into 2021, according OMA Connections Partner Clark Schaefer Hackett. Thousands of entities could be subject to a single audit, which is required when an entity expends $750,000 or more of federal funds during the entity’s business year. Read more.

Also, if you missed Clark Schaefer Hackett’s year-end tax planning webinar for businesses, watch the recording here. 12/14/2020

Manufacturers Push for Extension of Federal Tax Deduction

The National Association of Manufacturers is calling for Congress to temporarily extend a COVID-19 tax relief provision that would benefit manufacturers affected by the pandemic.

Currently, the maximum deduction for interest on business loans is limited to 30% of earnings before interest, tax, depreciation and amortization (EBITDA). But when COVID-19 hit, Congress increased the allowable business interest deduction from 30% to 50% of EBITDA for tax years 2019 and 2020. The NAM is calling on Congress to extend the provision for one more year. 12/16/2020

Ohio Performs Well on Property Tax Comparison

The non-partisan Tax Foundation released a revised comparison this week showing that Ohio imposes the nation’s sixth smallest property tax burden on businesses. The think tank evaluated state and local taxes on real and personal property, net worth, and asset transfers. See the foundation’s comparison map. 12/16/2020

State Revenues Up $393 Million for Fiscal Year

State tax receipts in November continued to exceed forecasts, according to the monthly financial report issued this week by the Ohio Office of Budget and Management (OBM). Total General Revenue Fund tax receipts finished last month $46.4 million (2.3%) above the budgeted estimate.

For the fiscal year-to-date, tax revenues are $393.6 million (3.8%) above estimate, largely due to sales and use taxes, which have beaten estimates by $306.9 million (6.6%). 12/7/2020