News and Analysis
Ohio Organizations Seek Federal Delegation’s Help to Ensure Ohio Businesses Are Eligible for PPP, ERCFebruary 19, 2021
This week, several Ohio organizations, including the OMA, wrote Ohio’s federal delegation, seeking lawmakers’ assistance to address an Ohio-specific issue regarding the eligibility of businesses for the Payroll Protection Program (PPP) and Employee Retention Credit (ERC).
Due to recent Ohio Bureau of Workers’ Compensation (BWC) premium refunds (or dividends) sent to employers — and the lack of clarity regarding the designation of these refunds for tax purposes — Ohio businesses applying for the PPP or ERC could be negatively impacted by current federal law that says borrowers must certify they experienced a revenue reduction of 25% or more calculated by comparing gross receipts in any 2020 quarter with the same quarter in 2019.
Specifically, the groups asked the delegation to urge the Small Business Administration to exclude BWC refunds from Ohio businesses’ federal gross receipts when considering PPP and/or ERC applications. Read the letter sent by the organizations. 2/17/2020
The OMA Tax and Finance Committee this week held its first meeting of 2021. Chaired by Meredith Mullett, senior manager of state tax operations for the J.M. Smucker Co. — and sponsored by OMA Connections Partner Huntington — the meeting featured a discussion with Ohio Tax Commissioner Jeff McClain, who updated members on collections during COVID-19 and recent improvements implemented by the Department of Taxation.
Justin Stallard and Bob Horstman from OMA Connections Partner RSM presented this briefing on the Employee Retention Tax Credit (ERC). Horstman said RSM has helped businesses that are applying for the ERC to identify and document how COVID-19 restrictions have impacted their operations.
Other highlights included a report from OMA Tax Counsel Justin Cook of Bricker & Eckler LLP. The next committee meeting is scheduled for June 2. 2/17/2021
Led by the OMA, a coalition of like-minded business organizations this week provided interested-party testimony on Senate Bill 45, a bill that would chip away at the competitiveness of Ohio’s commercial activity tax (CAT) by providing 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 payroll. One of those proposed incentives would include a CAT exclusion for gross receipts of a mega-project supplier from sales to a mega-project operator.
The coalition continues to advocate for the removal of the CAT credit provisions from SB 45 to protect the CAT’s competitive attributes: its broad base and low rate. 2/18/2021
Last week, two lawsuits were filed in Ohio courts arguing that it’s unconstitutional for cities to tax the income of workers who don’t live in those cities and have been remotely working during the pandemic. According to Hannah News Service, the lawsuits were filed by conservative think tank The Buckeye Institute.
Under current law (House Bill 197), employers can continue to withhold employee income taxes from their main place of business while the COVID-19 state of emergency continues. An OMA working group was heavily involved in crafting HB 197 last spring in an effort to reduce the administrative burden placed on employers. 2/15/2021
The Employee Retention Credit (ERC) was recently expanded to better assist employers affected by the pandemic. But many employers have questions regarding compliance. That’s why OMA Connections Partner Plante Moran will host a webinar on March 2 to address the most significant aspects of the ERC including the recent changes, frequently asked questions, and examples to help your business take full advantage of the credit. 2/17/2021
Last week, we reported that the $8 billion in BWC dividends issued last year to Ohio employers could be subject to Ohio’s Commercial Activity Tax (CAT). But this week, a fast-tracked measure (Senate Bill 18) to conform the state’s tax code with recent federal changes was amended with language that would exempt the BWC dividends from the CAT, beginning with dividends paid in 2020.
SB 18, which has been approved by the full Senate and now awaits House action, would also exempt federal Paycheck Protection Program loan proceeds from the CAT.
This development will be discussed Wednesday, Feb. 17 when the OMA’s Tax and Finance Committee will hold (via Zoom) its first meeting of 2021. Also on the agenda will be Ohio Tax Commissioner Jeff McClain, who will brief members on the state budget. Register now. 2/11/2021
At 1 p.m. on Feb. 23, OMA Connections Partner RSM will host a free webinar to discuss employer opportunities to utilize the recently expanded employee retention tax credit (ERTC) in combination with updated guidance on the Paycheck Protection Program (PPP). Learn more and register here.
Also, OMA Connections Partner CliftonLarsonAllen has published this new insight to address “very frequently asked questions” about the ERTC. 2/10/2021
The Office of Budget of Management (OBM) announced this week that Ohio’s January revenues continued to exceed estimates, coming in $81.3 million or 3.6% above forecasted amounts. Exceeding estimates were collections from the non-auto sales tax (3.5%), auto sales tax (8.6%), and the personal income tax (7.2%).
The Commercial Activity Tax (CAT) fell short of estimates by nearly $13.3 million (-18.1%). OBM noted that the CAT remains below estimate fiscal year-to-date, and that it “will monitor this source with interest through February, which is a far more important collections month.” 2/9/2021
The National Association of Manufacturers (NAM) reports that several members of Congress want to include a significant rollback of net operating loss relief in the next federal COVID-19 relief bill. NAM Senior Director of Tax Policy David Eiselsberg says such a policy change would “result in a retroactive tax increase on a sector that is key to America’s success.”
Meanwhile, the U.S. Chamber of Commerce has made its case for preserving a competitive corporate tax rate, saying there’s bipartisan agreement that an economic downturn is not the time to raise taxes. 2/8/2021
The non-partisan Congressional Budget Office (CBO) this week estimated that a proposed $15 federal minimum wage would cost 1.4 million jobs by 2025 while lifting 900,000 people out of poverty. It would also increase the federal deficit by $54 billion over a decade, while driving prices higher for goods and services. Read the CBO report. 2/8/2021