Tax and Finance Management

OMA-led Coalition Seeks to Preserve CAT’s Competitiveness

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

Lawsuits Challenge Cities’ Taxation of Remote Workers

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

Taking Advantage of the Employee Retention Credit

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

BWC Dividends, PPP Proceeds Would be Exempt Under New Tax Bill

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

Using the Employee Retention Tax Credit With the PPP

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

Ohio Revenues Continue to Exceed Estimates

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

Federal Lawmakers Push for Retroactive Tax Increase

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

CBO: $15 Minimum Wage Would Cost 1.4M Jobs by 2025

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

State Tax Officials: BWC Dividends Likely Subject to CAT, Income Taxes — at Least for Now

In 2020, the Ohio Bureau of Workers’ Compensation (BWC) issued nearly $8 billion in dividends to employers to provide relief from the economic effects of COVID-19. It now appears those dividend payments will be subject to the Commercial Activity Tax (CAT) and income tax, according to the Ohio Department of Taxation (ODT).

Hannah News Service reported that an ODT official told Ohio lawmakers that the agency currently views the dividends as taxable under the CAT. The same official noted that lawmakers could pass legislation exempting the BWC dividends from the CAT — but even if that happened, the dividends are “probably” subject to income taxes under federal law.

The OMA and other business groups are working with the administration to find a workable solution to this drastic policy shift by the state. Meanwhile, employers have begun to receive their 1099-G forms for 2020 BWC payments. 2/3/2021

PPP Second Draw Loans: How Much Are You Eligible For? It Depends

OMA Connections Partner CliftonLarsonAllen has published this new insight that examines the basic rules for Paycheck Protection Program (PPP) second draw loans. Generally speaking, the loan amount is determined by average monthly payroll for either 2019 or 2020, multiplied by 2.5, with a maximum loan size of $2 million. Businesses that are part of a single corporate group cannot receive more than $4 million of second draw loans in the aggregate.

Meanwhile, OMA Connections Partner Huntington National Bank offers this webpage with PPP information and updates. 2/3/2021