News and Analysis
OMA Connections Partner Calfee this week provided an update on the federal Opportunity Zone Program, created as part of the 2017 Tax Cuts and Jobs Act. The program is back in the headlines because the long-awaited second round of proposed regulations was recently published by the Treasury Department, Calfee reports. This guidance helps clarify how investments in these zones would work.
The goal of Opportunity Zones is to provide tax incentives for investors who make long term capital investment in designated low-income areas. Investors must invest through a qualified Opportunity Fund. Ohio has opportunity zones in 73 of Ohio’s 88 counties. 5/23/2019
This week, Ohio House Speaker Larry Householder (R-Glenford) announced a plan to include a personal income tax cut in Ohio’s two-year budget. The tax cut would be funded by reducing or eliminating selected incentives.
Specifically, the House’s income tax cut would be paid for by reducing the amount that pass-through businesses — such as partnerships, sole proprietorships or LLCs — could earn before paying the state income tax. The exemption threshold, passed in 2015, would go from the current $250,000 to $100,000. The House may also consider eliminating a 40% break for income over $250,000, the speaker noted.
Other provisions that could be used to pay for the income tax cut include Ohio’s motion picture tax credit and an exception for fractional ownership of airplanes. 5/2/2019
Thursday afternoon, the House Finance Committee unveiled the updated House version of the state budget bill (HB 166). Included were two amendments that the OMA urged lawmakers to include.
The first accepted amendment would expand the existing sales tax exemption for equipment and supplies used to clean equipment used in the production or processing of dairy products. This would include equipment used to produce or process any sort of food for human consumption.
The other accepted amendment would exempt from sales-and-use tax any supplies or janitorial services purchased to clean machinery in a manufacturing facility.
Both amendments have been OMA Tax Committee priorities over the years. It is imperative that manufacturers contact their state representative to keep both provisions in the budget. 5/2/2019
This week, the OMA Tax Committee held its first meeting of 2019. Guest speakers were Ohio Tax Commissioner Jeff McClain and Rep. Gary Scherer (R-Circleville), vice chair of the House Finance Committee and a member of the House Ways & Means Committee.
Appointed by Gov. Mike DeWine last January to head the Department of Taxation, Commissioner McClain briefed committee members on his agency’s priorities, including implementation of the lead-abatement credit, opportunity zones, and adjustments to the state’s employment services tax.
Rep. Scherer discussed key aspects of Ohio’s new transportation funding plan, signed last week by Gov. DeWine to provide an additional $865 million a year for roads funding. Rep. Scherer also spoke about efforts to craft legislation that would establish guidelines for internet retail sales tax collections. Last summer’s U.S. Supreme Court ruling (South Dakota v. Wayfair) allows states to collect sales taxes from out-of-state online retailers that have sales of more than $100,000, or more than 200 annual transactions.
Follow tax issues affecting Ohio manufacturers here. 4/10/2019
Today is the deadline for Ohio House members to submit their amendment priorities to leadership for the state budget. One of the amendments the OMA was able to secure for submission is the elimination of sales tax on temporary manufacturing employees.
This has been a long-time pain for Ohio’s manufacturers. Effective January 1993, in order to fill a hole in the state budget, employment services were added as a taxable service by a legislative conference committee facing a midnight deadline to reach agreement on a new budget. Since then Ohio has been one of the minority of states to burden employers with this additional tax.
OMA continues to seek a solution for manufacturers through the manufacturing sales and use tax exemption, which should include temporary labor. To learn more about this issue and how you can be involved, contact OMA’s Rob Brundrett. 4/11/2018
This week Ohio Department of Tax Commissioner Jeff McClain provided budget testimony on behalf of his department. Unlike the past several state budgets, House Bill 166 does not include a substantive shift in Ohio’s taxing schemes, much to the relief of manufacturers.
Commissioner McClain will be visiting with the OMA Tax Committee next Tuesday, April 9, at the OMA offices. Members will be discussing the budget in detail and also visiting with House Finance Committee Vice Chairman Gary Scherer (R-Circleville). Register today! 4/4/2019
From OMA Connections Partner Clark Schaefer Hackett: “A surprising number of Ohio taxpayers are missing a golden opportunity to reduce their tax liability using a relatively straightforward deduction.
“The Ohio Business Income Deduction allows taxpayers to deduct from their federal adjusted gross income the first $250,000 of business income earned by single taxpayers or married taxpayers who file jointly. For married taxpayers who file separately, the deduction applies to the first $125,000 of business income.”
Read more about this opportunity. 4/1/2019
From OMA Connections Partner: “The RSM US Middle Market Business Index tumbled in the first quarter to 124.1 from 132. The decline in both current conditions and the expected outlook for the economy and capital expenditures should be interpreted by policymakers as a signal that the “uncertainty tax” generated by the direction of U.S. trade policy and recent volatility in financial markets has spilled over into the real economy.
“While we are not suggesting that an end to the current business cycle—which is approaching the longest-running economic expansion in post-World War II U.S. history—is imminent, but the probability of one has increased due to the uncertainty that lingers in the economy.
“Despite the souring economic outlook and modest deterioration in revenues and profits during the current quarter, middle market businesses expect improvement in the next six months with 62 percent expecting revenues to increase and 60 percent anticipating a rise in net earnings.”
Read more and download the report here. 4/1/2019
From OMA Connections Partner, GBQ Partners: “Shakespeare’s words don’t apply just to Julius Caesar; they also apply to calendar-year partnerships, S corporations and limited liability companies (LLCs) treated as partnerships or S corporations for tax purposes. Why? The Ides of March, more commonly known as March 15, is the federal income tax filing deadline for these “pass-through” entities.”
Read more from GBQ. 3/5/2019
From OMA Connections Partner GBQ: “While we all have been distracted discussing the implementation of the new accounting standards for leases and revenue recognition, there is another Accounting Standards Update (ASU) sneaking in that is effective for fiscal years beginning after December 15, 2018. The update impacts private companies including not-for-profits and employee benefit plans that hold financial assets or owe financial liabilities.”
Read more from GBQ here. 2/20/2019