REPRESENTATIVES Latta, Kearns, Hollister, Otterman, Seitz, Lendrum, Reidelbach, Schmidt, Willamowski, D. Miller, Fessler, Jones, Jolivette, Roman, Faber, Aslanides, Kilbane, Coates

To amend sections 131.02 and 5747.451, to enact

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section 5703.06, and to repeal sections 5727.59 and

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5733.25 of the Revised Code relative to the

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attorney general's authority to compromise claims

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for taxes and other amounts due the state.

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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 131.02 and 5747.451 be amended and	6
section 5703.06 of the Revised Code be enacted to read as follows:	7

Sec. 131.02. (A) Whenever any amount is payable to the state,	8
the officer, employee, or agent responsible for administering the	9
law under which the amount is payable shall immediately proceed to	10
collect the amount or cause the amount to be collected and shall	11
pay the amount into the state treasury in the manner set forth	12
pursuant to section 113.08 of the Revised Code. If the amount is	13
not paid within forty-five days after payment is due, the officer,	14
employee, or agent shall certify the amount due to the attorney	15
general, in the form and manner prescribed by the attorney	16
general, and notify the director of budget and management thereof.	17

(B)(1) The attorney general shall give immediate notice by	18
mail or otherwise to the party indebted of the nature and amount	19
of the indebtedness. If	20

(2) If the amount payable to this state arises from a tax	21
levied under Chapter 5733., 5739., 5741., or 5747. of the Revised	22
Code, the notice also shall specify all of the following:	23

(A)(a) The assessment or case number;

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(B)(b) The tax pursuant to which the assessment is made;

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(C)(c) The reason for the liability, including, if	26
applicable, that a penalty or interest is due;	27

(D)(d) An explanation of how and when interest will be added	28
to the amount assessed;	29

(E)(e) That the attorney general and tax commissioner,	30
acting together, have the authority, but are not required, to	31
extendcompromise the claim and accept payment over a reasonable	32
time of the payment for up to one year, if such actions are in the	33
best interest of the state.	34

(C) The attorney general shall collect the claim or secure a	35
judgment and issue an execution for its collection.	36

(D) Each claim shall bear interest, from the day on which	37
the claim became due, at the base rate per annum for advances and	38
discounts to member banks in effect at the federal reserve bank in	39
the second federal reserve district. The attorney general and the	40
chief officer of the agency reporting the claim may adjust any	41
claim in such manner as is equitable. They may extend the time of	42
the payment of a claim or judgment for such period of time not to	43
exceed one year as is best for the interests of the state, and	44
they may require and take security for its paymentprescribed	45
under section 5703.47 of the Revised Code, unless a different rate	46
is provided by agreement or by other law applicable to the claim.	47

(E) The attorney general and the chief officer of the agency	48
reporting a claim, acting together, may do either or both of the	49
following if such action is in the best interests of the state:	50

(1) Compromise the claim;

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(2) Extend for a reasonable period the time for payment of	52
the claim by agreeing to accept monthly or other periodic	53
payments. The agreement may require security for payment of the	54
claim.	55

Sec. 5703.06. (A) As used in this section, "claim" means a	56
claim for an amount payable to this state that arises under a	57
statute administered by the tax commissioner and that has been	58
certified to the attorney general for collection under section	59
131.02 of the Revised Code.	60

(B) The tax commissioner and the attorney general shall	61
consider the following standards when ascertaining with respect to	62
a claim whether a compromise or payment-over-time agreement is in	63
the best interests of the state under division (E) of section	64
131.02 of the Revised Code:	65

(1) There exists a doubt as to whether the claim can be	66
collected.	67

(2) There exists a substantial probability that, upon	68
payment of the claim and submission of a timely application for	69
refund with respect to that payment, the commissioner would refund	70
an amount that was illegally or erroneously paid.	71

(3) There exists an economic hardship such that a	72
compromise or agreement would facilitate effective tax	73
administration.	74

(4) Any other standard to which the commissioner and	75
attorney general jointly agree.	76

(C) The rejection of a compromise or payment-over-time	77
agreement proposed by a taxpayer with respect to a claim shall not	78
be appealable.	79

(D) A compromise or payment-over-time agreement with	80
respect to a claim shall be binding upon and shall inure to the	81
benefit of only the parties to the compromise or agreement, and	82
shall not extinguish or otherwise affect the liability of any	83
other person or governmental entity.	84

(E) A compromise or payment-over-time agreement with respect	85
to a claim shall be void if the taxpayer defaults under the	86
compromise or agreement or if the compromise or agreement was	87
obtained by fraud or by misrepresentation of a material fact. Any	88
amount that was due prior to the compromise or agreement and is	89
unpaid shall remain due, and any interest that would have accrued	90
in the absence of the compromise or agreement shall continue to	91
accrue and be due.	92

Sec. 5747.451.  (A) The mere retirement from business or	93
voluntary dissolution of a domestic or foreign qualifying entity	94
does not exempt it from the requirements to make reports as	95
required under sections 5747.42 to 5747.44 or to pay the taxes	96
imposed under section 5733.41 or 5747.41 of the Revised Code. If	97
any qualifying entity subject to the taxes imposed under section	98
5733.41 or 5747.41 of the Revised Code sells its business or stock	99
of merchandise or quits its business, the taxes required to be	100
paid prior to that time, together with any interest or penalty	101
thereon, become due and payable immediately, and the qualifying	102
entity shall make a final return within fifteen days after the	103
date of selling or quitting business. The successor of the	104
qualifying entity shall withhold a sufficient amount of the	105
purchase money to cover the amount of such taxes, interest, and	106
penalties due and unpaid until the qualifying entity produces a	107
receipt from the tax commissioner showing that the taxes,	108
interest, and penalties have been paid, or a certificate	109
indicating that no taxes are due. If the purchaser of the	110
business or stock of goods fails to withhold purchase money, the	111
purchaser is personally liable for the payment of the taxes,	112
interest, and penalties accrued and unpaid during the operation of	113
the business by the qualifying entity. If the amount of those	114
taxes, interest, and penalty unpaid at the time of the purchase	115
exceeds the total purchase money, the tax commissioner may adjust	116
the qualifying entity's liability for those taxes, interest, and	117
penalty, or adjust the responsibility of the purchaser to pay that	118
liability, in a manner calculated to maximize the collection of	119
those liabilities.	120

(B) Annually, on the last day of each qualifying taxable	121
year of a qualifying entity, the taxes imposed under section	122
5733.41 or 5747.41 of the Revised Code, together with any	123
penalties subsequently accruing thereon, become a lien on all	124
property in this state of the qualifying entity, whether such	125
property is employed by the qualifying entity in the prosecution	126
of its business or is in the hands of an assignee, trustee, or	127
receiver for the benefit of the qualifying entity's creditors and	128
investors. The lien shall continue until those taxes, together	129
with any penalties subsequently accruing, are paid.	130

Upon failure of such a qualifying entity to pay those taxes	131
on the day fixed for payment, the treasurer of state shall	132
thereupon notify the tax commissioner, and the commissioner may	133
file in the office of the county recorder in each county in this	134
state in which the qualifying entity owns or has a beneficial	135
interest in real estate, notice of the lien containing a brief	136
description of such real estate. No fee shall be charged for such	137
a filing. The lien is not valid as against any mortgagee,	138
purchaser, or judgment creditor whose rights have attached prior	139
to the time the notice is so filed in the county in which the real	140
estate which is the subject of such mortgage, purchase, or	141
judgment lien is located. The notice shall be recorded in a book	142
kept by the recorder, called the qualifying entity tax lien	143
record, and indexed under the name of the qualifying entity	144
charged with the tax. When the tax, together with any penalties	145
subsequently accruing thereon, have been paid, the tax	146
commissioner shall furnish to the qualifying entity an	147
acknowledgment of such payment that the qualifying entity may	148
record with the recorder of each county in which notice of such	149
lien has been filed, for which recording the recorder shall charge	150
and receive a fee of two dollars.	151

(C) In addition to all other remedies for the collection of	152
any taxes or penalties due under law, whenever any taxes,	153
interest, or penalties due from any qualifying entity under	154
section 5733.41 of the Revised Code or this chapter have remained	155
unpaid for a period of ninety days, or whenever any qualifying	156
entity has failed for a period of ninety days to make any report	157
or return required by law, or to pay any penalty for failure to	158
make or file such report or return, the attorney general, upon the	159
request of the tax commissioner, shall file a petition in the	160
court of common pleas in the county of the state in which such	161
qualifying entity has its principal place of business for a	162
judgment for the amount of the taxes, interest, or penalties	163
appearing to be due, the enforcement of any lien in favor of the	164
state, and an injunction to restrain such qualifying entity and	165
its officers, directors, and managing agents from the transaction	166
of any business within this state, other than such acts as are	167
incidental to liquidation or winding up, until the payment of such	168
taxes, interest, and penalties, and the costs of the proceeding	169
fixed by the court, or the making and filing of such report or	170
return.	171

The petition shall be in the name of the state. Any of the	172
qualifying entities having its principal places of business in the	173
county may be joined in one suit. On the motion of the attorney	174
general, the court of common pleas shall enter an order requiring	175
all defendants to answer by a day certain, and may appoint a	176
special master commissioner to take testimony, with such other	177
power and authority as the court confers, and permitting process	178
to be served by registered mail and by publication in a newspaper	179
of general circulation published in the county, which publication	180
need not be made more than once, setting forth the name of each	181
delinquent qualifying entity, the matter in which the qualifying	182
entity is delinquent, the names of its officers, directors, and	183
managing agents, if set forth in the petition, and the amount of	184
any taxes, fees, or penalties claimed to be owing by the	185
qualifying entity.	186

All or any of the trustees or other fiduciaries, officers,	187
directors, investors, beneficiaries, or managing agents of any	188
qualifying entity may be joined as defendants with the qualifying	189
entity.	190

If it appears to the court upon hearing that any qualifying	191
entity that is a party to the proceeding is indebted to the state	192
for taxes imposed under section 5733.41 or 5747.41 of the Revised	193
Code, or interest or penalties thereon, judgment shall be entered	194
therefor with interest; and if it appears that any qualifying	195
entity has failed to make or file any report or return, a	196
mandatory injunction may be issued against the qualifying entity,	197
its trustees or other fiduciaries, officers, directors, and	198
managing agents, enjoining them from the transaction of any	199
business within this state, other than acts incidental to	200
liquidation or winding up, until the making and filing of all	201
proper reports or returns and until the payment in full of all	202
taxes, interest, and penalties.	203

If the trustees or other fiduciaries, officers, directors,	204
investors, beneficiaries, or managing agents of a qualifying	205
entity are not made parties in the first instance, and a judgment	206
or an injunction is rendered or issued against the qualifying	207
entity, those officers, directors, investors, or managing agents	208
may be made parties to such proceedings upon the motion of the	209
attorney general, and, upon notice to them of the form and terms	210
of such injunction, they shall be bound thereby as fully as if	211
they had been made parties in the first instance.	212

In any action authorized by this division, a statement of the	213
tax commissioner, or the secretary of state, when duly certified,	214
shall be prima-facie evidence of the amount of taxes, interest, or	215
penalties due from any qualifying entity, or of the failure of any	216
qualifying entity to file with the commissioner or the secretary	217
of state any report required by law, and any such certificate of	218
the commissioner or the secretary of state may be required in	219
evidence in any such proceeding.	220

On the application of any defendant and for good cause shown,	221
the court may order a separate hearing of the issues as to any	222
defendant.	223

The costs of the proceeding shall be apportioned among the	224
parties as the court deems proper.	225

The court in such proceeding may make, enter, and enforce	226
such other judgments and orders and grant such other relief as is	227
necessary or incidental to the enforcement of the claims and lien	228
of the state.	229

In the performance of the duties enjoined upon the attorney	230
general by this division, the attorney general may direct any	231
prosecuting attorney to bring an action, as authorized by this	232
division, in the name of the state with respect to any delinquent	233
qualifying entities within the prosecuting attorney's county, and	234
like proceedings and orders shall be had as if such action were	235
instituted by the attorney general.	236

(D) If any qualifying entity fails to make and file the	237
reports or returns required under this chapter, or to pay the	238
penalties provided by law for failure to make and file such	239
reports or returns for a period of ninety days after the time	240
prescribed by this chapter, the attorney general, on the request	241
of the tax commissioner, shall commence an action in quo warranto	242
in the court of appeals of the county in which that qualifying	243
entity has its principal place of business to forfeit and annul	244
its privileges and franchises. If the court is satisfied that any	245
such qualifying entity is in default, it shall render judgment	246
ousting such qualifying entity from the exercise of its privileges	247
and franchises within this state, and shall otherwise proceed as	248
provided in sections 2733.02 to 2733.39 of the Revised Code.	249

(E) With the advice and consent of the tax commissioner, the	250
attorney general may, before or after any action for the recovery	251
of taxes imposed under section 5733.41 or 5747.41 of the Revised	252
Code, or interest or penalties thereon and certified to the	253
attorney general as delinquent, compromise or settle any claim for	254
delinquent taxes, interest, or penalties so certified.	255

Section 2. That existing sections 131.02 and 5747.451 and	256
sections 5727.59 and 5733.25 of the Revised Code are hereby	257
repealed.	258