SENATOR Spada

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 payment.	45

(E) The attorney general and the chief officer of the agency	46
reporting a claim, acting together, may do either or both of the	47
following if such action is in the best interests of the state:	48

(1) Compromise the claim;

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(2) Extend for a reasonable period the time for payment of	50
the claim by agreeing to accept monthly or other periodic	51
payments. The agreement may require security for payment of the	52
claim.	53

Sec. 5703.06. (A) As used in this section, "claim" means a	54
claim for an amount payable to this state that arises under a	55
statute administered by the tax commissioner and that has been	56
certified to the attorney general for collection under section	57
131.02 of the Revised Code.	58

(B) The tax commissioner and the attorney general shall	59
consider the following standards when ascertaining with respect to	60
a claim whether a compromise or payment-over-time agreement is in	61
the best interests of the state under division (E) of section	62
131.02 of the Revised Code:	63

(1) There exists a doubt as to whether the claim can be	64
collected.	65

(2) There exists a substantial probability that, upon	66
payment of the claim and submission of a timely application for	67
refund with respect to that payment, the commissioner would refund	68
an amount that was illegally or erroneously paid.	69

(3) There exists an economic hardship such that a	70
compromise or agreement would facilitate effective tax	71
administration.	72

(4) Any other standard to which the commissioner and	73
attorney general jointly agree.	74

(C) The rejection of a compromise or payment-over-time	75
agreement proposed by a taxpayer with respect to a claim shall not	76
be appealable.	77

(D) A compromise or payment-over-time agreement with	78
respect to a claim shall be binding upon and shall inure to the	79
benefit of only the parties to the compromise or agreement, and	80
shall not extinguish or otherwise affect the liability of any	81
other person or governmental entity.	82

(E) A compromise or payment-over-time agreement with respect	83
to a claim shall be void if the taxpayer defaults under the	84
compromise or agreement or if the compromise or agreement was	85
obtained by fraud or by misrepresentation of a material fact. Any	86
amount that was due prior to the compromise or agreement and is	87
unpaid shall remain due, and any interest that would have accrued	88
in the absence of the compromise or agreement shall continue to	89
accrue and be due.	90

Sec. 5747.451.  (A) The mere retirement from business or	91
voluntary dissolution of a domestic or foreign qualifying entity	92
does not exempt it from the requirements to make reports as	93
required under sections 5747.42 to 5747.44 or to pay the taxes	94
imposed under section 5733.41 or 5747.41 of the Revised Code. If	95
any qualifying entity subject to the taxes imposed under section	96
5733.41 or 5747.41 of the Revised Code sells its business or stock	97
of merchandise or quits its business, the taxes required to be	98
paid prior to that time, together with any interest or penalty	99
thereon, become due and payable immediately, and the qualifying	100
entity shall make a final return within fifteen days after the	101
date of selling or quitting business. The successor of the	102
qualifying entity shall withhold a sufficient amount of the	103
purchase money to cover the amount of such taxes, interest, and	104
penalties due and unpaid until the qualifying entity produces a	105
receipt from the tax commissioner showing that the taxes,	106
interest, and penalties have been paid, or a certificate	107
indicating that no taxes are due. If the purchaser of the	108
business or stock of goods fails to withhold purchase money, the	109
purchaser is personally liable for the payment of the taxes,	110
interest, and penalties accrued and unpaid during the operation of	111
the business by the qualifying entity. If the amount of those	112
taxes, interest, and penalty unpaid at the time of the purchase	113
exceeds the total purchase money, the tax commissioner may adjust	114
the qualifying entity's liability for those taxes, interest, and	115
penalty, or adjust the responsibility of the purchaser to pay that	116
liability, in a manner calculated to maximize the collection of	117
those liabilities.	118

(B) Annually, on the last day of each qualifying taxable	119
year of a qualifying entity, the taxes imposed under section	120
5733.41 or 5747.41 of the Revised Code, together with any	121
penalties subsequently accruing thereon, become a lien on all	122
property in this state of the qualifying entity, whether such	123
property is employed by the qualifying entity in the prosecution	124
of its business or is in the hands of an assignee, trustee, or	125
receiver for the benefit of the qualifying entity's creditors and	126
investors. The lien shall continue until those taxes, together	127
with any penalties subsequently accruing, are paid.	128

Upon failure of such a qualifying entity to pay those taxes	129
on the day fixed for payment, the treasurer of state shall	130
thereupon notify the tax commissioner, and the commissioner may	131
file in the office of the county recorder in each county in this	132
state in which the qualifying entity owns or has a beneficial	133
interest in real estate, notice of the lien containing a brief	134
description of such real estate. No fee shall be charged for such	135
a filing. The lien is not valid as against any mortgagee,	136
purchaser, or judgment creditor whose rights have attached prior	137
to the time the notice is so filed in the county in which the real	138
estate which is the subject of such mortgage, purchase, or	139
judgment lien is located. The notice shall be recorded in a book	140
kept by the recorder, called the qualifying entity tax lien	141
record, and indexed under the name of the qualifying entity	142
charged with the tax. When the tax, together with any penalties	143
subsequently accruing thereon, have been paid, the tax	144
commissioner shall furnish to the qualifying entity an	145
acknowledgment of such payment that the qualifying entity may	146
record with the recorder of each county in which notice of such	147
lien has been filed, for which recording the recorder shall charge	148
and receive a fee of two dollars.	149

(C) In addition to all other remedies for the collection of	150
any taxes or penalties due under law, whenever any taxes,	151
interest, or penalties due from any qualifying entity under	152
section 5733.41 of the Revised Code or this chapter have remained	153
unpaid for a period of ninety days, or whenever any qualifying	154
entity has failed for a period of ninety days to make any report	155
or return required by law, or to pay any penalty for failure to	156
make or file such report or return, the attorney general, upon the	157
request of the tax commissioner, shall file a petition in the	158
court of common pleas in the county of the state in which such	159
qualifying entity has its principal place of business for a	160
judgment for the amount of the taxes, interest, or penalties	161
appearing to be due, the enforcement of any lien in favor of the	162
state, and an injunction to restrain such qualifying entity and	163
its officers, directors, and managing agents from the transaction	164
of any business within this state, other than such acts as are	165
incidental to liquidation or winding up, until the payment of such	166
taxes, interest, and penalties, and the costs of the proceeding	167
fixed by the court, or the making and filing of such report or	168
return.	169

The petition shall be in the name of the state. Any of the	170
qualifying entities having its principal places of business in the	171
county may be joined in one suit. On the motion of the attorney	172
general, the court of common pleas shall enter an order requiring	173
all defendants to answer by a day certain, and may appoint a	174
special master commissioner to take testimony, with such other	175
power and authority as the court confers, and permitting process	176
to be served by registered mail and by publication in a newspaper	177
of general circulation published in the county, which publication	178
need not be made more than once, setting forth the name of each	179
delinquent qualifying entity, the matter in which the qualifying	180
entity is delinquent, the names of its officers, directors, and	181
managing agents, if set forth in the petition, and the amount of	182
any taxes, fees, or penalties claimed to be owing by the	183
qualifying entity.	184

All or any of the trustees or other fiduciaries, officers,	185
directors, investors, beneficiaries, or managing agents of any	186
qualifying entity may be joined as defendants with the qualifying	187
entity.	188

If it appears to the court upon hearing that any qualifying	189
entity that is a party to the proceeding is indebted to the state	190
for taxes imposed under section 5733.41 or 5747.41 of the Revised	191
Code, or interest or penalties thereon, judgment shall be entered	192
therefor with interest; and if it appears that any qualifying	193
entity has failed to make or file any report or return, a	194
mandatory injunction may be issued against the qualifying entity,	195
its trustees or other fiduciaries, officers, directors, and	196
managing agents, enjoining them from the transaction of any	197
business within this state, other than acts incidental to	198
liquidation or winding up, until the making and filing of all	199
proper reports or returns and until the payment in full of all	200
taxes, interest, and penalties.	201

If the trustees or other fiduciaries, officers, directors,	202
investors, beneficiaries, or managing agents of a qualifying	203
entity are not made parties in the first instance, and a judgment	204
or an injunction is rendered or issued against the qualifying	205
entity, those officers, directors, investors, or managing agents	206
may be made parties to such proceedings upon the motion of the	207
attorney general, and, upon notice to them of the form and terms	208
of such injunction, they shall be bound thereby as fully as if	209
they had been made parties in the first instance.	210

In any action authorized by this division, a statement of the	211
tax commissioner, or the secretary of state, when duly certified,	212
shall be prima-facie evidence of the amount of taxes, interest, or	213
penalties due from any qualifying entity, or of the failure of any	214
qualifying entity to file with the commissioner or the secretary	215
of state any report required by law, and any such certificate of	216
the commissioner or the secretary of state may be required in	217
evidence in any such proceeding.	218

On the application of any defendant and for good cause shown,	219
the court may order a separate hearing of the issues as to any	220
defendant.	221

The costs of the proceeding shall be apportioned among the	222
parties as the court deems proper.	223

The court in such proceeding may make, enter, and enforce	224
such other judgments and orders and grant such other relief as is	225
necessary or incidental to the enforcement of the claims and lien	226
of the state.	227

In the performance of the duties enjoined upon the attorney	228
general by this division, the attorney general may direct any	229
prosecuting attorney to bring an action, as authorized by this	230
division, in the name of the state with respect to any delinquent	231
qualifying entities within the prosecuting attorney's county, and	232
like proceedings and orders shall be had as if such action were	233
instituted by the attorney general.	234

(D) If any qualifying entity fails to make and file the	235
reports or returns required under this chapter, or to pay the	236
penalties provided by law for failure to make and file such	237
reports or returns for a period of ninety days after the time	238
prescribed by this chapter, the attorney general, on the request	239
of the tax commissioner, shall commence an action in quo warranto	240
in the court of appeals of the county in which that qualifying	241
entity has its principal place of business to forfeit and annul	242
its privileges and franchises. If the court is satisfied that any	243
such qualifying entity is in default, it shall render judgment	244
ousting such qualifying entity from the exercise of its privileges	245
and franchises within this state, and shall otherwise proceed as	246
provided in sections 2733.02 to 2733.39 of the Revised Code.	247

(E) With the advice and consent of the tax commissioner, the	248
attorney general may, before or after any action for the recovery	249
of taxes imposed under section 5733.41 or 5747.41 of the Revised	250
Code, or interest or penalties thereon and certified to the	251
attorney general as delinquent, compromise or settle any claim for	252
delinquent taxes, interest, or penalties so certified.	253

Section 2. That existing sections 131.02 and 5747.451 and	254
sections 5727.59 and 5733.25 of the Revised Code are hereby	255
repealed.	256