As Introduced

127th General Assembly
Regular Session
2007-2008
S. B. No. 206


Senator Mason 

Cosponsors: Senators Smith, Fedor, Kearney, Roberts 

A BILL
To amend sections 5733.98 and 5747.98 and to enact 1
sections 5733.421 and 5747.391 of the Revised Code 2
to create a tax credit for wages paid by employers 3
to employees who have previously been convicted of 4
felonies. 5


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

       Section 1. That sections 5733.98 and 5747.98 be amended and 6
sections 5733.421 and 5747.391 of the Revised Code be enacted to 7
read as follows:8

       Sec. 5733.421.  (A) As used in this section:9

       (1) "Qualified reforming felon" means an individual who:10

       (a) Has been convicted of a felony under any statute of the 11
United States or any state;12

       (b) Was hired by a taxpayer within one year of the conviction 13
or, if sentenced to a term of incarceration, was hired within one 14
year of being released from incarceration; and15

       (c) Is a member of a family that, in the six months 16
immediately preceding the date of hiring, had an income that, on 17
an annual basis, would be seventy per cent or less of the most 18
recent lower living standard calculated by the federal bureau of 19
labor statistics.20

       (2) "Family" means an individual, and an individual's spouse 21
and children. 22

       (3) "Wages" has the same meaning as in section 3306 of the 23
Internal Revenue Code. 24

       (B)(1) For tax years 2008 and 2009, a nonrefundable credit is 25
allowed against the tax imposed by section 5733.06 of the Revised 26
Code for the wages paid by a taxpayer to a qualified reforming 27
felon who works at least one hundred twenty hours for the taxpayer 28
during the taxpayer's taxable year. The amount of the credit shall 29
be calculated as follows:30

       (a) For each qualified reforming felon who works at least 31
four hundred hours during the taxable year, the credit equals 32
forty per cent of the wages paid to the qualified reforming felon, 33
but shall not exceed two thousand four hundred dollars per 34
qualified reforming felon.35

       (b) For each qualified reforming felon who works less than 36
four hundred hours but at least one hundred twenty hours during 37
the taxable year, the credit equals twenty-five per cent of the 38
wages paid to the qualified reforming felon, but shall not exceed 39
one thousand five hundred dollars per qualified reforming felon. 40

       The credit shall be claimed in the order required under 41
section 5733.98 of the Revised Code. The credit, to the extent it 42
exceeds the taxpayer's tax liability for the tax year after 43
allowance for any other credits that precede the credit under that 44
section in that order, may be carried forward to the next tax 45
year.46

       (2) A taxpayer that received federally funded payments for 47
on-the-job training of a qualified reforming felon may not claim 48
the credit allowed under this section for any portion of the wages 49
paid to that qualified reforming felon. 50

       (3) A taxpayer may not claim the credit allowed under this 51
section for any portion of the wages paid to a qualified reforming 52
felon for services that were the same as, or substantially similar 53
to, services that, but for a strike or lockout, would have been 54
performed by another employee. 55

       (4) If a qualified reforming felon's employment is terminated 56
during the taxable year and the qualified reforming felon was 57
employed by the taxpayer for less than twelve months, the taxpayer 58
may not claim the full amount of the credit allowed under this 59
section unless the qualified reforming felon voluntarily 60
terminated employment; was unable to continue employment due to a 61
disability or death; or was terminated for cause. If a qualified 62
reforming felon's employment is terminated for any other reason, 63
the amount of the credit to which the taxpayer is entitled under 64
this section is reduced by a percentage equal to the percentage of 65
the taxable year that the qualified reforming felon was not 66
employed by the taxpayer. 67

       (C) All files, statements, returns, reports, papers, or 68
documents of any kind relating to qualified reforming felons or 69
their families are not public records under section 149.43 of the 70
Revised Code. 71

       Sec. 5733.98.  (A) To provide a uniform procedure for72
calculating the amount of tax imposed by section 5733.06 of the73
Revised Code that is due under this chapter, a taxpayer shall74
claim any credits to which it is entitled in the following order,75
except as otherwise provided in section 5733.058 of the Revised76
Code:77

       (1) For tax year 2005, the credit for taxes paid by a 78
qualifying pass-through entity allowed under section 5733.0611 of 79
the Revised Code;80

       (2) The credit allowed for financial institutions under81
section 5733.45 of the Revised Code;82

       (3) The credit for qualifying affiliated groups under section83
5733.068 of the Revised Code;84

       (4) The subsidiary corporation credit under section 5733.06785
of the Revised Code;86

       (5) The savings and loan assessment credit under section87
5733.063 of the Revised Code;88

       (6) The credit for recycling and litter prevention donations89
under section 5733.064 of the Revised Code;90

       (7) The credit for employers that enter into agreements with91
child day-care centers under section 5733.36 of the Revised Code;92

       (8) The credit for employers that reimburse employee child 93
care expenses under section 5733.38 of the Revised Code;94

       (9) The credit for maintaining railroad active grade crossing95
warning devices under section 5733.43 of the Revised Code;96

       (10) The credit for purchases of lights and reflectors under97
section 5733.44 of the Revised Code;98

       (11) The job retention credit under division (B) of section99
5733.0610 of the Revised Code;100

       (12) The credit for tax years 2008 and 2009 for selling 101
alternative fuel under section 5733.48 of the Revised Code;102

       (13) The second credit for purchases of new manufacturing103
machinery and equipment under section 5733.33 of the Revised Code;104

       (14) The job training credit under section 5733.42 of the105
Revised Code;106

       (15) The credit for qualified research expenses under section 107
5733.351 of the Revised Code;108

       (16) The enterprise zone credit under section 5709.66 of the109
Revised Code;110

       (17) The credit for the eligible costs associated with a111
voluntary action under section 5733.34 of the Revised Code;112

       (18) The credit for employers that establish on-site child113
day-care centers under section 5733.37 of the Revised Code;114

       (19) The credit for employers that employ qualified reforming 115
felons under section 5733.421 of the Revised Code;116

       (20) The ethanol plant investment credit under section117
5733.46 of the Revised Code;118

       (20)(21) The credit for purchases of qualifying grape119
production property under section 5733.32 of the Revised Code;120

       (21)(22) The export sales credit under section 5733.069 of121
the Revised Code;122

       (22)(23) The credit for research and development and123
technology transfer investors under section 5733.35 of the Revised124
Code;125

       (23)(24) The enterprise zone credits under section 5709.65 of126
the Revised Code;127

       (24)(25) The credit for using Ohio coal under section 5733.39128
of the Revised Code;129

       (25)(26) The credit for small telephone companies under 130
section 5733.57 of the Revised Code;131

       (26)(27) The credit for eligible nonrecurring 9-1-1 charges 132
under section 5733.55 of the Revised Code;133

       (27)(28) For tax year 2005, the credit for providing programs 134
to aid the communicatively impaired under division (A) of section 135
5733.56 of the Revised Code;136

       (28)(29) The research and development credit under section 137
5733.352 of the Revised Code;138

       (29)(30) For tax years 2006 and subsequent tax years, the 139
credit for taxes paid by a qualifying pass-through entity allowed 140
under section 5733.0611 of the Revised Code;141

       (30)(31) The refundable credit for rehabilitating a historic 142
building under section 5733.47 of the Revised Code;143

       (31)(32) The refundable jobs creation credit under division144
(A) of section 5733.0610 of the Revised Code;145

       (32)(33) The refundable credit for tax withheld under146
division (B)(2) of section 5747.062 of the Revised Code;147

       (33)(34) The refundable credit under section 5733.49 of the 148
Revised Code for losses on loans made to the Ohio venture capital 149
program under sections 150.01 to 150.10 of the Revised Code;150

       (34)(35) For tax years 2006, 2007, and 2008, the refundable 151
credit allowable under division (B) of section 5733.56 of the 152
Revised Code.153

       (B) For any credit except the credits enumerated in divisions 154
(A)(30)(31) to (34)(35) of this section, the amount of the credit 155
for a tax year shall not exceed the tax due after allowing for 156
any other credit that precedes it in the order required under157
this section. Any excess amount of a particular credit may be158
carried forward if authorized under the section creating that159
credit.160

       Sec. 5747.391.  (A) As used in this section:161

       (1) "Pass-through entity" has the same meaning as in section 162
5733.04 of the Revised Code and includes a sole proprietorship. 163

       (2) "Qualified reforming felon" means an individual who:164

       (a) Has been convicted of a felony under any statute of the 165
United States or any state;166

       (b) Was hired by a pass-through entity within one year of the 167
conviction or, if sentenced to a term of incarceration, was hired 168
within one year of being released from incarceration; and169

       (c) Is a member of a family that, in the six months 170
immediately preceding the date of hiring, had an income that, on 171
an annual basis, would be seventy per cent or less of the most 172
recent lower living standard calculated by the federal bureau of 173
labor statistics.174

       (3) "Family" means an individual, and an individual's spouse 175
and children.176

       (4) "Wages" has the same meaning as in section 3306 of the 177
Internal Revenue Code. 178

       (B)(1) For a taxpayer's taxable years beginning in 2007 or 179
thereafter, a nonrefundable credit is allowed against the tax 180
imposed by section 5747.02 of the Revised Code for the wages paid 181
by a pass-through entity to a qualified reforming felon who works 182
at least one hundred twenty hours for the pass-through entity 183
during the entity's taxable year. The amount of the credit shall 184
be calculated as follows:185

       (a) For each qualified reforming felon who works at least 186
four hundred hours during the taxable year, the credit equals 187
forty per cent of the wages paid to the qualified reforming felon, 188
but shall not exceed two thousand four hundred dollars per 189
qualified reforming felon.190

       (b) For each qualified reforming felon who works less than 191
four hundred hours but at least one hundred twenty hours during 192
the taxable year, the credit equals twenty-five per cent of the 193
wages paid to the qualified reforming felon, but shall not exceed 194
one thousand five hundred dollars per qualified reforming felon.195

       The amount of a taxpayer's credit is the taxpayer's 196
proportionate share of the credit distributed by the pass-through 197
entity. The credit shall be claimed in the order required under 198
section 5747.98 of the Revised Code. The credit, to the extent it 199
exceeds the taxpayer's tax liability for the taxable year after 200
allowance for any other credits that precede the credit under that 201
section in that order, may be carried forward for the next five 202
succeeding taxable years, but the amount of any excess credit 203
allowed in any such year shall be deducted from the balance 204
carried forward to the succeeding year.205

       (2) A taxpayer may not claim the credit allowed under this 206
section for any portion of the wages paid to a qualified reforming 207
felon for whom the pass-through entity received federally funded 208
payments for on-the-job training.209

       (3) A taxpayer may not claim the credit allowed under this 210
section for any portion of the wages paid to a qualified reforming 211
felon for services that were the same as, or substantially similar 212
to, services that, but for a strike or lockout, would have been 213
performed by another employee.214

       (4) If a qualified reforming felon's employment is terminated 215
during the taxable year and the qualified reforming felon was 216
employed by the pass-through entity for less than twelve months, a 217
taxpayer may not claim the full amount of the credit allowed under 218
this section unless the qualified reforming felon voluntarily 219
terminated employment; was unable to continue employment due to a 220
disability or death; or was terminated for cause. If a qualified 221
reforming felon's employment is terminated for any other reason, 222
the amount of the credit to which the taxpayer is entitled under 223
this section is reduced by a percentage equal to the percentage of 224
the taxable year that the qualified reforming felon was not 225
employed by the pass-through entity.226

       (C) All files, statements, returns, reports, papers, or 227
documents of any kind relating to qualified reforming felons or 228
their families are not public records under section 149.43 of the 229
Revised Code. 230

       Sec. 5747.98.  (A) To provide a uniform procedure for231
calculating the amount of tax due under section 5747.02 of the232
Revised Code, a taxpayer shall claim any credits to which the233
taxpayer is entitled in the following order:234

       (1) The retirement income credit under division (B) of235
section 5747.055 of the Revised Code;236

       (2) The senior citizen credit under division (C) of section237
5747.05 of the Revised Code;238

       (3) The lump sum distribution credit under division (D) of239
section 5747.05 of the Revised Code;240

       (4) The dependent care credit under section 5747.054 of the241
Revised Code;242

       (5) The lump sum retirement income credit under division (C)243
of section 5747.055 of the Revised Code;244

       (6) The lump sum retirement income credit under division (D)245
of section 5747.055 of the Revised Code;246

       (7) The lump sum retirement income credit under division (E)247
of section 5747.055 of the Revised Code;248

       (8) The low-income credit under section 5747.056 of the 249
Revised Code;250

       (9) The credit for displaced workers who pay for job training 251
under section 5747.27 of the Revised Code;252

       (10) The campaign contribution credit under section 5747.29253
of the Revised Code;254

       (11) The twenty-dollar personal exemption credit under255
section 5747.022 of the Revised Code;256

       (12) The joint filing credit under division (G) of section257
5747.05 of the Revised Code;258

       (13) The nonresident credit under division (A) of section259
5747.05 of the Revised Code;260

       (14) The credit for a resident's out-of-state income under261
division (B) of section 5747.05 of the Revised Code;262

       (15) The credit for employers that enter into agreements with 263
child day-care centers under section 5747.34 of the Revised Code;264

       (16) The credit for employers that reimburse employee child 265
care expenses under section 5747.36 of the Revised Code;266

       (17) The credit for adoption of a minor child under section267
5747.37 of the Revised Code;268

       (18) The credit for purchases of lights and reflectors under269
section 5747.38 of the Revised Code;270

       (19) The job retention credit under division (B) of section271
5747.058 of the Revised Code;272

       (20) The credit for selling alternative fuel under section 273
5747.77 of the Revised Code;274

       (21) The second credit for purchases of new manufacturing275
machinery and equipment and the credit for using Ohio coal under276
section 5747.31 of the Revised Code;277

       (22) The job training credit under section 5747.39 of the278
Revised Code;279

       (23) The enterprise zone credit under section 5709.66 of the280
Revised Code;281

       (24) The credit for the eligible costs associated with a282
voluntary action under section 5747.32 of the Revised Code;283

       (25) The credit for employers that establish on-site child284
day-care centers under section 5747.35 of the Revised Code;285

       (26) The credit for employers that employ qualified reforming 286
felons under section 5747.391 of the Revised Code;287

       (27) The ethanol plant investment credit under section288
5747.75 of the Revised Code;289

       (27)(28) The credit for purchases of qualifying grape290
production property under section 5747.28 of the Revised Code;291

       (28)(29) The export sales credit under section 5747.057 of292
the Revised Code;293

       (29)(30) The credit for research and development and294
technology transfer investors under section 5747.33 of the Revised295
Code;296

       (30)(31) The enterprise zone credits under section 5709.65 of297
the Revised Code;298

       (31)(32) The research and development credit under section 299
5747.331 of the Revised Code;300

       (32)(33) The refundable credit for rehabilitating a historic 301
building under section 5747.76 of the Revised Code;302

       (33)(34) The refundable jobs creation credit under division303
(A) of section 5747.058 of the Revised Code;304

       (34)(35) The refundable credit for taxes paid by a qualifying305
entity granted under section 5747.059 of the Revised Code;306

       (35)(36) The refundable credits for taxes paid by a307
qualifying pass-through entity granted under division (J) of308
section 5747.08 of the Revised Code;309

       (36)(37) The refundable credit for tax withheld under310
division (B)(1) of section 5747.062 of the Revised Code;311

       (37)(38) The refundable credit under section 5747.80 of the 312
Revised Code for losses on loans made to the Ohio venture capital 313
program under sections 150.01 to 150.10 of the Revised Code.314

       (B) For any credit, except the credits enumerated in 315
divisions (A)(32)(33) to (37)(38) of this section and the credit 316
granted under division (I) of section 5747.08 of the Revised 317
Code, the amount of the credit for a taxable year shall not318
exceed the tax due after allowing for any other credit that319
precedes it in the order required under this section. Any excess320
amount of a particular credit may be carried forward if321
authorized under the section creating that credit. Nothing in 322
this chapter shall be construed to allow a taxpayer to claim, 323
directly or indirectly, a credit more than once for a taxable 324
year.325

       Section 2. That existing sections 5733.98 and 5747.98 of the 326
Revised Code are hereby repealed.327