As Introduced

128th General Assembly Regular Session 2009-2010

S. B. No. 40

Senator Schaffer 

Cosponsors: Senators Wagoner, Gibbs, Grendell, Roberts, Turner, Hughes, Coughlin, Schuring, Stewart 

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A BILL

To amend sections 5747.08 and 5747.98 and to enact

1

section 5747.71 of the Revised Code to allow a

2

credit against the personal income tax for amounts

3

spent by teachers for instructional materials.

4

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

Section 1. That sections 5747.08 and 5747.98 be amended and	5
section 5747.71 of the Revised Code be enacted to read as follows:	6

Sec. 5747.08.  An annual return with respect to the tax	7
imposed by section 5747.02 of the Revised Code and each tax	8
imposed under Chapter 5748. of the Revised Code shall be made by	9
every taxpayer for any taxable year for which the taxpayer is	10
liable for the tax imposed by that section or under that chapter,	11
unless the total credits allowed under divisions (E), (F), and (G)	12
of section 5747.05 of the Revised Code for the year are equal to	13
or exceed the tax imposed by section 5747.02 of the Revised Code,	14
in which case no return shall be required unless the taxpayer is	15
liable for a tax imposed pursuant to Chapter 5748. of the Revised	16
Code.	17

(A) If an individual is deceased, any return or notice	18
required of that individual under this chapter shall be made and	19
filed by that decedent's executor, administrator, or other person	20
charged with the property of that decedent.	21

(B) If an individual is unable to make a return or notice	22
required by this chapter, the return or notice required of that	23
individual shall be made and filed by the individual's duly	24
authorized agent, guardian, conservator, fiduciary, or other	25
person charged with the care of the person or property of that	26
individual.	27

(C) Returns or notices required of an estate or a trust shall	28
be made and filed by the fiduciary of the estate or trust.	29

(D)(1)(a) Except as otherwise provided in division (D)(1)(b)	30
of this section, any pass-through entity may file a single return	31
on behalf of one or more of the entity's investors other than an	32
investor that is a person subject to the tax imposed under section	33
5733.06 of the Revised Code. The single return shall set forth the	34
name, address, and social security number or other identifying	35
number of each of those pass-through entity investors and shall	36
indicate the distributive share of each of those pass-through	37
entity investor's income taxable in this state in accordance with	38
sections 5747.20 to 5747.231 of the Revised Code. Such	39
pass-through entity investors for whom the pass-through entity	40
elects to file a single return are not entitled to the exemption	41
or credit provided for by sections 5747.02 and 5747.022 of the	42
Revised Code; shall calculate the tax before business credits at	43
the highest rate of tax set forth in section 5747.02 of the	44
Revised Code for the taxable year for which the return is filed;	45
and are entitled to only their distributive share of the business	46
credits as defined in division (D)(2) of this section. A single	47
check drawn by the pass-through entity shall accompany the return	48
in full payment of the tax due, as shown on the single return, for	49
such investors, other than investors who are persons subject to	50
the tax imposed under section 5733.06 of the Revised Code.	51

(b)(i) A pass-through entity shall not include in such a	52
single return any investor that is a trust to the extent that any	53
direct or indirect current, future, or contingent beneficiary of	54
the trust is a person subject to the tax imposed under section	55
5733.06 of the Revised Code.	56

(ii) A pass-through entity shall not include in such a single	57
return any investor that is itself a pass-through entity to the	58
extent that any direct or indirect investor in the second	59
pass-through entity is a person subject to the tax imposed under	60
section 5733.06 of the Revised Code.	61

(c) Nothing in division (D) of this section precludes the tax	62
commissioner from requiring such investors to file the return and	63
make the payment of taxes and related interest, penalty, and	64
interest penalty required by this section or section 5747.02,	65
5747.09, or 5747.15 of the Revised Code. Nothing in division (D)	66
of this section shall be construed to provide to such an investor	67
or pass-through entity any additional deduction or credit, other	68
than the credit provided by division (J) of this section, solely	69
on account of the entity's filing a return in accordance with this	70
section. Such a pass-through entity also shall make the filing and	71
payment of estimated taxes on behalf of the pass-through entity	72
investors other than an investor that is a person subject to the	73
tax imposed under section 5733.06 of the Revised Code.	74

(2) For the purposes of this section, "business credits"	75
means the credits listed in section 5747.98 of the Revised Code	76
excluding the following credits:	77

(a) The retirement credit under division (B) of section	78
5747.055 of the Revised Code;	79

(b) The senior citizen credit under division (C) of section	80
5747.05 of the Revised Code;	81

(c) The lump sum distribution credit under division (D) of	82
section 5747.05 of the Revised Code;	83

(d) The dependent care credit under section 5747.054 of the	84
Revised Code;	85

(e) The lump sum retirement income credit under division (C)	86
of section 5747.055 of the Revised Code;	87

(f) The lump sum retirement income credit under division (D)	88
of section 5747.055 of the Revised Code;	89

(g) The lump sum retirement income credit under division (E)	90
of section 5747.055 of the Revised Code;	91

(h) The credit for displaced workers who pay for job training	92
under section 5747.27 of the Revised Code;	93

(i) The twenty-dollar personal exemption credit under section	94
5747.022 of the Revised Code;	95

(j) The joint filing credit under division (G) of section	96
5747.05 of the Revised Code;	97

(k) The nonresident credit under division (A) of section	98
5747.05 of the Revised Code;	99

(l) The credit for a resident's out-of-state income under	100
division (B) of section 5747.05 of the Revised Code;	101

(m) The low-income credit under section 5747.056 of the	102
Revised Code;	103

(n) The credit for instructional material under section	104
5747.71 of the Revised Code.	105

(3) The election provided for under division (D) of this	106
section applies only to the taxable year for which the election is	107
made by the pass-through entity. Unless the tax commissioner	108
provides otherwise, this election, once made, is binding and	109
irrevocable for the taxable year for which the election is made.	110
Nothing in this division shall be construed to provide for any	111
deduction or credit that would not be allowable if a nonresident	112
pass-through entity investor were to file an annual return.	113

(4) If a pass-through entity makes the election provided for	114
under division (D) of this section, the pass-through entity shall	115
be liable for any additional taxes, interest, interest penalty, or	116
penalties imposed by this chapter if the tax commissioner finds	117
that the single return does not reflect the correct tax due by the	118
pass-through entity investors covered by that return. Nothing in	119
this division shall be construed to limit or alter the liability,	120
if any, imposed on pass-through entity investors for unpaid or	121
underpaid taxes, interest, interest penalty, or penalties as a	122
result of the pass-through entity's making the election provided	123
for under division (D) of this section. For the purposes of	124
division (D) of this section, "correct tax due" means the tax that	125
would have been paid by the pass-through entity had the single	126
return been filed in a manner reflecting the tax commissioner's	127
findings. Nothing in division (D) of this section shall be	128
construed to make or hold a pass-through entity liable for tax	129
attributable to a pass-through entity investor's income from a	130
source other than the pass-through entity electing to file the	131
single return.	132

(E) If a husband and wife file a joint federal income tax	133
return for a taxable year, they shall file a joint return under	134
this section for that taxable year, and their liabilities are	135
joint and several, but, if the federal income tax liability of	136
either spouse is determined on a separate federal income tax	137
return, they shall file separate returns under this section.	138

If either spouse is not required to file a federal income tax	139
return and either or both are required to file a return pursuant	140
to this chapter, they may elect to file separate or joint returns,	141
and, pursuant to that election, their liabilities are separate or	142
joint and several. If a husband and wife file separate returns	143
pursuant to this chapter, each must claim the taxpayer's own	144
exemption, but not both, as authorized under section 5747.02 of	145
the Revised Code on the taxpayer's own return.	146

(F) Each return or notice required to be filed under this	147
section shall contain the signature of the taxpayer or the	148
taxpayer's duly authorized agent and of the person who prepared	149
the return for the taxpayer, and shall include the taxpayer's	150
social security number. Each return shall be verified by a	151
declaration under the penalties of perjury. The tax commissioner	152
shall prescribe the form that the signature and declaration shall	153
take.	154

(G) Each return or notice required to be filed under this	155
section shall be made and filed as required by section 5747.04 of	156
the Revised Code, on or before the fifteenth day of April of each	157
year, on forms that the tax commissioner shall prescribe, together	158
with remittance made payable to the treasurer of state in the	159
combined amount of the state and all school district income taxes	160
shown to be due on the form, unless the combined amount shown to	161
be due is one dollar or less, in which case that amount need not	162
be remitted.	163

Upon good cause shown, the tax commissioner may extend the	164
period for filing any notice or return required to be filed under	165
this section and may adopt rules relating to extensions. If the	166
extension results in an extension of time for the payment of any	167
state or school district income tax liability with respect to	168
which the return is filed, the taxpayer shall pay at the time the	169
tax liability is paid an amount of interest computed at the rate	170
per annum prescribed by section 5703.47 of the Revised Code on	171
that liability from the time that payment is due without extension	172
to the time of actual payment. Except as provided in section	173
5747.132 of the Revised Code, in addition to all other interest	174
charges and penalties, all taxes imposed under this chapter or	175
Chapter 5748. of the Revised Code and remaining unpaid after they	176
become due, except combined amounts due of one dollar or less,	177
bear interest at the rate per annum prescribed by section 5703.47	178
of the Revised Code until paid or until the day an assessment is	179
issued under section 5747.13 of the Revised Code, whichever occurs	180
first.	181

If the tax commissioner considers it necessary in order to	182
ensure the payment of the tax imposed by section 5747.02 of the	183
Revised Code or any tax imposed under Chapter 5748. of the Revised	184
Code, the tax commissioner may require returns and payments to be	185
made otherwise than as provided in this section.	186

To the extent that any provision in this division conflicts	187
with any provision in section 5747.026 of the Revised Code, the	188
provision in that section prevails.	189

(H) If any report, claim, statement, or other document	190
required to be filed, or any payment required to be made, within a	191
prescribed period or on or before a prescribed date under this	192
chapter is delivered after that period or that date by United	193
States mail to the agency, officer, or office with which the	194
report, claim, statement, or other document is required to be	195
filed, or to which the payment is required to be made, the date of	196
the postmark stamped on the cover in which the report, claim,	197
statement, or other document, or payment is mailed shall be deemed	198
to be the date of delivery or the date of payment.	199

If a payment is required to be made by electronic funds	200
transfer pursuant to section 5747.072 of the Revised Code, the	201
payment is considered to be made when the payment is received by	202
the treasurer of state or credited to an account designated by the	203
treasurer of state for the receipt of tax payments.	204

"The date of the postmark" means, in the event there is more	205
than one date on the cover, the earliest date imprinted on the	206
cover by the United States postal service.	207

(I) The amounts withheld by the employer pursuant to section	208
5747.06 of the Revised Code shall be allowed to the recipient of	209
the compensation as credits against payment of the appropriate	210
taxes imposed on the recipient by section 5747.02 and under	211
Chapter 5748. of the Revised Code.	212

(J) If, in accordance with division (D) of this section, a	213
pass-through entity elects to file a single return and if any	214
investor is required to file the return and make the payment of	215
taxes required by this chapter on account of the investor's other	216
income that is not included in a single return filed by a	217
pass-through entity, the investor is entitled to a refundable	218
credit equal to the investor's proportionate share of the tax paid	219
by the pass-through entity on behalf of the investor. The investor	220
shall claim the credit for the investor's taxable year in which or	221
with which ends the taxable year of the pass-through entity.	222
Nothing in this chapter shall be construed to allow any credit	223
provided in this chapter to be claimed more than once. For the	224
purposes of computing any interest, penalty, or interest penalty,	225
the investor shall be deemed to have paid the refundable credit	226
provided by this division on the day that the pass-through entity	227
paid the estimated tax or the tax giving rise to the credit.	228

(K) The tax commissioner shall ensure that each return	229
required to be filed under this section includes a box that the	230
taxpayer may check to authorize a paid tax preparer who prepared	231
the return to communicate with the department of taxation about	232
matters pertaining to the return. The return or instructions	233
accompanying the return shall indicate that by checking the box	234
the taxpayer authorizes the department of taxation to contact the	235
preparer concerning questions that arise during the processing of	236
the return and authorizes the preparer only to provide the	237
department with information that is missing from the return, to	238
contact the department for information about the processing of the	239
return or the status of the taxpayer's refund or payments, and to	240
respond to notices about mathematical errors, offsets, or return	241
preparation that the taxpayer has received from the department and	242
has shown to the preparer.	243

Sec. 5747.71. (A) As used in this section:

244

(1) "Instructional material" means material used by a teacher	245
for general classroom instruction, even though the material may be	246
used from time to time by individual students or groups of	247
students. "Instructional material" does not include items given to	248
or used solely by an individual student, unless the student	249
receives instruction at home pursuant to an excuse from school	250
attendance under division (A)(2) of section 3321.04 of the Revised	251
Code and rules prescribed by the state board of education and the	252
student is the only student in the classroom receiving such	253
instruction by the teacher.	254

(2) "Teacher" means a classroom teacher in grades	255
kindergarten through twelve who holds an educator license under	256
Chapter 3319. of the Revised Code, or a person who instructs a	257
child at home and who is qualified to do so for the purposes of	258
division (A)(2) of section 3321.04 of the Revised Code and rules	259
prescribed by the state board of education.	260

(3) "Classroom" includes the place in which a child receives	261
instruction at home pursuant to an excuse from school attendance	262
under division (A)(2) of section 3321.04 of the Revised Code and	263
rules prescribed by the state board of education.	264

(B) There is hereby allowed a nonrefundable credit against	265
the tax imposed by section 5747.02 of the Revised Code for amounts	266
spent by a teacher during the teacher's taxable year on	267
instructional material used in the teacher's classroom. The amount	268
of the credit shall not exceed one hundred dollars. The credit	269
shall be claimed in the order required under section 5747.98 of	270
the Revised Code.	271

Sec. 5747.98.  (A) To provide a uniform procedure for	272
calculating the amount of tax due under section 5747.02 of the	273
Revised Code, a taxpayer shall claim any credits to which the	274
taxpayer is entitled in the following order:	275

(1) The retirement income credit under division (B) of	276
section 5747.055 of the Revised Code;	277

(2) The senior citizen credit under division (C) of section	278
5747.05 of the Revised Code;	279

(3) The lump sum distribution credit under division (D) of	280
section 5747.05 of the Revised Code;	281

(4) The dependent care credit under section 5747.054 of the	282
Revised Code;	283

(5) The lump sum retirement income credit under division (C)	284
of section 5747.055 of the Revised Code;	285

(6) The lump sum retirement income credit under division (D)	286
of section 5747.055 of the Revised Code;	287

(7) The lump sum retirement income credit under division (E)	288
of section 5747.055 of the Revised Code;	289

(8) The low-income credit under section 5747.056 of the	290
Revised Code;	291

(9) The credit for displaced workers who pay for job training	292
under section 5747.27 of the Revised Code;	293

(10) The campaign contribution credit under section 5747.29	294
of the Revised Code;	295

(11) The twenty-dollar personal exemption credit under	296
section 5747.022 of the Revised Code;	297

(12) The joint filing credit under division (G) of section	298
5747.05 of the Revised Code;	299

(13) The nonresident credit under division (A) of section	300
5747.05 of the Revised Code;	301

(14) The credit for a resident's out-of-state income under	302
division (B) of section 5747.05 of the Revised Code;	303

(15) The credit for employers that enter into agreements with	304
child day-care centers under section 5747.34 of the Revised Code;	305

(16) The credit for employers that reimburse employee child	306
care expenses under section 5747.36 of the Revised Code;	307

(17) The credit for instructional material under section	308
5747.71 of the Revised Code;	309

(18) The credit for adoption of a minor child under section	310
5747.37 of the Revised Code;	311

(18)(19) The credit for purchases of lights and reflectors	312
under section 5747.38 of the Revised Code;	313

(19)(20) The job retention credit under division (B) of	314
section 5747.058 of the Revised Code;	315

(20)(21) The credit for selling alternative fuel under	316
section 5747.77 of the Revised Code;	317

(21)(22) The second credit for purchases of new manufacturing	318
machinery and equipment and the credit for using Ohio coal under	319
section 5747.31 of the Revised Code;	320

(22)(23) The job training credit under section 5747.39 of the	321
Revised Code;	322

(23)(24) The enterprise zone credit under section 5709.66 of	323
the Revised Code;	324

(24)(25) The credit for the eligible costs associated with a	325
voluntary action under section 5747.32 of the Revised Code;	326

(25)(26) The credit for employers that establish on-site	327
child day-care centers under section 5747.35 of the Revised Code;	328

(26)(27) The ethanol plant investment credit under section	329
5747.75 of the Revised Code;	330

(27)(28) The credit for purchases of qualifying grape	331
production property under section 5747.28 of the Revised Code;	332

(28)(29) The export sales credit under section 5747.057 of	333
the Revised Code;	334

(29)(30) The credit for research and development and	335
technology transfer investors under section 5747.33 of the Revised	336
Code;	337

(30)(31) The enterprise zone credits under section 5709.65 of	338
the Revised Code;	339

(31)(32) The research and development credit under section	340
5747.331 of the Revised Code;	341

(32)(33) The credit for rehabilitating a historic building	342
under section 5747.76 of the Revised Code;	343

(33)(34) The refundable credit for rehabilitating a historic	344
building under section 5747.76 of the Revised Code;	345

(34)(35) The refundable jobs creation credit under division	346
(A) of section 5747.058 of the Revised Code;	347

(35)(36) The refundable credit for taxes paid by a qualifying	348
entity granted under section 5747.059 of the Revised Code;	349

(36)(37) The refundable credits for taxes paid by a	350
qualifying pass-through entity granted under division (J) of	351
section 5747.08 of the Revised Code;	352

(37)(38) The refundable credit for tax withheld under	353
division (B)(1) of section 5747.062 of the Revised Code;	354

(38)(39) The refundable credit under section 5747.80 of the	355
Revised Code for losses on loans made to the Ohio venture capital	356
program under sections 150.01 to 150.10 of the Revised Code.	357

(B) For any credit, except the refundable credits enumerated	358
in divisions (A)(33) to (38) of this section and the credit	359
granted under division (I) of section 5747.08 of the Revised	360
Code, the amount of the credit for a taxable year shall not	361
exceed the tax due after allowing for any other credit that	362
precedes it in the order required under this section. Any excess	363
amount of a particular credit may be carried forward if	364
authorized under the section creating that credit. Nothing in	365
this chapter shall be construed to allow a taxpayer to claim,	366
directly or indirectly, a credit more than once for a taxable	367
year.	368

Section 2. That existing sections 5747.08 and 5747.98 of the	369
Revised Code are hereby repealed.	370

Section 3. That the amendment of sections 5747.08 and 5747.98	371
and the enactment of section 5747.71 of the Revised Code apply to	372
taxable years beginning on or after January 1, 2009.	373