As Introduced

129th General Assembly
Regular Session
2011-2012
S. B. No. 58


Senator Tavares 



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 the employment of 3
individuals who have been convicted of felonies.4


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

       Section 1. That sections 5733.98 and 5747.98 be amended and 5
sections 5733.421 and 5747.391 of the Revised Code be enacted to 6
read as follows:7

       Sec. 5733.421.  (A) As used in this section:8

       (1) "Qualified reforming felon" means an individual who:9

       (a) Has been convicted of a felony under any statute of the 10
United States or any state;11

       (b) Was hired by a taxpayer within one year after the 12
conviction or, if sentenced to a term of incarceration, was hired 13
within one year after being released from incarceration; and14

       (c) Is a member of a family that, in the six months 15
immediately preceding the date of hiring, had an income that, on 16
an annual basis, would be seventy per cent or less of the most 17
recent lower living standard calculated by the federal bureau of 18
labor statistics.19

       (2) "Family" means an individual, an individual's spouse, and 20
children.21

       (3) "Wages" has the same meaning as in section 3306 of the 22
Internal Revenue Code.23

       (B)(1) Beginning in tax year 2011, a nonrefundable credit is 24
allowed against the tax imposed by section 5733.06 of the Revised 25
Code for the wages paid by a taxpayer to a qualified reforming 26
felon who works at least one hundred twenty hours for the taxpayer 27
during the taxpayer's taxable year. The amount of the credit shall 28
be calculated as follows:29

       (a) For each qualified reforming felon who works at least 30
four hundred hours during the taxable year, the credit equals 31
forty per cent of the wages paid to the qualified reforming felon, 32
but shall not exceed two thousand four hundred dollars per 33
qualified reforming felon.34

       (b) For each qualified reforming felon who works less than 35
four hundred hours but at least one hundred twenty hours during 36
the taxable year, the credit equals twenty-five per cent of the 37
wages paid to the qualified reforming felon, but shall not exceed 38
one thousand five hundred dollars per qualified reforming felon.39

       The credit shall be claimed in the order required under 40
section 5733.98 of the Revised Code. The credit, to the extent it 41
exceeds the taxpayer's tax liability for the tax year after 42
allowance for any other credits that precede the credit under that 43
section in that order, may be carried forward for the next five 44
succeeding tax years, but the amount of any excess credit allowed 45
in any such year shall be deducted from the balance carried 46
forward to the succeeding year.47

       (2) A taxpayer who received federally funded payments for 48
on-the-job training of a qualified reforming felon may not claim 49
the credit allowed under this section for any portion of the wages 50
paid to that qualified reforming felon.51

       (3) A taxpayer may not claim the credit allowed under this 52
section for any portion of the wages paid to a qualified reforming 53
felon for services that were the same as, or substantially similar 54
to, services that, but for a strike or lockout, would have been 55
performed by another employee.56

       (4) If a qualified reforming felon's employment is terminated 57
during the taxable year and the qualified reforming felon was 58
employed by the taxpayer for less than twelve months, the taxpayer 59
may not claim the full amount of the credit allowed under this 60
section unless the qualified reforming felon voluntarily 61
terminated employment; was unable to continue employment due to a 62
disability or death; or was terminated for cause. If a qualified 63
reforming felon's employment is terminated for any other reason, 64
the amount of the credit to which the taxpayer is entitled under 65
this section is reduced by a percentage equal to the percentage of 66
the taxable year that the qualified reforming felon was not 67
employed by the taxpayer.68

       (C) All files, statements, returns, reports, papers, or 69
documents of any kind relating to qualified reforming felons or 70
their families are not public records under section 149.43 of the 71
Revised Code.72

       Sec. 5733.98.  (A) To provide a uniform procedure for 73
calculating the amount of tax imposed by section 5733.06 of the 74
Revised Code that is due under this chapter, a taxpayer shall 75
claim any credits to which it is entitled in the following order, 76
except as otherwise provided in section 5733.058 of the Revised 77
Code:78

       (1) For tax year 2005, the credit for taxes paid by a 79
qualifying pass-through entity allowed under section 5733.0611 of 80
the Revised Code;81

       (2) The credit allowed for financial institutions under 82
section 5733.45 of the Revised Code;83

       (3) The credit for qualifying affiliated groups under section 84
5733.068 of the Revised Code;85

       (4) The subsidiary corporation credit under section 5733.067 86
of the Revised Code;87

       (5) The savings and loan assessment credit under section 88
5733.063 of the Revised Code;89

       (6) The credit for recycling and litter prevention donations 90
under section 5733.064 of the Revised Code;91

       (7) The credit for employers that enter into agreements with 92
child day-care centers under section 5733.36 of the Revised Code;93

       (8) The credit for employers that reimburse employee child 94
care expenses under section 5733.38 of the Revised Code;95

       (9) The credit for maintaining railroad active grade crossing 96
warning devices under section 5733.43 of the Revised Code;97

       (10) The credit for purchases of lights and reflectors under 98
section 5733.44 of the Revised Code;99

       (11) The job retention credit under division (B) of section 100
5733.0610 of the Revised Code;101

       (12) The credit for tax years 2008 and 2009 for selling 102
alternative fuel under section 5733.48 of the Revised Code;103

       (13) The second credit for purchases of new manufacturing 104
machinery and equipment under section 5733.33 of the Revised Code;105

       (14) The job training credit under section 5733.42 of the 106
Revised Code;107

       (15) The credit for qualified research expenses under section 108
5733.351 of the Revised Code;109

       (16) The enterprise zone credit under section 5709.66 of the 110
Revised Code;111

       (17) The credit for the eligible costs associated with a 112
voluntary action under section 5733.34 of the Revised Code;113

       (18) The credit for employers that establish on-site child 114
day-care centers under section 5733.37 of the Revised Code;115

       (19) The ethanol plant investment credit under section 116
5733.46 of the Revised Code;117

       (20) The credit for employers that employ qualified reforming 118
felons under section 5733.421 of the Revised Code;119

       (21) The credit for purchases of qualifying grape production 120
property under section 5733.32 of the Revised Code;121

       (21)(22) The export sales credit under section 5733.069 of 122
the Revised Code;123

       (22)(23) The credit for research and development and 124
technology transfer investors under section 5733.35 of the Revised 125
Code;126

       (23)(24) The enterprise zone credits under section 5709.65 of 127
the Revised Code;128

       (24)(25) The credit for using Ohio coal under section 5733.39 129
of the Revised Code;130

       (25)(26) The credit for purchases of qualified low-income 131
community investments under section 5733.58 of the Revised Code;132

       (26)(27) The credit for small telephone companies under 133
section 5733.57 of the Revised Code;134

       (27)(28) The credit for eligible nonrecurring 9-1-1 charges 135
under section 5733.55 of the Revised Code;136

       (28)(29) For tax year 2005, the credit for providing programs 137
to aid the communicatively impaired under division (A) of section 138
5733.56 of the Revised Code;139

       (29)(30) The research and development credit under section 140
5733.352 of the Revised Code;141

       (30)(31) For tax years 2006 and subsequent tax years, the 142
credit for taxes paid by a qualifying pass-through entity allowed 143
under section 5733.0611 of the Revised Code;144

       (31)(32) The refundable credit for rehabilitating a historic 145
building under section 5733.47 of the Revised Code;146

       (32)(33) The refundable jobs creation credit under division 147
(A) of section 5733.0610 of the Revised Code;148

       (33)(34) The refundable credit for tax withheld under 149
division (B)(2) of section 5747.062 of the Revised Code;150

       (34)(35) The refundable credit under section 5733.49 of the 151
Revised Code for losses on loans made to the Ohio venture capital 152
program under sections 150.01 to 150.10 of the Revised Code;153

       (35)(36) For tax years 2006, 2007, and 2008, the refundable 154
credit allowable under division (B) of section 5733.56 of the 155
Revised Code;156

       (36)(37) The refundable motion picture production credit 157
under section 5733.59 of the Revised Code.158

       (B) For any credit except the credits enumerated in divisions 159
(A)(31)(32) to (36)(37) of this section, the amount of the credit 160
for a tax year shall not exceed the tax due after allowing for any 161
other credit that precedes it in the order required under this 162
section. Any excess amount of a particular credit may be carried 163
forward if authorized under the section creating that credit.164

       Sec. 5747.391.  (A) As used in this section:165

       (1) "Pass-through entity" has the same meaning as in section 166
5733.04 of the Revised Code and includes a sole proprietorship.167

       (2) "Qualified reforming felon" means an individual who:168

       (a) Has been convicted of a felony under any statute of the 169
United States or any state;170

       (b) Was hired by a pass-through entity within one year after 171
the conviction or, if sentenced to a term of incarceration, was 172
hired within one year after being released from incarceration; and173

       (c) Is a member of a family that, in the six months 174
immediately preceding the date of hiring, had an income that, on 175
an annual basis, would be seventy per cent or less of the most 176
recent lower living standard calculated by the federal bureau of 177
labor statistics.178

       (3) "Family" means an individual, an individual's spouse, and 179
children.180

       (4) "Wages" has the same meaning as in section 3306 of the 181
Internal Revenue Code.182

       (B)(1) For taxable years beginning in 2011 or thereafter, a 183
nonrefundable credit is allowed against the tax imposed by section 184
5747.02 of the Revised Code for the wages paid by a pass-through 185
entity to a qualified reforming felon who works at least one 186
hundred twenty hours for the pass-through entity during the 187
entity's taxable year ending in or with the taxpayer's taxable 188
year. The amount of the credit shall be calculated as follows:189

       (a) For each qualified reforming felon who works at least 190
four hundred hours during the entity's taxable year, the credit 191
equals forty per cent of the wages paid to the qualified reforming 192
felon, but shall not exceed two thousand four hundred dollars per 193
qualified reforming felon.194

       (b) For each qualified reforming felon who works less than 195
four hundred hours but at least one hundred twenty hours during 196
the entity's taxable year, the credit equals twenty-five per cent 197
of the wages paid to the qualified reforming felon, but shall not 198
exceed one thousand five hundred dollars per qualified reforming 199
felon.200

       The amount of a taxpayer's credit is the taxpayer's 201
proportionate share of the credit distributed by the pass-through 202
entity. The credit shall be claimed in the order required under 203
section 5747.98 of the Revised Code. The credit, to the extent it 204
exceeds the taxpayer's tax liability for the taxable year after 205
allowance for any other credits that precede the credit under that 206
section in that order, may be carried forward for the next five 207
succeeding taxable years, but the amount of any excess credit 208
allowed in any such year shall be deducted from the balance 209
carried forward to the succeeding year.210

       (2) A taxpayer may not claim the credit allowed under this 211
section for any portion of the wages paid to a qualified reforming 212
felon for whom the pass-through entity received federally funded 213
payments for on-the-job training.214

       (3) A taxpayer may not claim the credit allowed under this 215
section for any portion of the wages paid to a qualified reforming 216
felon for services that were the same as, or substantially similar 217
to, services that, but for a strike or lockout, would have been 218
performed by another employee.219

       (4) If a qualified reforming felon's employment is terminated 220
during the pass-through entity's taxable year ending in or with 221
the taxpayer's taxable year and the qualified reforming felon was 222
employed by the pass-through entity for less than twelve months, a 223
taxpayer may not claim the full amount of the credit allowed under 224
this section unless the qualified reforming felon voluntarily 225
terminated employment; was unable to continue employment due to a 226
disability or death; or was terminated for cause. If a qualified 227
reforming felon's employment is terminated for any other reason, 228
the amount of the credit to which the taxpayer is entitled under 229
this section is reduced by a percentage equal to the percentage of 230
the taxable year that the qualified reforming felon was not 231
employed by the pass-through entity.232

       (C) All files, statements, returns, reports, papers, or 233
documents of any kind relating to qualified reforming felons or 234
their families are not public records under section 149.43 of the 235
Revised Code.236

       Sec. 5747.98.  (A) To provide a uniform procedure for 237
calculating the amount of tax due under section 5747.02 of the 238
Revised Code, a taxpayer shall claim any credits to which the 239
taxpayer is entitled in the following order:240

       (1) The retirement income credit under division (B) of 241
section 5747.055 of the Revised Code;242

       (2) The senior citizen credit under division (C) of section 243
5747.05 of the Revised Code;244

       (3) The lump sum distribution credit under division (D) of 245
section 5747.05 of the Revised Code;246

       (4) The dependent care credit under section 5747.054 of the 247
Revised Code;248

       (5) The lump sum retirement income credit under division (C) 249
of section 5747.055 of the Revised Code;250

       (6) The lump sum retirement income credit under division (D) 251
of section 5747.055 of the Revised Code;252

       (7) The lump sum retirement income credit under division (E) 253
of section 5747.055 of the Revised Code;254

       (8) The low-income credit under section 5747.056 of the 255
Revised Code;256

       (9) The credit for displaced workers who pay for job training 257
under section 5747.27 of the Revised Code;258

       (10) The campaign contribution credit under section 5747.29 259
of the Revised Code;260

       (11) The twenty-dollar personal exemption credit under 261
section 5747.022 of the Revised Code;262

       (12) The joint filing credit under division (G) of section 263
5747.05 of the Revised Code;264

       (13) The nonresident credit under division (A) of section 265
5747.05 of the Revised Code;266

       (14) The credit for a resident's out-of-state income under 267
division (B) of section 5747.05 of the Revised Code;268

       (15) The credit for employers that enter into agreements with 269
child day-care centers under section 5747.34 of the Revised Code;270

       (16) The credit for employers that reimburse employee child 271
care expenses under section 5747.36 of the Revised Code;272

       (17) The credit for adoption of a minor child under section 273
5747.37 of the Revised Code;274

       (18) The credit for purchases of lights and reflectors under 275
section 5747.38 of the Revised Code;276

       (19) The job retention credit under division (B) of section 277
5747.058 of the Revised Code;278

       (20) The credit for selling alternative fuel under section 279
5747.77 of the Revised Code;280

       (21) The second credit for purchases of new manufacturing 281
machinery and equipment and the credit for using Ohio coal under 282
section 5747.31 of the Revised Code;283

       (22) The job training credit under section 5747.39 of the 284
Revised Code;285

       (23) The enterprise zone credit under section 5709.66 of the 286
Revised Code;287

       (24) The credit for the eligible costs associated with a 288
voluntary action under section 5747.32 of the Revised Code;289

       (25) The credit for employers that establish on-site child 290
day-care centers under section 5747.35 of the Revised Code;291

       (26) The ethanol plant investment credit under section 292
5747.75 of the Revised Code;293

       (27) The credit for employers that employ qualified reforming 294
felons under section 5747.391 of the Revised Code;295

       (28) The credit for purchases of qualifying grape production 296
property under section 5747.28 of the Revised Code;297

       (28)(29) The export sales credit under section 5747.057 of 298
the Revised Code;299

       (29)(30) The credit for research and development and 300
technology transfer investors under section 5747.33 of the Revised 301
Code;302

       (30)(31) The enterprise zone credits under section 5709.65 of 303
the Revised Code;304

       (31)(32) The research and development credit under section 305
5747.331 of the Revised Code;306

       (32)(33) The credit for rehabilitating a historic building 307
under section 5747.76 of the Revised Code;308

       (33)(34) The refundable credit for rehabilitating a historic 309
building under section 5747.76 of the Revised Code;310

       (34)(35) The refundable jobs creation credit under division 311
(A) of section 5747.058 of the Revised Code;312

       (35)(36) The refundable credit for taxes paid by a qualifying 313
entity granted under section 5747.059 of the Revised Code;314

       (36)(37) The refundable credits for taxes paid by a 315
qualifying pass-through entity granted under division (J) of 316
section 5747.08 of the Revised Code;317

       (37)(38) The refundable credit for tax withheld under 318
division (B)(1) of section 5747.062 of the Revised Code;319

       (38)(39) The refundable credit for tax withheld under section 320
5747.063 of the Revised Code;321

       (39)(40) The refundable credit under section 5747.80 of the 322
Revised Code for losses on loans made to the Ohio venture capital 323
program under sections 150.01 to 150.10 of the Revised Code;324

       (40)(41) The refundable motion picture production credit 325
under section 5747.66 of the Revised Code.326

       (B) For any credit, except the refundable credits enumerated 327
in this section and the credit granted under division (I) of 328
section 5747.08 of the Revised Code, the amount of the credit for 329
a taxable year shall not exceed the tax due after allowing for any 330
other credit that precedes it in the order required under this 331
section. Any excess amount of a particular credit may be carried 332
forward if authorized under the section creating that credit. 333
Nothing in this chapter shall be construed to allow a taxpayer to 334
claim, directly or indirectly, a credit more than once for a 335
taxable year.336

       Section 2. That existing sections 5733.98 and 5747.98 of the 337
Revised Code are hereby repealed.338