As Introduced

130th General Assembly Regular Session 2013-2014

H. B. No. 405

Representatives Budish, Hottinger 

Cosponsors: Representatives Patterson, Boyd, Barborak, Reece, Ruhl, Hagan, R., Lundy, Mallory, Winburn, Pillich, Perales, Hood, Stebelton, Grossman 

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A BILL

To amend sections 5747.08 and 5747.98 and to enact

1

sections 3333.51 and 5747.82 of the Revised Code

2

to grant an income tax credit to individuals who

3

earn degrees in science, technology, engineering,

4

or math-based fields of study.

5

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

Section 1. That sections 5747.08 and 5747.98 be amended and	6
sections 3333.51 and 5747.82 of the Revised Code be enacted to	7
read as follows:	8

Sec. 3333.51. (A) As used in this section:

9

(1) "Approved field of study" means a field of study in the	10
natural sciences, technology, engineering, or mathematics that the	11
Ohio board of regents determines is associated with job creation	12
and retention in Ohio.	13

(2) "Institution of higher education" means all of the	14
following:	15

(a) An institution of higher education, as defined in section	16
3345.12 of the Revised Code;	17

(b) An institution authorized by the Ohio board of regents	18
under Chapter 1713. of the Revised Code to grant degrees and that	19
is accredited by the appropriate regional and professional	20
accrediting associations within whose jurisdiction it falls;	21

(c) Private career schools holding program authorizations	22
issued by the state board of career colleges and schools under	23
division (C) of section 3332.05 of the Revised Code;	24

(d) Private institutions exempt from regulation under Chapter	25
3332. of the Revised Code as prescribed in section 3333.046 of the	26
Revised Code;	27

(e) Any institution located outside Ohio designated as an	28
"institution of higher education" by the Ohio board of regents for	29
purposes of this section.	30

(3) "Active duty" means active duty pursuant to an executive	31
order of the president of the United States, an act of the	32
congress of the United States, or a proclamation of the governor.	33

(B)(1) For the purpose of developing and maintaining a highly	34
qualified workforce and thereby to improve the economic welfare of	35
all Ohioans, an individual who graduates on or after the effective	36
date of the enactment of this section from an institution of	37
higher education with a degree in an approved field of study is	38
allowed a credit against the tax imposed by section 5747.02 of the	39
Revised Code. Except as provided in division (D)(1) of this	40
section, the credit shall equal five thousand dollars in the case	41
of an associate's degree; twenty thousand dollars in the case of a	42
baccalaureate degree; and thirty thousand dollars in the case of a	43
master's or doctoral degree. Except as otherwise provided in this	44
section, the individual shall claim one-tenth of the credit amount	45
for the individual's taxable year in which the individual's credit	46
application was approved and one-tenth of the credit amount in	47
each of the succeeding nine taxable years.	48

(2) An individual is liable to the state for credit taken	49
with respect to a degree, and forfeits unused credit and any	50
credit carry-forward, if the individual has been allowed the	51
credit for five or fewer of the individual's taxable years, the	52
individual is a nonresident of Ohio, and the individual is not a	53
full-time student at an institution of higher education in an	54
approved field of study or is not serving in active duty as a	55
member of the national guard or a reserve unit of the armed forces	56
of the United States. A credit shall not be considered to have	57
been allowed for taxable years for which a deferral under division	58
(D) of this section has been authorized and used. Any amount for	59
which an individual is liable under this division may be collected	60
by assessment under section 5747.13 of the Revised Code, and shall	61
be considered as taxes imposed under section 5747.02 of the	62
Revised Code.	63

(C) An individual shall apply for a credit to the Ohio board	64
of regents or to the board's designee on a form approved by the	65
board or designee and shall submit any documents required by the	66
board or designee. If the individual qualifies for a credit, the	67
board or designee shall issue a tax credit certificate to the	68
individual. The certificate shall state the individual's name and	69
social security number, the date the credit application was	70
approved, the credit amount, and the taxable years for which the	71
credit shall be claimed.	72

(D)(1) An individual who has received a credit certificate	73
for an associate's or baccalaureate degree or both may apply for	74
an additional certificate for receipt of a more advanced degree	75
from an institution of higher education in an approved field of	76
study. The credit amount for the additional degree equals the	77
credit amount for the degree as provided in division (B) of this	78
section less the credit amount for the degree or degrees for which	79
a credit certificate has previously been issued. The credit shall	80
be applied for, approved, and claimed in the manner required under	81
division (B) of this section.	82

(2) An individual who has received a credit certificate	83
pursuant to this section may apply to the Ohio board of regents or	84
the board's designee to defer claiming the credit and any related	85
credit carry-forward for a taxable year during which the	86
individual is either of the following:	87

(a) Enrolled full time in an institution of higher education	88
to pursue a more advanced degree in an approved field of study;	89

(b) A member of the national guard or a reserve unit of the	90
armed forces of the United States serving in active duty.	91

An individual described in division (D)(2)(a) of this section	92
may defer claiming the credit until the individual's taxable year	93
in which the individual is no longer a full-time student in an	94
institution of higher education in an approved field of study or	95
in which the individual receives a credit certificate for the	96
more advanced degree, whichever is earlier. An individual	97
described in division (D)(2)(b) of this section may defer claiming	98
the credit until the individual's next taxable year that does not	99
include the period of the individual's active duty deployment.	100

An individual applying for a deferral under division (D)(2)	101
of this section shall submit the application on a form approved by	102
the board or designee. The application shall be accompanied by	103
such documents as the board or designee requires.	104

(E) The Ohio board of regents may designate an entity,	105
including a nonprofit private organization, to perform the	106
administrative duties conferred upon the board by this section.	107

(F) The Ohio board of regents shall identify institutions of	108
higher education and approved fields of study, and shall specify	109
the information required to be disclosed in credit certificate and	110
deferral applications and the documents required to be submitted.	111
In identifying approved fields of study, the board shall give	112
priority to those related to information technology, power and	113
propulsion, advanced materials, instruments and controls,	114
electronics, and biotechnology and biosciences.	115

Sec. 5747.08.  An annual return with respect to the tax	116
imposed by section 5747.02 of the Revised Code and each tax	117
imposed under Chapter 5748. of the Revised Code shall be made by	118
every taxpayer for any taxable year for which the taxpayer is	119
liable for the tax imposed by that section or under that chapter,	120
unless the total credits allowed under divisions (E), (F), and (G)	121
of section 5747.05 of the Revised Code for the year are equal to	122
or exceed the tax imposed by section 5747.02 of the Revised Code,	123
in which case no return shall be required unless the taxpayer is	124
liable for a tax imposed pursuant to Chapter 5748. of the Revised	125
Code.	126

(A) If an individual is deceased, any return or notice	127
required of that individual under this chapter shall be made and	128
filed by that decedent's executor, administrator, or other person	129
charged with the property of that decedent.	130

(B) If an individual is unable to make a return or notice	131
required by this chapter, the return or notice required of that	132
individual shall be made and filed by the individual's duly	133
authorized agent, guardian, conservator, fiduciary, or other	134
person charged with the care of the person or property of that	135
individual.	136

(C) Returns or notices required of an estate or a trust shall	137
be made and filed by the fiduciary of the estate or trust.	138

(D)(1)(a) Except as otherwise provided in division (D)(1)(b)	139
of this section, any pass-through entity may file a single return	140
on behalf of one or more of the entity's investors other than an	141
investor that is a person subject to the tax imposed under section	142
5733.06 of the Revised Code. The single return shall set forth the	143
name, address, and social security number or other identifying	144
number of each of those pass-through entity investors and shall	145
indicate the distributive share of each of those pass-through	146
entity investor's income taxable in this state in accordance with	147
sections 5747.20 to 5747.231 of the Revised Code. Such	148
pass-through entity investors for whom the pass-through entity	149
elects to file a single return are not entitled to the exemption	150
or credit provided for by sections 5747.02 and 5747.022 of the	151
Revised Code; shall calculate the tax before business credits at	152
the highest rate of tax set forth in section 5747.02 of the	153
Revised Code for the taxable year for which the return is filed;	154
and are entitled to only their distributive share of the business	155
credits as defined in division (D)(2) of this section. A single	156
check drawn by the pass-through entity shall accompany the return	157
in full payment of the tax due, as shown on the single return, for	158
such investors, other than investors who are persons subject to	159
the tax imposed under section 5733.06 of the Revised Code.	160

(b)(i) A pass-through entity shall not include in such a	161
single return any investor that is a trust to the extent that any	162
direct or indirect current, future, or contingent beneficiary of	163
the trust is a person subject to the tax imposed under section	164
5733.06 of the Revised Code.	165

(ii) A pass-through entity shall not include in such a single	166
return any investor that is itself a pass-through entity to the	167
extent that any direct or indirect investor in the second	168
pass-through entity is a person subject to the tax imposed under	169
section 5733.06 of the Revised Code.	170

(c) Nothing in division (D) of this section precludes the tax	171
commissioner from requiring such investors to file the return and	172
make the payment of taxes and related interest, penalty, and	173
interest penalty required by this section or section 5747.02,	174
5747.09, or 5747.15 of the Revised Code. Nothing in division (D)	175
of this section precludes such an investor from filing the annual	176
return under this section, utilizing the refundable credit equal	177
to the investor's proportionate share of the tax paid by the	178
pass-through entity on behalf of the investor under division (J)	179
of this section, and making the payment of taxes imposed under	180
section 5747.02 of the Revised Code. Nothing in division (D) of	181
this section shall be construed to provide to such an investor or	182
pass-through entity any additional deduction or credit, other than	183
the credit provided by division (J) of this section, solely on	184
account of the entity's filing a return in accordance with this	185
section. Such a pass-through entity also shall make the filing and	186
payment of estimated taxes on behalf of the pass-through entity	187
investors other than an investor that is a person subject to the	188
tax imposed under section 5733.06 of the Revised Code.	189

(2) For the purposes of this section, "business credits"	190
means the credits listed in section 5747.98 of the Revised Code	191
excluding the following credits:	192

(a) The retirement credit under division (B) of section	193
5747.055 of the Revised Code;	194

(b) The senior citizen credit under division (C) of section	195
5747.05 of the Revised Code;	196

(c) The lump sum distribution credit under division (D) of	197
section 5747.05 of the Revised Code;	198

(d) The dependent care credit under section 5747.054 of the	199
Revised Code;	200

(e) The lump sum retirement income credit under division (C)	201
of section 5747.055 of the Revised Code;	202

(f) The lump sum retirement income credit under division (D)	203
of section 5747.055 of the Revised Code;	204

(g) The lump sum retirement income credit under division (E)	205
of section 5747.055 of the Revised Code;	206

(h) The credit for displaced workers who pay for job training	207
under section 5747.27 of the Revised Code;	208

(i) The twenty-dollar personal exemption credit under section	209
5747.022 of the Revised Code;	210

(j) The joint filing credit under division (G) of section	211
5747.05 of the Revised Code;	212

(k) The nonresident credit under division (A) of section	213
5747.05 of the Revised Code;	214

(l) The credit for a resident's out-of-state income under	215
division (B) of section 5747.05 of the Revised Code;	216

(m) The low-income credit under section 5747.056 of the	217
Revised Code;	218

(n) The earned income tax credit under section 5747.71 of the	219
Revised Code;	220

(o) The credit for graduates from institutions of higher	221
education in approved fields of study under section 5747.82 of the	222
Revised Code.	223

(3) The election provided for under division (D) of this	224
section applies only to the taxable year for which the election is	225
made by the pass-through entity. Unless the tax commissioner	226
provides otherwise, this election, once made, is binding and	227
irrevocable for the taxable year for which the election is made.	228
Nothing in this division shall be construed to provide for any	229
deduction or credit that would not be allowable if a nonresident	230
pass-through entity investor were to file an annual return.	231

(4) If a pass-through entity makes the election provided for	232
under division (D) of this section, the pass-through entity shall	233
be liable for any additional taxes, interest, interest penalty, or	234
penalties imposed by this chapter if the tax commissioner finds	235
that the single return does not reflect the correct tax due by the	236
pass-through entity investors covered by that return. Nothing in	237
this division shall be construed to limit or alter the liability,	238
if any, imposed on pass-through entity investors for unpaid or	239
underpaid taxes, interest, interest penalty, or penalties as a	240
result of the pass-through entity's making the election provided	241
for under division (D) of this section. For the purposes of	242
division (D) of this section, "correct tax due" means the tax that	243
would have been paid by the pass-through entity had the single	244
return been filed in a manner reflecting the commissioner's	245
findings. Nothing in division (D) of this section shall be	246
construed to make or hold a pass-through entity liable for tax	247
attributable to a pass-through entity investor's income from a	248
source other than the pass-through entity electing to file the	249
single return.	250

(E) If a husband and wife file a joint federal income tax	251
return for a taxable year, they shall file a joint return under	252
this section for that taxable year, and their liabilities are	253
joint and several, but, if the federal income tax liability of	254
either spouse is determined on a separate federal income tax	255
return, they shall file separate returns under this section.	256

If either spouse is not required to file a federal income tax	257
return and either or both are required to file a return pursuant	258
to this chapter, they may elect to file separate or joint returns,	259
and, pursuant to that election, their liabilities are separate or	260
joint and several. If a husband and wife file separate returns	261
pursuant to this chapter, each must claim the taxpayer's own	262
exemption, but not both, as authorized under section 5747.02 of	263
the Revised Code on the taxpayer's own return.	264

(F) Each return or notice required to be filed under this	265
section shall contain the signature of the taxpayer or the	266
taxpayer's duly authorized agent and of the person who prepared	267
the return for the taxpayer, and shall include the taxpayer's	268
social security number. Each return shall be verified by a	269
declaration under the penalties of perjury. The tax commissioner	270
shall prescribe the form that the signature and declaration shall	271
take.	272

(G) Each return or notice required to be filed under this	273
section shall be made and filed as required by section 5747.04 of	274
the Revised Code, on or before the fifteenth day of April of each	275
year, on forms that the tax commissioner shall prescribe, together	276
with remittance made payable to the treasurer of state in the	277
combined amount of the state and all school district income taxes	278
shown to be due on the form.	279

Upon good cause shown, the commissioner may extend the period	280
for filing any notice or return required to be filed under this	281
section and may adopt rules relating to extensions. If the	282
extension results in an extension of time for the payment of any	283
state or school district income tax liability with respect to	284
which the return is filed, the taxpayer shall pay at the time the	285
tax liability is paid an amount of interest computed at the rate	286
per annum prescribed by section 5703.47 of the Revised Code on	287
that liability from the time that payment is due without extension	288
to the time of actual payment. Except as provided in section	289
5747.132 of the Revised Code, in addition to all other interest	290
charges and penalties, all taxes imposed under this chapter or	291
Chapter 5748. of the Revised Code and remaining unpaid after they	292
become due, except combined amounts due of one dollar or less,	293
bear interest at the rate per annum prescribed by section 5703.47	294
of the Revised Code until paid or until the day an assessment is	295
issued under section 5747.13 of the Revised Code, whichever occurs	296
first.	297

If the commissioner considers it necessary in order to ensure	298
the payment of the tax imposed by section 5747.02 of the Revised	299
Code or any tax imposed under Chapter 5748. of the Revised Code,	300
the commissioner may require returns and payments to be made	301
otherwise than as provided in this section.	302

To the extent that any provision in this division conflicts	303
with any provision in section 5747.026 of the Revised Code, the	304
provision in that section prevails.	305

(H) If any report, claim, statement, or other document	306
required to be filed, or any payment required to be made, within a	307
prescribed period or on or before a prescribed date under this	308
chapter is delivered after that period or that date by United	309
States mail to the agency, officer, or office with which the	310
report, claim, statement, or other document is required to be	311
filed, or to which the payment is required to be made, the date of	312
the postmark stamped on the cover in which the report, claim,	313
statement, or other document, or payment is mailed shall be deemed	314
to be the date of delivery or the date of payment.	315

If a payment is required to be made by electronic funds	316
transfer pursuant to section 5747.072 of the Revised Code, the	317
payment is considered to be made when the payment is received by	318
the treasurer of state or credited to an account designated by the	319
treasurer of state for the receipt of tax payments.	320

"The date of the postmark" means, in the event there is more	321
than one date on the cover, the earliest date imprinted on the	322
cover by the United States postal service.	323

(I) The amounts withheld by an employer pursuant to section	324
5747.06 of the Revised Code, a casino operator pursuant to section	325
5747.063 of the Revised Code, or a lottery sales agent pursuant to	326
section 5747.064 of the Revised Code shall be allowed to the	327
recipient of the compensation casino winnings, or lottery prize	328
award as credits against payment of the appropriate taxes imposed	329
on the recipient by section 5747.02 and under Chapter 5748. of the	330
Revised Code.	331

(J) If a pass-through entity elects to file a single return	332
under division (D) of this section and if any investor is required	333
to file the annual return and make the payment of taxes required	334
by this chapter on account of the investor's other income that is	335
not included in a single return filed by a pass-through entity or	336
any other investor elects to file the annual return, the investor	337
is entitled to a refundable credit equal to the investor's	338
proportionate share of the tax paid by the pass-through entity on	339
behalf of the investor. The investor shall claim the credit for	340
the investor's taxable year in which or with which ends the	341
taxable year of the pass-through entity. Nothing in this chapter	342
shall be construed to allow any credit provided in this chapter to	343
be claimed more than once. For the purpose of computing any	344
interest, penalty, or interest penalty, the investor shall be	345
deemed to have paid the refundable credit provided by this	346
division on the day that the pass-through entity paid the	347
estimated tax or the tax giving rise to the credit.	348

(K) The tax commissioner shall ensure that each return	349
required to be filed under this section includes a box that the	350
taxpayer may check to authorize a paid tax preparer who prepared	351
the return to communicate with the department of taxation about	352
matters pertaining to the return. The return or instructions	353
accompanying the return shall indicate that by checking the box	354
the taxpayer authorizes the department of taxation to contact the	355
preparer concerning questions that arise during the processing of	356
the return and authorizes the preparer only to provide the	357
department with information that is missing from the return, to	358
contact the department for information about the processing of the	359
return or the status of the taxpayer's refund or payments, and to	360
respond to notices about mathematical errors, offsets, or return	361
preparation that the taxpayer has received from the department and	362
has shown to the preparer.	363

(L) The tax commissioner shall permit individual taxpayers to	364
instruct the department of taxation to cause any refund of	365
overpaid taxes to be deposited directly into a checking account,	366
savings account, or an individual retirement account or individual	367
retirement annuity, or preexisting college savings plan or program	368
account offered by the Ohio tuition trust authority under Chapter	369
3334. of the Revised Code, as designated by the taxpayer, when the	370
taxpayer files the annual return required by this section	371
electronically.	372

(M) The tax commissioner may adopt rules to administer this	373
section.	374

Sec. 5747.82.  A taxpayer to whom a tax credit certificate	375
has been issued under section 3333.51 of the Revised Code is	376
allowed a nonrefundable credit against the tax imposed by section	377
5747.02 of the Revised Code. The credit shall be claimed as	378
provided in section 3333.51 of the Revised Code and in the order	379
required under section 5747.98 of the Revised Code. The amount of	380
credit claimed for a taxable year shall not exceed the tax	381
otherwise due after allowing for all preceding credits in that	382
order. If the amount of credit allowed for a taxable year exceeds	383
the tax otherwise due, the excess may be carried forward to the	384
next taxable year. Excess credit allowed in a taxable year shall	385
be deducted from the balance carried forward to the ensuing	386
taxable year. If a credit may not be claimed for a taxable year,	387
excess credit with respect to the same credit certificate may not	388
be claimed.	389

Sec. 5747.98.  (A) To provide a uniform procedure for	390
calculating the amount of tax due under section 5747.02 of the	391
Revised Code, a taxpayer shall claim any credits to which the	392
taxpayer is entitled in the following order:	393

(1) The retirement income credit under division (B) of	394
section 5747.055 of the Revised Code;	395

(2) The senior citizen credit under division (C) of section	396
5747.05 of the Revised Code;	397

(3) The lump sum distribution credit under division (D) of	398
section 5747.05 of the Revised Code;	399

(4) The dependent care credit under section 5747.054 of the	400
Revised Code;	401

(5) The lump sum retirement income credit under division (C)	402
of section 5747.055 of the Revised Code;	403

(6) The lump sum retirement income credit under division (D)	404
of section 5747.055 of the Revised Code;	405

(7) The lump sum retirement income credit under division (E)	406
of section 5747.055 of the Revised Code;	407

(8) The low-income credit under section 5747.056 of the	408
Revised Code;	409

(9) The credit for displaced workers who pay for job training	410
under section 5747.27 of the Revised Code;	411

(10) The campaign contribution credit under section 5747.29	412
of the Revised Code;	413

(11) The twenty-dollar personal exemption credit under	414
section 5747.022 of the Revised Code;	415

(12) The joint filing credit under division (G) of section	416
5747.05 of the Revised Code;	417

(13) The nonresident credit under division (A) of section	418
5747.05 of the Revised Code;	419

(14) The credit for a resident's out-of-state income under	420
division (B) of section 5747.05 of the Revised Code;	421

(15) The earned income credit under section 5747.71 of the	422
Revised Code;	423

(16) The credit for employers that reimburse employee child	424
care expenses under section 5747.36 of the Revised CodeThe credit	425
for graduates from institutions of higher education in approved	426
fields of study under section 5747.82 of the Revised Code;	427

(17) The credit for adoption of a minor child under section	428
5747.37 of the Revised Code;	429

(18) The credit for purchases of lights and reflectors under	430
section 5747.38 of the Revised Code;	431

(19) The nonrefundable job retention credit under division	432
(B) of section 5747.058 of the Revised Code;	433

(20) The credit for selling alternative fuel under section	434
5747.77 of the Revised Code;	435

(21) The second credit for purchases of new manufacturing	436
machinery and equipment and the credit for using Ohio coal under	437
section 5747.31 of the Revised Code;	438

(22) The job training credit under section 5747.39 of the	439
Revised Code;	440

(23) The enterprise zone credit under section 5709.66 of the	441
Revised Code;	442

(24) The credit for the eligible costs associated with a	443
voluntary action under section 5747.32 of the Revised Code;	444

(25) The credit for employers that establish on-site child	445
day-care centers under section 5747.35 of the Revised Code;	446

(26) The ethanol plant investment credit under section	447
5747.75 of the Revised Code;	448

(27) The credit for purchases of qualifying grape production	449
property under section 5747.28 of the Revised Code;	450

(28) The small business investment credit under section	451
5747.81 of the Revised Code;	452

(29) The enterprise zone credits under section 5709.65 of the	453
Revised Code;	454

(30) The research and development credit under section	455
5747.331 of the Revised Code;	456

(31) The credit for rehabilitating a historic building under	457
section 5747.76 of the Revised Code;	458

(32) The refundable credit for rehabilitating a historic	459
building under section 5747.76 of the Revised Code;	460

(33) The refundable jobs creation credit or job retention	461
credit under division (A) of section 5747.058 of the Revised Code;	462

(34) The refundable credit for taxes paid by a qualifying	463
entity granted under section 5747.059 of the Revised Code;	464

(35) The refundable credits for taxes paid by a qualifying	465
pass-through entity granted under division (J) of section 5747.08	466
of the Revised Code;	467

(36) The refundable credit under section 5747.80 of the	468
Revised Code for losses on loans made to the Ohio venture capital	469
program under sections 150.01 to 150.10 of the Revised Code;	470

(37) The refundable motion picture production credit under	471
section 5747.66 of the Revised Code.;	472

(38) The refundable credit for financial institution taxes	473
paid by a pass-through entity granted under section 5747.65 of the	474
Revised Code.	475

(B) For any credit, except the refundable credits enumerated	476
in this section and the credit granted under division (I) of	477
section 5747.08 of the Revised Code, the amount of the credit for	478
a taxable year shall not exceed the tax due after allowing for any	479
other credit that precedes it in the order required under this	480
section. Any excess amount of a particular credit may be carried	481
forward if authorized under the section creating that credit.	482
Nothing in this chapter shall be construed to allow a taxpayer to	483
claim, directly or indirectly, a credit more than once for a	484
taxable year.	485

Section 2. That existing sections 5747.08 and 5747.98 of the	486
Revised Code are hereby repealed.	487