As Reported by the House Finance and Appropriations Committee

130th General Assembly
Regular Session
2013-2014
Am. Sub. S. B. No. 263


Senators Peterson, Beagle 

Cosponsors: Senators Jones, Obhof, Bacon, Patton, Schaffer, Hughes, Gardner, Burke, Coley, Balderson, Eklund, Faber, Jordan, LaRose, Manning, Oelslager, Schiavoni, Tavares, Uecker, Widener 

Representatives Amstutz, Beck 

A BILL
To amend sections 5703.05 and 5739.121 and to enact 1
section 5703.77 of the Revised Code to require the 2
Tax Commissioner to notify taxpayers of tax or fee 3
overpayments, to authorize the Commissioner to 4
either apply an overpayment to future tax 5
liabilities or issue a refund, to provide for a 6
sales tax deduction or refund for bad debts, and 7
to make an appropriation.8


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

       Section 1. That sections 5703.05 and 5739.121 be amended and 9
section 5703.77 of the Revised Code be enacted to read as follows:10

       Sec. 5703.05.  All powers, duties, and functions of the 11
department of taxation are vested in and shall be performed by the 12
tax commissioner, which powers, duties, and functions shall 13
include, but shall not be limited to, the following:14

       (A) Prescribing all blank forms which the department is 15
authorized to prescribe, and to provide such forms and distribute 16
the same as required by law and the rules of the department. 17

       (B) Exercising the authority provided by law, including 18
orders from bankruptcy courts, relative to remitting or refunding 19
taxes or assessments, including penalties and interest thereon, 20
illegally or erroneously assessed or collected, or for any other 21
reason overpaid, and in addition, the commissioner may on written 22
application of any person, firm, or corporation claiming to have 23
overpaid to the treasurer of state at any time within five years 24
prior to the making of such application any tax payable under any 25
law which the department of taxation is required to administer 26
which does not contain any provision for refund, or on the 27
commissioner's own motion investigate the facts and make in 28
triplicate a written statement of the commissioner's findings, 29
and, if the commissioner finds that there has been an overpayment, 30
issue in triplicate a certificate of abatement payable to the 31
taxpayer, the taxpayer's assigns, or legal representative which 32
shows the amount of the overpayment and the kind of tax overpaid. 33
One copy of such statement shall be entered on the journal of the 34
commissioner, one shall be certified to the attorney general, and 35
one certified copy shall be delivered to the taxpayer. All copies 36
of the certificate of abatement shall be transmitted to the 37
attorney general, and if the attorney general finds it to be 38
correct the attorney general shall so certify on each copy, and 39
deliver one copy to the taxpayer, one copy to the commissioner, 40
and the third copy to the treasurer of state. Except as provided 41
in section 5725.08 of the Revised Code, the taxpayer's copy of any 42
certificates of abatement may be tendered by the payee or 43
transferee thereof to the treasurer of state, or to the 44
commissioner on behalf of the treasurer, as payment, to the extent 45
of the amount thereof, of any tax payable to the treasurer of 46
state.47

       (C) Exercising the authority provided by law relative to 48
consenting to the compromise and settlement of tax claims;49

       (D) Exercising the authority provided by law relative to the 50
use of alternative tax bases by taxpayers in the making of 51
personal property tax returns;52

       (E) Exercising the authority provided by law relative to 53
authorizing the prepayment of taxes on retail sales of tangible 54
personal property or on the storage, use, or consumption of 55
personal property, and waiving the collection of such taxes from 56
the consumers;57

       (F) Exercising the authority provided by law to revoke 58
licenses;59

       (G) Maintaining a continuous study of the practical operation 60
of all taxation and revenue laws of the state, the manner in which 61
and extent to which such laws provide revenues for the support of 62
the state and its political subdivisions, the probable effect upon 63
such revenue of possible changes in existing laws, and the 64
possible enactment of measures providing for other forms of 65
taxation. For this purpose the commissioner may establish and 66
maintain a division of research and statistics, and may appoint 67
necessary employees who shall be in the unclassified civil 68
service; the results of such study shall be available to the 69
members of the general assembly and the public.70

       (H) Making all tax assessments, valuations, findings, 71
determinations, computations, and orders the department of 72
taxation is by law authorized and required to make and, pursuant 73
to time limitations provided by law, on the commissioner's own 74
motion, reviewing, redetermining, or correcting any tax 75
assessments, valuations, findings, determinations, computations, 76
or orders the commissioner has made, but the commissioner shall 77
not review, redetermine, or correct any tax assessment, valuation, 78
finding, determination, computation, or order which the 79
commissioner has made as to which an appeal or application for 80
rehearing, review, redetermination, or correction has been filed 81
with the board of tax appeals, unless such appeal or application 82
is withdrawn by the appellant or applicant or dismissed;83

       (I) Appointing not more than five deputy tax commissioners, 84
who, under such regulations as the rules of the department of 85
taxation prescribe, may act for the commissioner in the 86
performance of such duties as the commissioner prescribes in the 87
administration of the laws which the commissioner is authorized 88
and required to administer, and who shall serve in the 89
unclassified civil service at the pleasure of the commissioner, 90
but if a person who holds a position in the classified service is 91
appointed, it shall not affect the civil service status of such 92
person. The commissioner may designate not more than two of the 93
deputy commissioners to act as commissioner in case of the 94
absence, disability, or recusal of the commissioner or vacancy in 95
the office of commissioner. The commissioner may adopt rules 96
relating to the order of precedence of such designated deputy 97
commissioners and to their assumption and administration of the 98
office of commissioner.99

       (J) Appointing and prescribing the duties of all other 100
employees of the department of taxation necessary in the 101
performance of the work of the department which the tax 102
commissioner is by law authorized and required to perform, and 103
creating such divisions or sections of employees as, in the 104
commissioner's judgment, is proper;105

       (K) Organizing the work of the department, which the 106
commissioner is by law authorized and required to perform, so 107
that, in the commissioner's judgment, an efficient and economical 108
administration of the laws will result;109

       (L) Maintaining a journal, which is open to public 110
inspection, in which the tax commissioner shall keep a record of 111
all final determinations of the commissioner;112

       (M) Adopting and promulgating, in the manner provided by 113
section 5703.14 of the Revised Code, all rules of the department, 114
including rules for the administration of sections 3517.16, 115
3517.17, and 5747.081 of the Revised Code;116

       (N) Destroying any or all returns or assessment certificates 117
in the manner authorized by law;118

       (O) Adopting rules, in accordance with division (B) of 119
section 325.31 of the Revised Code, governing the expenditure of 120
moneys from the real estate assessment fund under that division;121

       (P) Informing taxpayers in a timely manner to resolve credit 122
account balances as required by section 5703.77 of the Revised 123
Code.124

       Sec. 5703.77.  (A) As used in this section:125

       (1) "Taxpayer" means a person subject to or previously 126
subject to a tax or fee, a person that remits a tax or fee, or a 127
person required to or previously required to withhold or collect 128
and remit a tax or fee on behalf of another person.129

       (2) "Tax or fee" means a tax or fee administered by the tax 130
commissioner.131

       (3) "Credit account balance" means the amount of a tax or fee 132
that a taxpayer remits to the state in excess of the amount 133
required to be remitted, after accounting for factors applicable 134
to the taxpayer such as accelerated payments, estimated payments, 135
tax credits, and tax credit balances that may be carried forward.136

       (4) "Tax debt" means an unpaid tax or fee or any unpaid 137
penalty, interest, or additional charge on such a tax or fee due 138
the state.139

       (B) As soon as practicable, but not later than sixty days 140
before the expiration of the period of time during which a 141
taxpayer may file a refund application for a tax or fee, the tax 142
commissioner shall review the taxpayer's accounts for the tax or 143
fee and notify the taxpayer of any credit account balance for 144
which the commissioner is required to issue a refund if the 145
taxpayer were to file a refund application for that balance, 146
regardless of whether the taxpayer files a refund application or 147
amended return with respect to that tax or fee. The notice shall 148
be made using contact information for the taxpayer on file with 149
the commissioner.150

       (C) Notwithstanding sections 128.47, 3734.905, 4307.05, 151
5726.30, 5727.28, 5727.42, 5727.91, 5728.061, 5735.122, 5736.08, 152
5739.07, 5739.104, 5741.10, 5743.05, 5743.53, 5747.11, 5749.08, 153
5751.08, 5753.06, and any other section of the Revised Code 154
governing refunds of taxes or fees, the commissioner may apply the 155
amount of any credit account balance for which the commissioner is 156
required to issue a refund if the taxpayer were to file a refund 157
application for that balance as a credit against the taxpayer's 158
liability for the tax or fee in the taxpayer's next reporting 159
period for that tax or fee or issue a refund of that credit 160
account balance to the taxpayer, subject to division (D) of this 161
section.162

       (D) Before issuing a refund to a taxpayer under division (C) 163
of this section, the tax commissioner shall withhold from that 164
refund the amount of any of the taxpayer's tax debt certified to 165
the attorney general under section 131.02 of the Revised Code and 166
the amount of the taxpayer's liability, if any, for a tax or fee. 167
The commissioner shall apply any amount withheld first in 168
satisfaction of the amount of the taxpayer's certified tax debt 169
and then in satisfaction of the taxpayer's liability.170

       (E) The tax commissioner may adopt rules to administer this 171
section.172

       Sec. 5739.121.  (A) As used in this section, "bad:173

       (1) "Bad debt" means any debt that has become worthless or 174
uncollectible in the time period between a vendor's preceding 175
return and the present return, has been uncollected for at least 176
six months, and that may be claimed as a deduction pursuant to the 177
"Internal Revenue Code of 1954," 68A Stat. 50, 26 U.S.C. 166, as 178
amended, and regulations adopted pursuant thereto, or that could 179
be claimed as such a deduction if the vendor kept accounts on an 180
accrual basis. "Bad debt" does not include any interest or sales 181
tax on the purchase price, uncollectible amounts on property that 182
remains in the possession of the vendor until the full purchase 183
price is paid, expenses incurred in attempting to collect any 184
account receivable or for any portion of the debt recovered, and 185
repossessed property.186

       (2) "Lender" means a person or an affiliate, assignee, or 187
transferee of a person that owns a private label credit card 188
account, or an interest in a private label credit card receivable, 189
provided that interest was any of the following:190

       (a) Transferred from a third party;191

       (b) Purchased directly from a vendor that remitted tax 192
imposed under this chapter or from an affiliate of the vendor;193

       (c) Originated according to a written agreement between the 194
person and a vendor that remitted tax imposed under this chapter 195
or an affiliate of the vendor. 196

       (3) "Private label credit card" means a charge card or credit 197
card on which the name or logo of a vendor appears. 198

       (4) "Accounts or receivables bad debt" means the unpaid 199
balance on private label credit card accounts or receivables that 200
are bad debt and are charged off as uncollectible on the books of 201
a lender on or after July 1, 2014, and against which a deduction 202
or refund has not previously been taken or allowed, respectively, 203
under this section. For the purposes of division (A)(4) of this 204
section only, "bad debt" shall be determined without regard to 205
when the debt has become worthless or uncollectible relative to 206
the period between a vendor's returns, and the deductibility of 207
the debt for federal income tax purposes shall be determined with 208
respect to the lender instead of the vendor.209

       (5) "Affiliate" means any person that is a member of an 210
affiliated group or that would be a member of an affiliated group 211
if the person was a corporation.212

       (6) "Affiliated group" has the same meaning as in section 213
1504 of the Internal Revenue Code.214

       (B) In computing taxable receipts for purposes of this 215
chapter, a vendor may deduct the amount of bad debts. TheExcept 216
as provided in division (F) of this section, the amount deducted 217
must be charged off as uncollectible on the books of the vendor. A 218
deduction may be claimed only with respect to bad debts on which 219
the taxes pursuant to sections 5739.10 and 5739.12 of the Revised 220
Code were paid in a preceding tax period. If the vendor's business 221
consists of taxable and nontaxable transactions, the deduction 222
shall equal the full amount of the debt if the debt is documented 223
as a taxable transaction in the vendor's records. If no such 224
documentation is available, the maximum deduction on any bad debt 225
shall equal the amount of the bad debt multiplied by the quotient 226
obtained by dividing the sales taxed pursuant to this chapter 227
during the preceding calendar year by all sales during the 228
preceding calendar year, whether taxed or not. If a consumer or 229
other person pays all or part of a bad debt with respect to which 230
a vendor claimed a deduction under this section, the vendor shall 231
be liable for the amount of taxes deducted in connection with that 232
portion of the debt for which payment is received and shall remit 233
such taxes in the vendor's next payment to the tax commissioner.234

       (C) Any claim for a bad debt deduction under this section 235
shall be supported by such evidence as the tax commissioner by 236
rule requires. The commissioner shall review any change in the 237
rate of taxation applicable to any taxable sales by a vendor 238
claiming a deduction pursuant to this section and adopt rules for 239
altering the deduction in the event of such a change in order to 240
ensure that the deduction on any bad debt does not result in the 241
vendor claiming the deduction recovering any more or less than the 242
taxes imposed on the sale that constitutes the bad debt.243

       (D) In any reporting period in which the amount of bad debt 244
exceeds the amount of taxable sales for the period, the vendor may 245
file a refund claim for any tax collected on the bad debt in 246
excess of the tax reported on the return. The refund claim shall 247
be filed in the manner provided in section 5739.07 of the Revised 248
Code, except that the claim may be filed within four years of the 249
due date of the return on which the bad debt first could have been 250
claimed.251

       (E) When the filing responsibilities of a vendor have been 252
assumed by a certified service provider, the certified service 253
provider shall claim the bad debt allowance provided by this 254
section on behalf of the vendor. The certified service provider 255
shall credit or refund to the vendor the full amount of any bad 256
debt allowance or refund.257

       (F) No person other than the vendor in the transaction that 258
generated the bad debt or, as provided in division (E) of this 259
section, a certified service provider, may claim the bad debt 260
allowance provided by this section(1) A vendor may deduct on a 261
return or obtain a refund of tax remitted by the vendor on 262
accounts or receivables bad debt.263

       A vendor taking a deduction or claiming a refund under 264
division (F)(1) of this section shall include all credit sale 265
transactions outstanding in the account or receivable at the time 266
the account or receivable is charged off as uncollectible on the 267
books of a lender in calculating the deduction or refund, 268
regardless of the date on which the credit sale transaction 269
occurs.270

       (2) The deduction or refund authorized under division (F)(1) 271
of this section may be taken or obtained by the vendor only on the 272
basis of accounts or receivables bad debt from purchases from the 273
vendor whose name or logo appears on the private label credit card 274
or from purchases from any of the vendor's affiliates or 275
franchisees.276

       (3) A vendor taking a deduction or receiving a refund under 277
division (F)(1) of this section shall maintain books, records, or 278
other documents verifying the accounts or receivables bad debt, 279
which shall be open to inspection by the commissioner upon 280
request.281

       (4) If the vendor collects in whole or part any accounts or 282
receivables bad debt on the basis of which the vendor took a 283
deduction or received a refund under division (F) of this section, 284
the vendor shall include the amount collected in the vendor's 285
first return filed after the collection and pay tax on the portion 286
of that amount with respect to which the vendor took the deduction 287
or received a refund.288

       For the purpose of calculating the amount of tax to remit 289
under division (F)(4) of this section, the vendor shall allocate 290
payments made by the holder of a private label credit card on the 291
holder's accounts based on the agreement between the account 292
holder and the vendor or lender.293

       (G) The tax commissioner may adopt rules necessary to 294
administer this section.295

       Section 2.  That existing sections 5703.05 and 5739.121 of 296
the Revised Code are hereby repealed.297

       Section 3. All appropriation items in this act are 298
appropriated out of any moneys in the state treasury to the credit 299
of the designated fund that are not otherwise appropriated. For 300
all appropriations made in this act, the amounts in the first 301
column are for fiscal year 2014 and the amounts in the second 302
column are for fiscal year 2015. The appropriations made in this 303
act are in addition to any other appropriations made for the FY 304
2014-FY 2015 biennium.305

TAX DEPARTMENT OF TAXATION
306

GRF 110321 Operating Expenses $ 0 $ 682,000 307
TOTAL GRF General Revenue Fund $ 0 $ 682,000 308
TOTAL ALL BUDGET FUND GROUPS $ 0 $ 682,000 309