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(123rd General Assembly)(Substitute House Bill Number 483)
AN ACT
To amend sections 113.061, 718.01, 718.02, 718.08,
5703.053, 5703.19, and 5703.21, and to enact sections 718.011,
5745.01 to 5745.03, 5745.031, 5745.04, 5745.041, and 5745.05 to 5745.16 of the
Revised Code to prescribe a
uniform set of procedures and remedies regarding municipal
taxation of electric light company income, to provide for the
collection of municipal taxes on those companies by the state, and to
authorize the Tax Commissioner to discuss with other states the development of
a system to collect and administer sales and use taxes from remote sellers.
Be it enacted by the General Assembly of the State of Ohio:
SECTION 1 . That sections 113.061, 718.01, 718.02, 718.08,
5703.053, 5703.19, and 5703.21 be amended and sections
718.011, 5745.01, 5745.02, 5745.03, 5745.031, 5745.04, 5745.041, 5745.05,
5745.06,
5745.07, 5745.08, 5745.09, 5745.10, 5745.11, 5745.12, 5745.13,
5745.14, 5745.15, and 5745.16 of the Revised Code be enacted to
read as follows:
Sec. 113.061. The treasurer of state shall adopt rules in
accordance with Chapter 119. of the Revised Code governing the
remittance of taxes by electronic funds transfer as required
under sections 5727.311, 5727.83, 5733.022, 5735.062, 5739.032,
5739.122,
5741.121, 5745.04, and 5747.072 of the Revised Code and any other
section
of the Revised Code under which a person is required to remit
taxes by electronic funds transfer. The rules shall govern the
modes of electronic funds transfer acceptable to the treasurer
of state and under what circumstances each mode is acceptable, the
content
and format of electronic funds transfers, the coordination of
payment by electronic funds transfer and filing of associated tax
reports and returns, the remittance of taxes by means other than
electronic funds transfer by persons otherwise required to do so
but relieved of the requirement by the treasurer of state, and
any other matter that in the opinion of the treasurer of state
facilitates payment by electronic funds transfer in a manner
consistent with those sections. Upon failure by a person, if so required, to remit taxes by
electronic funds transfer in the manner prescribed under section
5727.83,
5733.022, 5735.062, 5739.032, 5739.122, 5741.121, 5745.04, or
5747.072 of
the Revised Code and rules adopted under this section, the
treasurer of state shall notify the tax commissioner of such
failure if the treasurer of state determines that such failure was not
due
to reasonable cause or was due to willful neglect, and shall
provide the tax commissioner with any information used in making
that determination. The tax commissioner may assess an
additional charge as specified in the respective section of the
Revised Code governing the requirement to remit taxes by
electronic funds transfer. The treasurer of state may implement means of
acknowledging, upon the request of a taxpayer, receipt of tax
remittances made by electronic funds transfer, and may adopt
rules governing acknowledgments. The cost of acknowledging
receipt of electronic remittances shall be paid by the person
requesting acknowledgment. The treasurer of state, not the tax commissioner, is
responsible for resolving any problems involving electronic funds
transfer transmissions. Sec. 718.01. (A) As used in this chapter: (1) "Internal Revenue Code" means the Internal Revenue Code of
1986, 100
Stat. 2085, 26 U.S.C. 1, as amended. (2) "Schedule C" means internal revenue service schedule C
filed by a
taxpayer pursuant to the Internal Revenue Code. (3) "Form 2106" means internal revenue service form 2106 filed by a taxpayer
pursuant to the Internal Revenue Code. (4) "Intangible income" means income of any of the following types: income
yield, interest, dividends, or other income arising from the ownership, sale,
exchange, or other disposition of intangible property including, but not
limited to, investments, deposits, money, or credits as those terms are
defined in Chapter 5701. of the Revised Code. (B) No municipal corporation with respect to that income
that it may tax
shall tax such income at other than a uniform rate. (C) No municipal corporation shall levy a tax on income at a rate in excess
of one per cent without having obtained the approval of the excess by a
majority of the electors of the municipality voting on the question at a
general, primary, or special election. The legislative authority of the
municipal corporation shall file with the board of elections at least
seventy-five days before the day of the election a copy of the ordinance
together with a resolution specifying the date the election is to be held and
directing the board of elections to conduct the election. The ballot shall be
in the following form: "Shall the Ordinance providing for a ... per cent levy
on income for (Brief description of the purpose of the proposed levy) be
passed? FOR THE INCOME TAX AGAINST THE INCOME TAX" In the event of an affirmative vote, the proceeds of the
levy may be used only for the specified purpose. (D)(1) Except as otherwise provided in division (D)(2) of this section, no
municipal corporation shall exempt from a tax on income, compensation for
personal services of individuals over eighteen years of age or the net profit
from a business or profession. (2) The legislative authority of a municipal corporation may, by ordinance or
resolution, exempt from a tax on income any compensation arising from the
grant, sale, exchange, or other disposition of a stock option; the exercise of
a stock option; or the sale, exchange, or other disposition of stock purchased
under a stock option. (E) Nothing in this section shall prevent a municipal corporation from
permitting lawful deductions as prescribed by ordinance. If a taxpayer's
taxable income includes income against which the taxpayer has taken a
deduction for federal income tax purposes as reportable on the taxpayer's form
2106, and against which a like deduction has not been allowed by the municipal
corporation, the municipal corporation shall deduct from the taxpayer's
taxable income an amount equal to the deduction shown on such form allowable
against such income, to the extent not otherwise so allowed as a deduction by
the municipal corporation. In the case of a taxpayer who has a net profit
from a business or profession that is operated as a sole proprietorship, no
municipal corporation may tax or use as the base for determining the amount of
the net profit that shall be considered as having a taxable situs in the
municipal corporation, a greater amount than the net profit reported by the
taxpayer on schedule C filed in reference to the year in question as taxable
income from such sole proprietorship, except as otherwise specifically
provided by ordinance or regulation. (F) No A municipal corporation shall not tax any of the
following: (1) The military pay or allowances of members of the armed forces of the
United States and of members of their reserve components, including the Ohio
national guard; (2) The income of religious, fraternal, charitable, scientific, literary, or
educational institutions to the extent that such income is derived from
tax-exempt real estate, tax-exempt tangible or intangible property, or
tax-exempt activities; (3) Except as otherwise provided in division (G) of this section, intangible
income; (4) Compensation paid under section 3501.28 or 3501.36 of the Revised Code to
a person serving as a precinct election official, to the extent that such
compensation does not exceed one thousand dollars annually. Such compensation
in excess of one thousand dollars may be subjected to taxation by a municipal
corporation. A municipal corporation shall not require the payer of such
compensation to withhold any tax from that compensation. (5) Compensation paid to an employee of a transit authority, regional transit
authority, or regional transit commission created under Chapter 306. of the
Revised Code for operating a transit bus or other motor vehicle for the
authority or commission in or through the municipal corporation, unless the
bus or vehicle is operated on a regularly scheduled route, the operator is
subject to such a tax by reason of residence or domicile in the municipal
corporation, or the headquarters of the authority or commission is located
within the municipal corporation; (6) The income of a public utility when that public utility is
subject to the tax levied under section 5727.24 or 5727.30 of the Revised
Code, except starting January 1, 2002, the income of an
electric company or combined company, as defined in section 5727.01 of the
Revised Code, may
be taxed by a municipal corporation. For a combined company, only the
income
attributed from the activity of an electric company shall be subject to
taxation by a municipal corporation. The income of an electric
company or combined company, subject to taxation by a municipal
corporation shall be computed by taking into account the
adjustments provided by division (I)(16) of section 5733.04
Chapter 5745. of the
Revised Code. (7) On and after January 1, 2003, items excluded from
federal gross income pursuant to section 107 of the Internal
Revenue Code; (8) On and after January 1, 2001, compensation paid to an
individual for personal services performed
within the municipal corporation, if the individual does not
reside in the municipal corporation,
performs such personal services in the municipal
corporation on twelve or fewer days in the calendar year, and, if the
individual is an employee, the principal place of
business of the individual's employer is located outside the municipal
corporation. Division (F)(8) of this section does not apply to
professional entertainers or professional athletes
or to promoters of
professional entertainment or sports events and their employees, as reasonably
defined by the municipal
corporation a nonresident individual to the extent prohibited under
section 718.011 of the Revised Code. (G) Any municipal corporation that taxes any type of intangible income on
March 29, 1988, pursuant to Section 3 of Amended Substitute Senate Bill No.
238 of the 116th general assembly, may continue to tax that type of income
after 1988 if a majority of the electors of the municipal corporation voting
on the question of whether to permit the taxation of that type of intangible
income after 1988 vote in favor thereof at an election held on November 8,
1988. (H) Nothing in this section or section 718.02 of the Revised Code
shall authorize the levy of any tax on income that a municipal
corporation is not
authorized to levy under existing laws or shall require a municipal
corporation to allow a deduction from taxable income for losses incurred from
a sole proprietorship or partnership. Sec. 718.011. on and after january 1, 2001, a municipal
corporation shall not tax the compensation of an individual if all of the
following apply: (A) the individual does not reside in that municipal
corporation. (b) the compensation is paid for personal services performed by
the individual in that municipal corporation on twelve or fewer days in
the calendar year. (c) in the case of an individual who is an employee, the
principal place of business of the individual's employer is located outside
that municipal CORPORATION and the individual pays
tax on compensation described in division (B) of this section
to the municipal corporation, if any, in which the employer's principal place
of business is
located, and no portion of that tax is refunded to the individual. (D) the individual is not a professional entertainer or
professional athlete, the promoter of a professional entertainment or sports
event, or an employee of such a promoter, all as
may be reasonably defined by the municipal corporation. Sec. 718.02. (A) This section does not apply to electric companies
or combined companies, or to electric light companies for which an election
made under section 5745.031 of the Revised Code is in effect. (A) In the taxation of income that is
subject to municipal income taxes, if the books and records of a
taxpayer conducting a business or profession both within and
without the boundaries of a municipal corporation disclose
with reasonable accuracy what portion of its net profit is
attributable to that part of the business or profession conducted
within the boundaries of the municipal corporation, then only
such portion shall be considered as having a taxable situs in
such municipal corporation for purposes of municipal income
taxation. In the absence of such records, net profit from a
business or profession conducted both within and without the
boundaries of a municipal corporation shall be considered as
having a taxable situs in such municipal corporation for purposes
of municipal income taxation in the same proportion as the
average ratio of: (1) The average net book value of the real and tangible
personal property owned or used by the taxpayer in the business
or profession in such municipal corporation during the taxable
period to the average net book value of all of the real and
tangible personal property owned or used by the taxpayer in the
business or profession during the same period, wherever situated. As used in the preceding paragraph, real property shall
include property rented or leased by the taxpayer and the value
of such property shall be determined by multiplying the annual
rental thereon by eight; (2) Wages, salaries, and other compensation paid during
the taxable period to persons employed in the business or
profession for services performed in such municipal corporation
to wages, salaries, and other compensation paid during the same
period to persons employed in the business or profession,
wherever their services are performed, excluding compensation
described in division (F)(8) of section 718.01 that is not taxable
by the municipal corporation under section 718.011 of the Revised
Code; (3) Gross receipts of the business or profession from
sales made and services performed during the taxable period in
such municipal corporation to gross receipts of the business or
profession during the same period from sales and services,
wherever made or performed. If the foregoing allocation formula does not
produce an equitable result, another basis may be substituted, under
uniform
regulations, so as to produce an equitable
result. (B) As used in division (A) of this section, "sales made
in a municipal corporation" mean: (1) All sales of tangible personal property
delivered within such municipal corporation regardless of where
title passes if shipped or delivered from a stock of goods within
such municipal corporation; (2) All sales of tangible personal property
delivered within such municipal corporation regardless of where
title passes even though transported from a point outside such
municipal corporation if the taxpayer is regularly engaged
through its own employees in the solicitation or promotion of
sales within such municipal corporation and the sales result from
such solicitation or promotion; (3) All sales of tangible personal property
shipped from a place within such municipal corporation to
purchasers outside such municipal corporation regardless of where
title passes if the taxpayer is not, through its own employees,
regularly engaged in the solicitation or promotion of sales at
the place where delivery is made. Sec. 718.08. (A) As used in this section: (1) "Estimated tax
liability" means the amount that a taxpayer estimates to be the
taxpayer's liability for a municipal corporation's income tax for
a year prior to applying any credits, estimated tax payments, or
withheld taxes for the year. (2) "Fiscal year taxpayer" means a taxpayer that reports
municipal income tax on the basis of a twelve-month period that does not
coincide with the calendar year. (B) Beginning January 1, 2003, a municipal corporation
that requires taxpayers who are individuals to remit payment of estimated
taxes may require such
taxpayers to remit such payments only as prescribed by divisions
(B)(1) to (4) of this section, subject to divisions
(C) and (E)(1) and (2) of this section: (1) Not more than twenty-two and one-half per cent of the
taxpayer's estimated tax liability for the current year shall be required to
have been remitted on or before the thirtieth day of April or the day
on
which the annual tax return for the prior year is required to be filed
disregarding any extension, as prescribed by
ordinance or rule of the municipal corporation; (2) Not more than forty-five per cent of the taxpayer's estimated
tax liability for the current year shall be required to have been remitted on
or before the thirty-first day of July; (3) Not more than sixty-seven and one-half per cent of the
taxpayer's estimated tax liability for the current year shall be required to
have been remitted on or before the thirty-first day of October; (4) Not more than ninety per cent of the taxpayer's estimated tax
liability for the previous year referred to in division
(B)(1), (2), and (3) of this section shall be required to have
been remitted on or
before the thirty-first day of January. (C) Any amount deducted and withheld for taxes from the
compensation of an individual shall be considered as estimated taxes paid in
equal amounts on each of the payment dates prescribed
by division (B) of this section. (D) Beginning January 1, 2003, a municipal corporation
requiring
taxpayers that are not individuals to remit payments of estimated taxes may
require such taxpayers to remit such payments only as prescribed by divisions
(D)(1) to (4) of this section, subject to division (E)(2) of this section: (1) Not more than twenty-two and one-half per cent of the
taxpayer's estimated tax liability for the current year shall be
required to have been remitted on or before the day on which the annual
tax return for the prior year is required to be filed disregarding
any extension or, in the case of a fiscal year taxpayer, the
fifteenth day of the fourth month of the taxpayer's taxable year; (2) Not more than forty-five per cent of the taxpayer's estimated
tax liability for the current year shall be required to have been
remitted on or before the fifteenth day of June or, in the case of
a fiscal year taxpayer, the fifteenth day of the sixth month of the
taxpayer's taxable year; (3) Not more than sixty-seven and one-half per cent of the
taxpayer's estimated tax liability for the current year shall be
required to have been remitted on or before the fifteenth day of
September or, in the case of a fiscal year taxpayer, the fifteenth
day of the ninth month of the taxpayer's taxable year; (4) Not more than ninety per cent of the taxpayer's estimated tax
liability for the current year shall be required to have been remitted
on or before the fifteenth day of December or, in the case of a
fiscal year taxpayer, the fifteenth day of the twelfth month of the
taxpayer's taxable year. (E) A municipal corporation shall not impose any penalty,
interest, interest penalty, or other similar assessment or charge against a
taxpayer for the late payment or nonpayment of estimated tax liability
in either of the following circumstances: (1) The taxpayer is an individual who resides in the municipal
corporation but was not domiciled there on
the first day of January of the current
calendar year; (2) The taxpayer has remitted, pursuant to division (B) or
(D) of this section, an amount at least equal to one hundred per cent of the
taxpayer's tax liability for the preceding year as shown on the return filed
by the taxpayer for the preceding year, provided that
the return for the preceding year reflected a twelve-month period
and the taxpayer filed a return for the preceding year. Sec. 5703.053. As used in this section, "postal service"
means the United States postal service. An application to the tax commissioner for a tax refund
under sections section 4307.05, 4307.07, 5727.28, 5727.91,
5728.061, 5735.122,
5735.13,
5735.14, 5735.141, 5735.142, 5739.07, 5741.10, 5743.05, 5743.53,
5745.11,
5749.08, and or 5753.06 of the Revised Code or division (B) of
section 5703.05 of the Revised Code, or a fee refunded under
section 3734.905 of the Revised Code, that is received after the
last day for filing under such section shall be considered to
have been filed in a timely manner if: (A) The application is delivered by the postal service and
the earliest postal service postmark on the cover in which the
application is enclosed is not later than the last day for filing
the application; (B) The application is delivered by the postal service,
the only postmark on the cover in which the application is
enclosed was affixed by a private postal meter, the date of that
postmark is not later than the last day for filing the
application, and the application is received within seven days of
such last day; or (C) The application is delivered by the postal service, no
postmark date was affixed to the cover in which the application
is enclosed or the date of the postmark so affixed is not
legible, and the application is received within seven days of the
last day for making the application. Sec. 5703.19. (A) To carry out the purposes of the laws
that he the tax commissioner is required to administer, the
tax commissioner or any person employed by him the
commissioner for that purpose, upon demand, may inspect books, accounts,
records, and memoranda of any person or public utility subject to those laws,
and may examine under oath any officer, agent, or employee of that person or
public utility. Any person other than the commissioner who makes a demand
pursuant to this section shall produce his the person's
authority to make the inspection. (B) If a person or public utility receives at least ten
days' written notice of a demand made under division (A) of this
section and refuses to comply with that demand, a penalty of five
hundred dollars shall be imposed upon the person or public
utility for each day the person or public utility refuses to
comply with the demand. Penalties imposed under this division
may be assessed and collected in the same manner as assessments
made under Chapter 3769., 4305., 5727., 5728., 5733., 5735.,
5739., 5743., 5745., 5747., 5749., or 5753., or sections 3734.90 to
3734.9014, of the Revised Code. Sec. 5703.21. (A) Except as provided in divisions (B), and
(C), (D), (E), (F), and (G) of this section, no agent
of the department of taxation,
except in the agent's report to the department or when called on to
testify in any court or proceeding, shall divulge any information
acquired by the agent as to the transactions, property, or business
of any person while acting or claiming to act under orders of the
department. Whoever violates this provision shall thereafter be
disqualified from acting as an officer or employee or in any
other capacity under appointment or employment of the department. (B)(1) For purposes of an audit pursuant to section 117.15
of the Revised Code, or an audit of the department pursuant to
Chapter 117. of the Revised Code, or an audit, pursuant to that
chapter, the objective of which is to express an opinion on a
financial report or statement prepared or issued pursuant to
division (A)(7) or (9) of section
126.21 of
the Revised Code, the
officers and employees of the auditor of state charged with
conducting the audit shall have access to and the right to
examine any state tax returns and state tax return information in
the possession of the department to the extent that the
access
and examination are necessary for purposes of the audit. Any
information acquired as the result of that access and
examination
shall not be divulged for any purpose other than as required for
the audit or unless the officers and employees are required
to
testify in a court or proceeding under compulsion of legal
process. Whoever violates this provision shall thereafter be
disqualified from acting as an officer or employee or in any
other capacity under appointment or employment of the auditor of
state. (2) As provided by section 6103(d)(2) of the Internal
Revenue Code, any federal tax returns or federal tax information
that the department has acquired from the internal revenue
service, through federal and state statutory authority, may be
disclosed to the auditor of state solely for purposes of an audit
of the department. (C) Division (A) of this section does not prohibit
divulging any of the following: (1) Divulging information contained in applications, complaints, and
related documents filed with the department under section 5715.27
of the Revised Code or in applications filed with the department
under section 5715.39 of the Revised Code.; (D) Division (A) of this section does not prohibit the
department of taxation providing (2) Providing
information to the division of child support
within the department of job and family services, or a
child support enforcement
agency, pursuant to division (G)(2) of section 5101.31 of the Revised
Code.;
(E) Division (A)
of this section does not prohibit the disclosure (3)
Disclosing to the board of
motor vehicle collision repair registration of any information
in the possession of the department that is necessary for the
board to
verify the existence of an applicant's valid vendor's license and
current state tax identification number under section 4775.07 of the
Revised Code.;
(F) Division (A) of this section does not prohibit the department from
providing (4) Providing information to the administrator
of workers' compensation pursuant
to section 4123.591 of the Revised Code.;
(G) Division (A) of this section does not prohibit the department of
taxation
from providing (5) Providing to the attorney general
information the department obtains
under division (J) of section 1346.01 of the Revised Code.;
(6) Permitting properly authorized officers, employees, or agents of a
municipal corporation from inspecting reports or information pursuant to
rules adopted under section 5745.16 of the Revised Code. Sec. 5745.01. As used in this chapter: (A) "Electric company" and "combined company" have the same
meanings as in section 5727.01 of the Revised Code. (B) "Electric light company" has the same meaning as in section
4928.01 of the Revised Code, and includes the activities of a
combined company as an electric company, but excludes nonprofit companies
and municipal corporations. (C) "Taxpayer" means an electric light company subject to
taxation by a municipal corporation in this state for a taxable year,
excluding an
electric light company that is not an electric
company or a combined company and for which an election made under
section 5745.031 of the Revised Code is not in effect with respect to the taxable
year. If such a company is a qualified subchapter S subsidiary as
defined in section 1361 of the Internal Revenue
Code or a
disregarded entity, the company's parent S corporation or owner is
the taxpayer for the purposes of this chapter and is hereby deemed to have
nexus with this state under the Constitution of the United
States for the purposes of this chapter. (D) "Disregarded entity" means an entity that, for its taxable
year, is by default, or has elected to be, disregarded as an entity
separate from its owner pursuant to 26 C.F.R.
301.7701-3. (E) "Taxable year" of a taxpayer is the taxpayer's taxable year
for federal income tax purposes. (F) "Federal taxable income" means taxable income, before
operating loss deduction and special deductions, as required to be reported
for the taxpayer's taxable year under the Internal Revenue
Code. (G) "Adjusted federal taxable income" means federal taxable
income adjusted as follows: (1) Deduct intangible income as defined in section 718.01 of the Revised Code to the
extent
included in federal taxable income; (2) Add expenses incurred in the production of such intangible
income; (3) If the taxpayer is a qualifying taxpayer under section
5733.0510 of the Revised Code, deduct the amount by which the
taxpayer reduced its net income to the extent that amount is
included in federal taxable income, or add the amount by which the
taxpayer increased its net income, for the taxable year under
division (B)(1) of that section, subject to divisions
(B)(3), (4),
and (5) of that section to the extent those divisions apply to the
adjustments in division (B)(1) of that section for the
taxable year. A taxpayer shall not deduct or add any amount under division
(G)(3) of this section that the taxpayer deducted or added under
division (G)(1) or (2) of this section. For the purposes of division (G)(3) of this section, "net income"
has
the same meaning as in section 5733.04 of the Revised Code. (H) "Internal Revenue Code" means the
"Internal Revenue Code of 1986," 100 Stat.
2085, 26 U.S.C.A. 1, as amended. (I) "Ohio net income" means the amount determined under division
(B) of section 5745.02 of the Revised Code. Sec. 5745.02. (A) The annual report filed under section 5745.03
of the Revised Code determines a taxpayer's ohio net income and
the portion of ohio net income to be apportioned to a municipal
corporation. (B) A taxpayer's Ohio net income is determined by
multiplying the
taxpayer's adjusted
federal taxable income by the sum of the property factor multiplied
by one-third, the payroll factor multiplied by one-third, and the sales factor
multiplied by one-third.
If the denominator of one of the factors is zero, the remaining two factors
each shall be multiplied by one-half instead of one-third; if the denominator
of two of the factors is zero, the remaining factor shall be multiplied by one.
The property, payroll, and sales factors shall be determined in the manner
prescribed by divisions (B)(1), (2), and (3) of this section. (1) The property factor is a fraction the numerator of
which is the average value of the taxpayer's real and tangible
personal property owned or rented, and used in
business in this state during the taxable year, and the
denominator of which is the average value of all the
taxpayer's real and tangible personal property owned or
rented and used in business everywhere during such
year.
Property owned by the taxpayer is valued at its
original cost. Property rented by the taxpayer is valued at
eight times the net annual rental rate. "Net annual rental rate"
means the annual rental rate paid by the taxpayer less any
annual rental rate received by the taxpayer from subrentals.
The average value of property shall be determined by
averaging the values at the beginning and the end of the taxable
year, but the tax commissioner may require the averaging of
monthly values during the taxable year, if reasonably required to
reflect properly the average value of the taxpayer's property. (2) The payroll factor is a fraction the numerator of
which is the total amount paid in this state during the taxable
year by the taxpayer for compensation, and the denominator of
which is the total compensation paid everywhere by the
taxpayer during such year. Compensation means any form of remuneration paid
to an
employee for personal services. Compensation is paid in this state if:
(a) the
recipient's service is performed entirely within this state, (b)
the recipient's service is performed both within and without this
state, but the service performed without this state is incidental
to the recipient's service within this state, (c) some of the
service is performed within this state and either the base of
operations, or if there is no base of operations, the place from
which the service is directed or controlled is within this state,
or the base of operations or the place from which the service is
directed or controlled is not in any state in which some part of
the service is performed, but the recipient's residence is in
this state. (3)(a) Sales of electricity shall be sitused in this state as
provided in
section 5733.059 of the Revised Code. (b) For all other sales, the sales factor is a fraction the
numerator of which
is the total sales in this state by the taxpayer during the
taxable year, and the denominator of which is the total sales by
the taxpayer everywhere during such year. In determining the
numerator and denominator of the sales factor, receipts from the
sale or other disposal of a capital asset or an asset described
in section 1231 of the Internal Revenue Code shall
be eliminated.
Also, in determining the numerator and denominator of the sales
factor, in the case of a reporting taxpayer owning at least
eighty per cent of the issued and outstanding common stock of one
or more insurance companies or public utilities, except an electric company,
or owning at
least twenty-five per cent of the issued and outstanding common
stock of one or more financial institutions, receipts received by
the reporting taxpayer from such utilities, insurance
companies, and financial institutions shall be eliminated. For the purpose of division (B)(3)(b) of this
section, sales of tangible personal property are in this
state where such property is received in this state by the
purchaser. In the case of delivery of tangible personal property
by common carrier or by other means of transportation, the place
at which such property is ultimately received after all
transportation has been completed shall be considered as the
place at which such property is received by the purchaser.
Direct delivery in this state, other than for purposes of
transportation, to a person or firm designated by a purchaser
constitutes delivery to the purchaser in this state, and direct
delivery outside this state to a person or firm designated by a
purchaser does not constitute delivery to the purchaser in this
state, regardless of where title passes or other conditions of
sale. Sales other than sales of electricity or tangible personal property are
in this state if either
the income-producing activity is performed solely in this
state, or
the income-producing activity is performed both
within and without this state and a greater proportion of the
income-producing activity is
performed within this state than in
any other state, based on costs of performance. (C) The portion of a taxpayer's Ohio net income taxable
by each
municipal corporation imposing an income tax shall be determined by
multiplying the taxpayer's Ohio net income by the sum of the
municipal
property factor multiplied by one-third, the municipal payroll factor
multiplied by
one-third, and the municipal sales factor multiplied by one-third,
and subtracting from the product so obtained any "municipal net
operating loss carryforward from prior taxable years."
If the denominator of one of the factors is zero, the remaining two factors
each shall be multiplied by one-half instead of one-third; if the denominator
of two of the factors is zero, the remaining factor shall be multiplied by one.
In calculating the "municipal net operating loss carryforward from prior
taxable years" for each municipal corporation, net operating losses are
apportioned in and out of a municipal corporation for the taxable year in which
the net operating loss occurs in the same manner that positive net income would
have been so apportioned. Any net operating loss for a municipal corporation
may be applied to subsequent net income in that municipal corporation to reduce
that income to zero or until the net operating loss has been fully used as a
deduction. The unused portion of net operating losses for each taxable year
apportioned to a municipal corporation may only be applied against the income
apportioned to that municipal corporation for five subsequent taxable years.
Net operating losses occurring in taxable years ending before 2002 may not be
subtracted under this section. A taxpayer's municipal property, municipal payroll, and municipal
sales factors for a municipal corporation shall be determined as provided in
divisions (C)(1), (2), and (3) of this section. (1) The municipal property factor is the QUOTIENT obtained by
dividing (a) the average value of real and tangible personal
property owned or rented by the taxpayer and used in business in the municipal
corporation during the taxable
year by (b) the average value of all of the taxpayer's real
and
tangible personal property owned or rented and used in business during that
taxable year in this
state. the
value and average value of such property shall be determined in the same
manner provided in
division (b)(1) of this section. (2) The municipal payroll factor is the quotient obtained by
dividing (a) the total amount of compensation paid by the
taxpayer
to its employees during the taxable year that is subject to income tax
withholding by the
municipal corporation by
(b) the total amount of compensation paid in this state by the
taxpayer
to its employees during the taxable year. Compensation has the same meaning
as in division
(B)(2) of this section. (3) The municipal sales
factor is a fraction the numerator of which
is the taxpayer's total sales in a municipal corporation during the
taxable year, and the denominator of which is the taxpayer's total sales
in this state during such year. For the purpose of division (C)(3) of this section, sales of
tangible personal property are in the municipal corporation
where such property is received in the municipal corporation by the
purchaser. Sales of electricity directly to the consumer, as defined in
section 5733.059 of the Revised Code, shall be considered sales of tangible
personal property. In the case of the delivery of tangible personal property
by common carrier or by other means of transportation, the place at which such
property ultimately is received after all transportation has been completed
shall be considered as the place at which the property is received by the
purchaser. Direct delivery in the municipal corporation, other than
for purposes of
transportation, to a person or firm designated by a purchaser
constitutes delivery to the purchaser in that municipal corporation, and
direct
delivery outside the municipal corporation to a person or firm designated by a
purchaser does not constitute delivery to the purchaser in that municipal
corporation, regardless of where title passes or other conditions of
sale. Sales, other than sales of tangible personal property, are
in the municipal corporation if either: (a) The income-producing activity is performed solely in
the municipal corporation; (b) The income-producing activity is performed both
within and without the municipal corporation and a greater proportion of the
income-producing activity is
performed within that municipal corporation than
any other location in this state, based on costs of performance. (D) If a taxpayer is a combined company as defined in section
5727.01 of the Revised Code, the municipal property, payroll, and sales
factors under
division (C) of this section shall be adjusted as follows: (1) The numerator of the municipal property factor shall include only the
value, as determined under division (C)(1) of this
section, of the company's real and tangible property in the municipal
corporation attributed to
the company's activity as an electric company using the same
methodology prescribed under section 5727.03 of the Revised Code
for taxable tangible personal property. (2) The numerator of the municipal payroll factor shall include only
compensation paid in the municipal corporation by the company to its employees
for
personal services rendered in the company's activity as an
electric company. (3) The numerator of the municipal sales factor shall include only the
sales of tangible personal property and services, as determined under division
(C)(3) of this section, made in the municipal corporation in the
course of the company's activity as an electric company. (E)(1) If the provisions for apportioning adjusted federal
taxable income or Ohio net income under division (B),
(C), and (D) of this section do not fairly represent
business activity in this state or among municipal corporations, the tax
commissioner may adopt rules for apportioning such income by an alternative
method that fairly represents business activity in this state or among
municipal corporations. (2) If any of the factors determined under division (B),
(C), or (D) of this
section does not fairly represent the extent of a taxpayer's business
activity in this state or among municipal corporations, the taxpayer may
request, or the
tax commissioner may require,
that the taxpayer's adjusted federal taxable income or Ohio net
income
be determined by an alternative method, including
any of the alternative methods enumerated in division
(B)(2)(d) of section 5733.05 of the Revised Code.
A taxpayer requesting an alternative
method shall make the request in
writing to the tax commissioner either with the annual report, a
timely filed amended report, or a timely filed petition for
reassessment. When the tax commissioner requires or permits an
alternative method under division (E)(2) of this section, the tax
commissioner shall cause a written
notice to that effect to be DELIVERED to any municipal corporation
that would be affected by application of the alternative method.
nothing in this division shall be construed to extend any statute
of limitations under this chapter. (F)(1)
The tax commissioner may adopt rules providing for the combination of adjusted
federal taxable incomes of taxpayers satisfying the ownership or control
requirements of section 5733.052 of the Revised Code if the tax commissioner finds that such
combinations are necessary to properly reflect adjusted federal taxable
income,
Ohio net income, or the portion of Ohio net income to be
taxable by municipal corporations. (2) A taxpayer satisfying the ownership or control requirements
of section 5733.052 of the Revised Code with respect to one or
more other taxpayers may not combine their adjusted federal taxable incomes
for the purposes of
this section unless rules are adopted under division (F)(1) of this
section allowing such a combination or the tax commissioner finds
that such a
combination is necessary to properly reflect the taxpayers' adjusted federal
taxable incomes, Ohio
net incomes, or the portion of Ohio net incomes to be subject to
taxation within a municipal corporation. Sec. 5745.03. (A) For each taxable year, each taxpayer shall
file an
annual report with the treasurer of state not later than the
fifteenth day of the fourth month after the end of the taxpayer's
taxable year, and shall remit with that report the amount of tax
due as shown on the report less the amount paid for the year
under section 5745.04 of the Revised Code. the remittance shall
be made in the form prescribed by the treasurer of state, including electronic
funds transfer if the amount payable with the report
exceeds one thousand dollars. The treasurer of state shall credit
ninety-eight and one-half per cent of such remittances to the
MUNICIPAL income tax fund, which is hereby created in the state
treasury, and credit the remainder to the municipal income tax
administrative fund, which is hereby created in the state
treasury. the treasurer of state shall indicate on the report the
date it was filed and the amount remitted, and IMMEDIATELY shall
transmit the report to the tax commissioner. (B) Any taxpayer that has been granted an extension for filing a
federal income tax return may request an extension for filing the
return required under this section by filing with the tax
commissioner a copy of the taxpayer's request for the federal
filing extension. The request shall be filed not later than the
last day for filing the return as required under division (A) of
this section. If such a request is properly and timely filed, the tax
commissioner shall extend
the last day for filing the return required under this section for the same
period for WHICH the
federal filing extension was granted. The tax commissioner may
deny the filing extension request only if the taxpayer fails to
timely file the request, fails to file a copy of the federal
extension request, owes past due taxes, interest, or penalty under
this chapter, or has failed to file a required report or other
document for a prior taxable year. The granting of an extension under
this section does not extend the last day for paying taxes without
penalty pursuant to this chapter unless the tax commissioner
extends the payment date. (C) The annual report
shall include statements of the following facts as of the last
day of the taxpayer's taxable year: (1) the name of the taxpayer; (2) the name of the state or country under the laws of
which it is incorporated; (3) the location of its principal office in this state
and, in the case of a taxpayer organized UNDER the
laws of another state, the principal place of business in this
state and the name and address of the officer or agent of the
taxpayer in charge of the business conducted in this
state; (4) the names of the PRESIDENT, secretary, treasurer, and
statutory agent in this STATE, with the post-office address of
each; (5) The date on which the taxpayer's taxable year begins and ends; (6) The taxpayer's federal taxable income during the
taxpayer's taxable year; (7) Any other information the tax commissioner requires
for the proper administration of this chapter. (D) The tax commissioner may require any reports required under
this chapter to be filed in an
electronic format. (E) A municipal corporation may not require a taxpayer required
to file a report under this section to file a report of the taxpayer's income,
but a municipal corporation may require a
taxpayer to report to the municipal corporation the value of the
taxpayer's real and tangible personal property situated in the
municipal corporation, compensation paid in the municipal
corporation to employees by the taxpayer, and sales made in the
municipal corporation by the taxpayer, to the extent necessary for
the municipal corporation to compute the taxpayer's municipal
property, payroll, and sales factors for the municipal
corporation. (F) On or before the thirty-first
day of January each year, each
municipal corporation imposing a tax on income shall certify to the tax
commissioner the rate of the tax in effect on the first day of
January of that year. If any municipal corporation
fails to
certify its income tax rate as required by this division, the tax
commissioner shall notify the director of budget and management,
who, upon receiving such notification, shall withhold from each
payment made to the municipal corporation under section 5745.05 of the Revised Code fifty per
cent of the amount of the payment
otherwise due the municipal corporation under that section as computed on the
basis of the tax rate most recently certified until
the municipal corporation certifies the tax rate in effect on the first day of
January of that year. The tax rate used to determine the tax payable to a municipal corporation
under this section for a taxpayer's taxable year shall be the tax rate in
effect in a municipal corporation on the first day of January in that
taxable year. If a taxpayer's taxable year is for a period less than twelve
months that does not include the first day of January, the tax rate
used to determine the tax payable to a municipal corporation under this section
for the taxpayer's taxable year shall be the tax rate in effect in a municipal
corporation on the first day of January in the preceding taxable year. Sec. 5745.031. An electric light company that is not an electric
company or a combined company may elect to be a taxpayer for the
purposes of this chapter if not less than fifty per cent of the
company's total sales in this state consist of electricity, as determined
under section
5733.059 of the Revised Code, and other energy commodities during the taxpayer's most
recently concluded taxable year. the
company shall make the election by application in writing to the tax
commissioner before the first day of the first taxable year to which the
election is to apply. The election is effective for five consecutive taxable
years and, once made, is irrevocable for the five taxable years for which the
election was made. The failure of such a company to make an election under this
section shall not be construed to exempt or exclude such a company from
the income tax of any municipal corporation. Sec. 5745.04. (A) as used in this section, "combined tax
liability" means the total of a taxpayer's income tax liabilities to all
municipal corporations in this state for a taxable year. (B) Beginning in 2003, each taxpayer shall file a declaration of
estimated tax report with, and remit estimated taxes to, the treasurer of
state at the times and in the amounts PRESCRIBED in
divisions (b)(1) to (4) of this section, except as provided in
division (c) of this section: (1) Not less than twenty-five per cent of the combined tax liability
for the preceding taxable year or twenty per cent of the
combined tax liability for the current taxable year shall have been remitted
not later than the fifteenth day of the fourth month after the end
of the preceding taxable year; (2) Not less than fifty per cent of the combined tax liability
for the preceding taxable year or forty per cent of the combined
tax liability for the current taxable year shall have been remitted not
later than the fifteenth day of the sixth month after the end of
the preceding taxable year; (3) Not less than seventy-five per cent of the combined tax liability
for the preceding taxable year or sixty per cent of the
combined tax liability for the current taxable year shall have been
remitted not later than the fifteenth day of the ninth month after
the end of the preceding taxable year; (4) Not less than one hundred per cent of the combined tax liability
for the preceding taxable year or eighty per cent of the
combined tax liability for the current taxable year shall have been remitted
not later than the fifteenth day of the twelfth month after the
end of the preceding taxable year. (C) Each taxpayer shall report on the declaration of estimated
tax report the portion of the remittance that the taxpayer estimates that it
owes to each municipal corporation for the taxable year. (D) Upon receiving a declaration of estimated tax report and
remittance of estimated taxes under this section, the treasurer of state shall
credit ninety-eight and one-half per cent of the
remittance to the municipal income tax fund and credit the
remainder to the municipal income tax administrative fund, and
shall transmit the report to the tax commissioner. (E) If any remittance of estimated taxes is for one thousand
dollars or more, the taxpayer shall make the remittance by electronic
funds transfer as prescribed by section 5745.04 of the Revised Code. (F) Notwithstanding section 5745.08 or 5745.09 of the Revised Code, no PENALTY or
interest shall be imposed on a taxpayer if the declaration of estimated tax
report is properly filed, and the estimated tax is remitted,
within the time prescribed by
division (B) of this section. Sec. 5745.041. Any taxpayer required by section 5745.03 or 5745.04 of the Revised Code to
remit tax payments
by electronic funds transfer shall remit such payments to the
treasurer of state in the manner prescribed by rules adopted by
the treasurer under section 113.061 of the Revised Code. Except as otherwise provided in
this paragraph, the payment
of taxes by electronic funds transfer does not affect a
taxpayer's obligation to file reports under this chapter. If a taxpayer
remits estimated tax payments in a manner, designated by rule of the treasurer
of state, that permits the inclusion of all information necessary for the
treasurer of state to process the payment, the taxpayer is not required to
file the declaration of estimated tax report as otherwise required under
section 5745.04 of the Revised Code. The treasurer of state, in consultation with the tax commissioner, may
adopt rules governing the format for reporting and paying estimated taxes by
electronic funds transfer. A taxpayer required to remit taxes by
electronic funds transfer may apply to the treasurer of state in
the manner prescribed by the treasurer to be excused from that
requirement. The treasurer of state may excuse the taxpayer from
the requirement for good cause shown for
the period of time requested by the taxpayer or for a portion of
that period. The treasurer shall notify the tax commissioner and
the taxpayer of the treasurer's decision as soon as is
practicable. If a taxpayer required by this section to remit taxes
by electronic funds transfer remits those taxes by some means
other than by electronic funds transfer as prescribed by this
section and the rules adopted by the treasurer of state, and the
treasurer determines that such failure was not due to reasonable
cause or was due to willful neglect, the treasurer shall notify
the tax commissioner of the failure to remit by electronic funds
transfer and shall provide the commissioner with any information
used in making that determination. The tax commissioner may
collect an additional charge by assessment in the manner
prescribed by section 5745.12 of the Revised Code. The
additional charge shall equal five per cent of the amount of the
taxes or estimated tax payments required to be paid by electronic
funds transfer, but shall not exceed five thousand dollars. Any
additional charge assessed under this section is in addition to
any other penalty or charge imposed under this chapter, and shall
be considered as revenue arising from municipal income taxes collected under
this chapter. The tax commissioner may remit all or a
portion of such
a charge and may adopt rules governing such remission. No additional charge shall be assessed under this section
against a taxpayer that has been notified of its obligation to
remit taxes under this section and that remits its first two tax
payments after such notification by some means other than
electronic funds transfer. The additional charge may be assessed
upon the remittance of any subsequent tax payment that the
taxpayer remits by some means other than electronic funds
transfer. Sec. 5745.05. (A) Prior to the first day of March,
June,
September, and December, the tax
commissioner shall certify to the director of budget and management the amount
to be paid to each
municipal corporation, as indicated on the declaration of estimated tax
reports and annual reports received under sections 5745.03 and 5745.04 of the Revised Code,
less any amounts previously distributed for the taxable year. Not later
than the first day of March, June, September, and
December, the
director of budget and management shall provide for payment of the amount
certified to each municipal corporation from the municipal income tax fund,
plus a pro rata share of any investment earnings
accruing to the fund since the previous payment under this section
apportioned among municipal corporations entitled to such payments
in proportion to the amount certified by the tax commissioner. (B) If the tax commissioner determines that the amount of tax
paid by a taxpayer and distributed to a municipal corporation under this
section for a taxable year exceeds the amount payable to that municipal
corporation under this chapter after accounting for amounts remitted with the
annual report and as estimated taxes, the tax commissioner shall permit the
taxpayer to credit
the excess against the taxpayer's payments to the
municipal corporation of estimated taxes remitted for an ensuing taxable year
under section
5745.04 of the Revised Code. If, upon the written request of the taxpayer, the tax
commissioner determines
that the excess to be so credited is likely to exceed the amount
of estimated taxes payable by the taxpayer to the
municipal corporation during the ensuing twelve months, the tax
commissioner shall so notify the municipal corporation and the
municipal corporation shall issue a refund of the excess to the
taxpayer within ninety days after receiving such a notice.
Interest shall accrue on the amount to be
refunded and is payable to the taxpayer at the rate per annum
prescribed by section 5703.47 of the Revised Code from the
ninety-first day after the notice is received by the municipal corporation
until the day the refund is
paid. Sec. 5745.06. (A) As used in this section: (1) "Qualifying pass-through entity" means a pass-through entity,
as defined in section 5733.04 of the Revised Code, that is a
taxpayer under this chapter. (2) "Qualifying taxpayer" means a taxpayer, that, during any
portion of the taxable year of a qualifying pass-through entity, holds a
direct ownership interest in that qualifying pass-through entity. (B) There is hereby allowed a nonrefundable credit against the
amount of tax payable under this chapter to a municipal corporation by a
qualifying taxpayer. The credit shall equal the
qualifying taxpayer's proportionate share of the lesser of the tax
due from or the tax paid by a qualifying pass-through entity to that
municipal corporation under this chapter for the entity's taxable
year ending in the qualifying taxpayer's taxable year. The
taxpayer shall claim the credit for the taxpayer's taxable year in which
the qualifying pass-through entity's taxable year ends. In determining
the taxpayer's proportionate share of the tax due or tax paid by the
qualifying pass-through entity, the taxpayer shall follow the
concepts set forth in SUBCHAPTERS J and K of the
Internal Revenue
Code. If the amount of the credit claimed for a taxable year exceeds the
amount of tax due to that municipal corporation for that year, the
excess shall be allowed as a credit against the taxes payable to
that municipal corporation for ensuing taxable years until the full
amount of the credit is claimed. any amount of the credit claimed
for a taxable year shall be deducted from the balance carried forward
to the ensuing taxable year. Sec. 5745.07. If the tax required to be paid under this
chapter,
or any portion of that tax, whether determined by the tax
commissioner or the taxpayer, is not paid on or before the date
prescribed for its payment, interest shall be assessed,
collected, and paid, in the same manner as the tax, upon such
unpaid amount at the rate per annum prescribed by section 5703.47
of the Revised Code from the date prescribed for its payment
until it is paid or until the day an assessment is issued under section
5745.12 of the Revised Code, whichever occurs first. Sec. 5745.08. (A) The
following penalties shall apply under the circumstances indicated: (1) If a taxpayer
required to file a report or remit tax as
required by this chapter fails to
make and file the report within the time prescribed, including
any extensions of time granted by the tax commissioner, the tax commissioner
may impose a penalty
not exceeding the greater of fifty dollars per month
or fraction of a month, not to exceed five hundred dollars, or
five per cent per month or fraction of a month, not to exceed
fifty per cent, of the tax required to be shown on the report,
for each month or fraction of a month elapsing between the due
date, including extensions of the due date, and the day on which the report is
filed. (2) If a taxpayer fails
to pay any amount of estimated tax
required to be paid under division (B) of section
5745.04 of the Revised Code
by
the dates prescribed for payment, the tax commissioner may impose a penalty
not
to exceed twice the interest charged under section
5745.09 of the Revised Code for the delinquent payment. (3) If a taxpayer files what purports to be a report
required by this chapter that does not contain information
upon
which the substantial correctness of the report may be judged or
contains information that on its face indicates that the report
is substantially incorrect, and the filing of the report in that
manner is due to a position that is frivolous or a desire that is
apparent from the report to delay or impede the administration of
this chapter, a penalty of up to five hundred dollars
may be imposed. (4) If a taxpayer makes a fraudulent attempt to evade
the
reporting or payment of the tax required to be shown on any
report required under this chapter, a penalty may be
imposed
not exceeding the greater of one thousand dollars or one hundred per
cent of the tax required to be shown on the report. (5) If any person makes a false or fraudulent claim for a
refund under section 5745.11 of the Revised Code, a penalty may be imposed not exceeding
the greater of one thousand dollars or one hundred per cent of
the claim. Any penalty imposed under division (A)(5) of this
section, any refund issued on the claim, and interest on any
refund from the date of the refund, may be assessed under section
5745.12 of the Revised Code without regard to any time
limitation for the assessment
imposed by division (A) of that section. (B) For the purposes of this section, the tax required to be
shown on the report shall be reduced by the amount of any part of
the tax paid on or before the date, including extensions of the
date, prescribed for filing the report. (C) Each penalty imposed under this section shall be in
addition to any other penalty provided in this section. All or
part of any penalty imposed under this section may be abated by
the commissioner. The tax commissioner may adopt rules governing the
imposition and abatement of such penalties. (D) All amounts collected under this section from a taxpayer
shall be considered
as taxes collected under this chapter and shall be credited
and distributed to municipal corporations
in the amounts found to be due such municipal corporations. Sec. 5745.09. (A) In case of any underpayment of the
estimated tax under
section 5745.04 of the Revised Code,
there shall be added to the tax an amount
determined at the rate per annum prescribed by section 5703.47 of
the Revised Code upon the amount of underpayment for the
period
of underpayment. (B) The amount of the underpayment shall be the excess of
division (B)(1) over division (B)(2) of this section: (1) The amount of the estimated tax payment that would be
required to be paid for the taxable year if the total estimated tax were equal
to the
total tax shown to be due on the annual report, or
if no report was filed, the tax for such year; (2) The amount, if any, of the estimated tax paid on or
before the last day prescribed for such payment. (C) The period of the underpayment shall run from the date
the estimated tax payment was required to be made to the date on
which such payment is made. For purposes of this section, a
payment of estimated tax on any payment date shall be considered
a payment of any previous underpayment only to the extent such
payment exceeds the amount of the payment presently due. (D) All amounts collected under this section shall be considered
as taxes collected under this chapter and shall be credited
and distributed to municipal corporations in the same proportions as the
taxpayer's taxes are distributed for the reporting period under section
5745.05 of the Revised Code. Sec. 5745.10. Except as otherwise provided in
section 5703.053 of the Revised Code, if any report, claim, statement, or other document
required to be filed, or any payment required to be made, within
a prescribed period or on or before a prescribed date under
this chapter
is, after such period or such date, delivered by
United
States mail to the agency, officer, or office with which such
report, claim, statement, or other document is required to be
filed, or to which such payment is required to be made, the date
of the postmark stamped on the cover in which such report, claim,
statement, or other document, or payment is mailed shall be
deemed the date of delivery or the date of payment. "The date of the postmark" means, in the event there is
more than one date on the cover, the earliest date imprinted on
the cover by the post office. Sec. 5745.11. An application to refund to
a taxpayer
the amount of taxes paid
on any illegal, erroneous, or
excessive assessment, with interest on that amount as provided
by section 5745.07 of the
Revised Code, shall be filed with the
tax commissioner within three years after the date of the
illegal, erroneous, or excessive payment of the tax, or within
any additional period allowed by division
(A) of section 5745.12 of the
Revised Code. the application shall be
filed in the form prescribed by the tax commissioner. Upon the filing of a refund application, the tax
COMMISSIONER shall determine the amount of refund due and
certify the amount of the refund to
each municipal corporation to which the overpayment was made. the
municipal corporation shall issue a refund to the taxpayer, or, upon the
taxpayer's written request, shall credit the amount of the refund
against the taxpayer's estimated tax payments to the municipal
corporation for an ensuing taxable year. any portion of the
refund not issued within ninety days after the tax commissioner's
notice is received by the municipal corporation shall bear
interest at the rate per annum prescribed by section 5703.47 of the Revised Code from the
ninetieth day after such notice is
received by the municipal corporation until the day the refund is paid or
credited. Sec. 5745.12. (A) If any
taxpayer required to file a
report under this chapter fails to file the report within the
time prescribed, files an incorrect report, or fails to remit the
full amount of the tax due for the period covered by the report,
the tax commissioner may make an assessment against the taxpayer for any
deficiency for the period for which the
report or tax is due, based upon any information in the
commissioner's possession. The tax commissioner shall not make or issue an assessment against
a taxpayer
more than three years after the later of the final date the
report subject to assessment was required to be filed or the date
the report was filed. Such time limit may be extended if both
the taxpayer and the commissioner consent in writing to the
extension. Any such extension shall extend the three-year time
limit in section 5745.11 of the Revised Code for
the same period of time. There shall be no bar or limit to an
assessment against a taxpayer that fails to file a report
subject to assessment as required by this chapter, or that files a fraudulent
report. The commissioner shall give the
party
assessed written notice of the assessment by personal service or certified
mail. (B) Unless the taxpayer to which the notice of
assessment is directed files with the commissioner within sixty
days after service thereof, either personally or by certified
mail, a petition for reassessment in writing, signed by the
authorized agent of the taxpayer assessed having knowledge of
the facts, and makes payment of the portion of the assessment
required by division (E) of this section, the assessment shall
become final, and the amount of the assessment shall
be due and payable from the taxpayer to the treasurer of
state. The petition shall indicate the taxpayer's objections,
but additional objections may be raised in writing if received
prior to the date shown on the final determination by the
commissioner. Unless the petitioner waives a hearing, the commissioner
shall assign a time and place for the hearing on the petition and
notify the petitioner of the time and place of the hearing by
personal service or certified mail, but the commissioner may
continue the hearing from time to time if necessary. The commissioner may make such correction to the assessment
as the commissioner finds proper. The commissioner shall
serve a copy of the final determination on the petitioner by
personal service or by
certified mail, and the commissioner's decision in the
matter shall be final,
subject to appeal as provided in section 5717.02 of the Revised
Code. Only objections decided on the merits by the board of tax
appeals or a court shall be given collateral estoppel or res
judicata effect in considering an application for refund of
amounts paid pursuant to the assessment. (C) After an assessment becomes final, if any portion of
the assessment remains unpaid, including accrued interest, a
certified copy of the
commissioner's entry making the assessment final may be filed in
the office of the clerk of the court of common pleas in the
county in which the taxpayer has an office or place of
business in this state, the county in which the taxpayer's
statutory agent is located, or Franklin county. Immediately upon the filing of the entry, the clerk shall
enter a judgment against the taxpayer assessed in the amount
shown on the entry. The judgment may be filed by the clerk in a
loose-leaf book entitled "special judgments for municipal income
taxes," and shall have the same effect
as other judgments. Execution shall issue upon the judgment upon
the request of the tax commissioner, and all laws applicable to
sales on execution shall apply to sales made under the judgment. The portion of an assessment not paid within
sixty days after the day the assessment was issued shall bear interest
at the rate per annum prescribed by section 5703.47 of the
Revised Code
from the day the tax commissioner issues the assessment
until the assessment is paid. Interest shall be paid in the
same manner as the tax and may be collected by issuing an
assessment under this section. (D) All money collected under this section shall be
credited and distributed to the municipal corporation to which the money is
owed based on the assessment issued under this section. (E) The portion of an assessment which must be paid upon
the filing of a petition for reassessment shall be as follows: (1) If the sole item objected to is the assessed penalty
or interest, payment of the assessment excluding any penalty
is required. (2) If the taxpayer that is assessed failed to file, prior to
the date of issuance of the assessment, the annual report
required by section 5745.03 of the Revised Code, full
payment
of the assessment including
penalty and interest is required. (3) If the taxpayer that is assessed filed, prior to the date
of issuance of the assessment, the annual report required by
section 5745.03 of the Revised Code,
and a balance of the taxes shown due on the reports as
computed on the reports remains unpaid, payment of only that
portion of the assessment representing the unpaid balance is
required. (4) If none of the conditions specified in divisions
(E)(1) to (3) of this section apply, no payment is required. (F) Notwithstanding the fact that a petition for
reassessment is pending, the taxpayer may pay all or a portion
of the assessment that is the subject of the petition. The
acceptance of a payment by the treasurer of state does not
prejudice any claim for refund upon final determination of the
petition. If upon final determination of the petition an error in the
assessment is corrected by the commissioner, upon petition so
filed or pursuant to a decision of the board of tax appeals or
any court to which the determination or decision has been
appealed, so that the amount due from the taxpayer under the
corrected assessment is less than the portion paid, there shall
be issued to the taxpayer, its assigns, or legal
representative a refund in the amount of the overpayment as
provided by section 5745.11 of the Revised Code, with
interest on
that amount as provided by section 5745.11 of the Revised
Code. Sec. 5745.13. If, upon examination of any books, records,
reports, or other documents of a taxpayer, the tax commissioner
determines that an adjustment shall be made in the portion of the taxpayer's
income that is to be apportioned to a municipal corporation, the tax
commissioner shall notify the taxpayer and each municipal corporation to the
taxpayer's income has been adjusted. Any municipal corporation to which such a notice is issued may
request a review and redetermination of the taxpayer's federal taxable
income, ohio net income, or the portion of ohio net income
apportioned to the municipal corporation by filing a petition with the tax
commissioner not later than sixty days after the tax commissioner issues the
notice. the petition shall be filed either personally or by
certified mail, and shall indicate the objections of the municipal
corporation. Upon receiving such a petition, if a hearing is requested the tax
commissioner shall assign
a time and place for a hearing on the petition and shall notify the
petitioner of the time and place of the hearing by ordinary mail. The
tax commissioner may continue the hearing from time to time as
necessary. The tax commissioner shall make any correction to the
taxpayer's federal taxable income, Ohio net income, or apportionment
of Ohio net income that the commissioner finds proper,
and
issue notice of any correction
by ordinary mail
to the petitioner, to each other municipal corporation affected by
the correction of the apportionment, and to the taxpayer. The tax
commissioner's decision on the matter is final, and is not subject to further
appeal. Sec. 5745.14. If any of the facts, figures, computations, or
attachments required in a taxpayer's report
to
determine the tax due a municipal corporation must be altered as the
result of an adjustment to the taxpayer's federal income tax
return, whether the adjustment is initiated by the taxpayer, the internal
revenue
service, or the tax commissioner, and such alteration affects the
taxpayer's tax liability to a municipal corporation,
the taxpayer shall file an amended report with the tax commissioner in such
form as the commissioner requires. The amended report shall be
filed not later than one year after the adjustment has been
agreed to or finally determined. (B) In the case of an underpayment, the amended report
shall be accompanied by payment of an additional tax and interest
due and is a report subject to assessment under section 5745.12
of the Revised Code for the purpose of assessing any additional
tax due under this division, together with any applicable penalty
and interest. It shall not reopen those facts, figures,
computations, or attachments from a previously filed report no
longer subject to assessment that are not affected, either
directly or indirectly, by the adjustment to the taxpayer's
federal income tax return. (C) In the case of an overpayment, an application for
refund may be filed under section 5745.11 of the Revised Code within the one-year
period prescribed for filing the amended report even if it is
filed beyond the period prescribed by that section, if it otherwise conforms
to the
requirements of such section. An application filed under this
division shall claim refund of overpayments resulting from
alterations to only those facts, figures, computations, or
attachments required in the taxpayer's report that are
affected, either directly or indirectly, by the adjustment to the
taxpayer's federal income tax return unless
it is also filed
within the time prescribed by section 5745.11 of the Revised Code. It shall not reopen those
facts, figures,
computations, or attachments that are not affected, either
directly or indirectly, by the adjustment to the taxpayer's
federal income tax return. Sec. 5745.15. (A) Each taxpayer
shall make its records, documents, returns, and reports open
to inspection by the tax commissioner during normal business hours, and shall
preserve
those records, documents, returns, and reports for a period of
three years after the date the return or report, or return or
report to which such a record or document pertains, was required
to be filed or actually was filed, whichever is later. The tax
commissioner may consent in writing to the destruction of such
records, documents, returns, or reports within that three-year
period. (B) The tax commissioner shall administer and enforce this
chapter. In addition to any other
powers conferred by law on the tax commissioner, the tax commissioner may
prescribe all forms required to be filed under those
sections, adopt rules that, in the opinion of the tax
commissioner, are necessary to carry out those sections, and
appoint and employ such personnel as may be necessary to carry out
the tax commissioner's duties under those sections. Sec. 5745.16.
With respect to reports filed with the tax commissioner under
this chapter,
and any other
information gained in the performance of the tax commissioner's duties
prescribed by this chapter, the tax commissioner shall
adopt rules governing the terms and conditions under which such
reports or information shall be available for inspection by
properly authorized officers, employees, or agents of the
municipal corporation to which the taxpayer's Ohio net income is
apportioned under division (D) of section 5745.02 of the Revised Code. The rules
shall prohibit disclosure of such reports or information to any person other
than a properly authorized officer,
employee, or agent of a municipal corporation, and shall provide
for disclosure of only such information as is necessary, in the
opinion of the tax commissioner, for properly authorized officers,
employees, or agents of a municipal corporation to ascertain the
share of a taxpayer's net income to be apportioned to that
municipal corporation. As used in this division, "properly authorized officer, employee,
or agent" means an officer, employee, or agent of a municipal
corporation who is authorized by charter or ordinance of the municipal
corporation to view or possess information referred to in
section 718.13 of the Revised Code. SECTION 2 . That existing sections 113.061, 718.01, 718.02,
718.08, 5703.053, 5703.19, and 5703.21 of the Revised
Code are hereby repealed.
SECTION 3 . Sections 113.061, 718.01, 718.011, 718.02, 718.08,
5703.053, 5703.19, 5703.21, and 5745.01 to 5745.16 of
the Revised Code, as amended or enacted by this act, take effect
January 1, 2002.
SECTION 4 . Notwithstanding division (B) of section 5745.04 of the
Revised Code as enacted by this act:
(A) Each electric company and combined company, as defined in
section 5727.01 of the Revised Code, shall file a declaration of
estimated tax report and remit 20% of the combined tax
liability for its taxable year ending in 2002 on the fifteenth day of the
fourth,
sixth, ninth, and twelfth month of that
taxable year. The company shall indicate on the
report the portion of the remittance that is payable to each
municipal corporation to which the company estimates its Ohio net income will
be apportioned for that taxable year under section 5745.02 of the Revised Code
as enacted by this act.
No penalty or interest shall be imposed on such a company if the
estimated tax remitted under division (B) of this section is
remitted within the time prescribed by that division and the total
of the estimated taxes remitted equals at least 80% of the
combined tax liability for the taxable year. (B)(1) Except as otherwise provided in division (B)(2) of this
section, each electric light company that is not an electric
company or combined company as defined in section 5727.01 of the
Revised Code and that paid a municipal corporation's income tax in
2001 shall file a declaration of estimated tax report and remit
25% of the company's combined tax liability for 2001, in lieu of
the estimated combined tax liability for 2002, on the
fifteenth day of the fourth, sixth, ninth, and twelfth month after
the end of the company's taxable year ending in 2001. The company
shall indicate on the report the portion of the remittance that is
payable to each municipal corporation to which the company estimates its Ohio
net income will be apportioned for that taxable year under section 5745.02 of
the
Revised Code as enacted by this act. No penalty or interest shall be imposed
on such a
company if the total of the estimated taxes remitted equals at
least 80% of the combined tax liability for
the taxable year ending in 2001 or 100% of the combined tax liability for the
taxable year ending in 2000. (2) Division (B)(1) of this section applies only to an electric
light company described in that division that makes an election
under section 5745.031 of the Revised Code that is in effect for
tax year 2002. SECTION 5 .
Notwithstanding sections 5745.03 and 5745.04 of the
Revised Code, as enacted by this act, the Treasurer of State
shall credit to the Municipal Income Tax Administrative Fund, from remittances
received under those sections for taxable
years ending in 2002 and 2003, the amount certified by
the Tax Commissioner as the amount
necessary to defray the Tax Commissioner's expenses of
administering Chapter 5745. of the Revised Code for 2002
and 2003, respectively. The amount shall not exceed 5%
of the remittances received for the respective year. The Tax
Commissioner shall certify that amount to the Treasurer of State
not later than January 31, 2002, and January 31, 2003,
respectively.
SECTION 6 . (A) The Tax Commissioner may discuss with other
states the development of a multi-state, voluntary, and simplified
system for the collection of the sales and use tax from remote
sellers, and administration of such tax. The discussions shall
focus on a system that will have the capability to determine
whether a sale of goods or a service is taxable or tax exempt, the
appropriate tax rate that applies to the sale, and the total tax
due on the sale. The system shall provide a method for collecting
and remitting sales and use taxes to this state, and may provide
compensation for the costs of collecting and remitting such taxes.
Discussions between the Tax Commissioner and other states may
address the following:
(1) The development of a Joint Request for Information from
public and private parties governing the specifications for the
system; (2) The mechanism for compensating parties for the development
and operation of the system; (3) The establishment of minimum statutory measures necessary for
state participation in the system; (4) Methods to preserve confidentiality of taxpayer information
and the privacy rights of consumers. Following these discussions, the Tax Commissioner may issue a
Joint Request for Information. (B) The Tax Commissioner may participate in a sales and use tax
pilot project with other states and selected businesses to test
means for simplifying administration of the sales and use tax, and
may enter into joint agreements for that purpose. The agreements
shall establish provisions for the administration, imposition, and
collection of sales and use taxes resulting in revenues paid that
are the same as would be paid under Chapters 5739. and 5741. of
the Revised Code. All such agreements shall terminate no later
than December 31, 2001. Parties to the agreements may be exempted from compliance with
Chapters 5739. and 5741. of the Revised Code to the extent a
different procedure is required by the agreements, except for
confidentiality of taxpayer information under division (C) of this
section. (C) Return information submitted to any party acting for and on
behalf of this state under division (A) or (B) of this section
shall be treated as confidential taxpayer information. Disclosure
of confidential taxpayer information necessary under division (A)
or (B) of this section shall be pursuant to a written agreement
between the Tax Commissioner and the party. The party shall be
bound by the same requirements of confidentiality as the
Department of Taxation and its agents under section 5703.21 of the
Revised Code. (D) The Tax Commissioner, by November 1, 2000, shall provide a
report on the progress of multi-state discussions to the Governor,
Speaker of the House of Representatives, President of the Senate,
Minority Leaders of the House of Representatives and Senate, and
chairpersons of the House of Representatives' and Senate's
standing committees with primary responsibility for sales and use
tax legislation. Not later than March 1, 2001, the Tax
Commissioner shall provide a final report to these entities on the
status of multi-state discussions held under this section. If a
proposed system for the collection and administration of sales and
use taxes has been agreed upon by participating states, the Tax
Commissioner, in the final report, shall recommend whether this
state should participate in the system and what legislation is
needed to implement it. SECTION 7 . Section 5703.053 of the Revised Code is presented in
this act
as a composite of the sections as amended by both
Am. Sub. H.B. 283 and Am. Sub. S.B. 3 of the 123rd General Assembly,
with the new language of neither of the acts shown in capital letters.
This is in recognition of the principle stated in division (B) of section
1.52 of the Revised Code that such amendments are to be
harmonized where not substantively irreconcilable and constitutes
a legislative finding that such are the resulting versions in
effect prior to the effective date of this act.
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