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H. B. No. 396As Reported by the House Ways and Means CommitteeAs Reported by the House Ways and Means Committee
124th General Assembly | Regular Session | 2001-2002 |
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REPRESENTATIVES Latta, Kearns, Hollister, Otterman, Seitz, Lendrum, Reidelbach, Schmidt, Willamowski, D. Miller, Fessler, Jones, Jolivette, Roman, Faber, Aslanides, Kilbane, Coates, Hoops, S. Smith
A BILL
To amend sections 131.02 and 5747.451, to enact
section 5703.06, and to repeal sections 5727.59
and
5733.25 of the Revised Code relative to the
attorney general's authority to compromise claims
for taxes and other amounts due the state.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 131.02 and 5747.451 be amended and
section 5703.06 of the Revised Code be enacted to read as follows:
Sec. 131.02. (A) Whenever any amount is payable to the state,
the officer, employee, or agent responsible for administering the
law under which the amount is payable shall immediately proceed
to
collect the amount or cause the amount to be collected and
shall
pay the amount into the state treasury in the manner set
forth
pursuant to section 113.08 of the Revised Code. If the
amount is
not paid within forty-five days after payment is due,
the officer,
employee, or agent shall certify the amount due to
the attorney
general, in the form and manner prescribed by the
attorney
general, and notify the director of budget and
management thereof. (B)(1) The attorney general shall give immediate notice by
mail
or
otherwise to the party indebted of the nature and amount
of the
indebtedness.
If (2) If the amount payable to this state arises from a
tax
levied under Chapter 5733., 5739., 5741., or 5747. of the
Revised
Code, the notice also shall specify all of the following: (A)(a) The assessment or case number;
(B)(b) The tax pursuant to which the assessment is made;
(C)(c) The reason for the liability, including, if
applicable, that a penalty or interest is due;
(D)(d) An explanation of how and when interest will be added
to the amount assessed;
(E)(e) That the attorney general and tax commissioner,
acting together, have
the authority, but are not required, to
extend
compromise the
claim and accept payment over a reasonable
time
of the
payment for up to one year, if such actions are in the
best interest of the state.
(C) The attorney general shall collect the claim or secure a
judgment and issue an execution for its collection. (D) Each claim shall bear interest, from the day on which
the
claim became due, at the
base rate per annum
for advances and
discounts to member banks in effect at the federal reserve bank
in
the second federal reserve district. The attorney general and
the
chief officer of the agency reporting the claim may adjust
any
claim in such manner as is equitable. They may extend the
time of
the payment of a claim or judgment for such period of
time not to
exceed one year as is best for the interests of the
state, and
they may require and take security for its payment
prescribed
under section 5703.47 of the Revised Code, unless a different rate
is provided by agreement or by other law applicable to the claim.
(E) The attorney general and the chief officer of the agency
reporting a claim, acting together, may do either or both of the
following if such action is in the best interests of the state:
(1) Compromise the claim;
(2) Extend for a reasonable period the time for payment of
the claim by agreeing to accept monthly or other periodic
payments. The agreement may require security for payment of the
claim.
Sec. 5703.06. (A) As used in this section, "claim" means a
claim for an amount payable to this state that arises under a
statute administered by the tax commissioner and that has been
certified to
the attorney general for collection under section
131.02 of the
Revised Code.
(B) The tax commissioner and the attorney general shall
consider the following standards when ascertaining with respect to
a claim whether a compromise or payment-over-time agreement is in
the best interests of the state under division (E) of section
131.02 of the Revised Code: (1) There exists a doubt as to whether the claim can be
collected. (2) There exists a substantial probability that, upon
payment of the claim and submission of a timely application for
refund with respect to that payment, the commissioner would refund
an amount that was illegally or erroneously paid.
(3) There exists an economic hardship such that a
compromise or agreement would facilitate effective tax
administration.
(4) Any other standard to which the commissioner
and
attorney general jointly agree. (C) The rejection of a compromise or payment-over-time
agreement proposed by a taxpayer with respect to a claim shall not
be appealable.
(D) A compromise or payment-over-time agreement with
respect to a claim shall be binding upon and shall inure to the
benefit of only the parties to the compromise or agreement, and
shall not extinguish or otherwise affect the liability of any
other person or governmental entity. (E) A compromise or payment-over-time agreement with respect
to a claim shall be void if the taxpayer defaults under the
compromise or agreement or if the compromise or agreement was
obtained by fraud or by misrepresentation of a material fact. Any
amount that was due prior to the compromise or agreement and is
unpaid shall remain due, and any interest that would have accrued
in the absence of the compromise or agreement shall continue to
accrue and be due.
Sec. 5747.451. (A) The mere retirement from business or
voluntary
dissolution of a domestic or foreign qualifying entity
does not exempt it
from the requirements to make reports as
required under sections 5747.42 to
5747.44 or to pay the taxes
imposed under section 5733.41 or 5747.41 of the
Revised Code. If
any qualifying entity subject to the taxes imposed under
section
5733.41 or 5747.41 of the Revised Code sells its business or stock
of
merchandise or quits its business, the taxes required to be
paid prior to that
time, together with any interest or penalty
thereon, become due and payable
immediately, and the qualifying
entity shall make a final return within
fifteen days after the
date of selling or quitting business. The successor of
the
qualifying entity shall withhold a sufficient amount of the
purchase money
to cover the amount of such taxes, interest, and
penalties due and unpaid
until the qualifying entity produces a
receipt from the tax commissioner
showing that the
taxes,
interest, and penalties have been paid, or a certificate
indicating that no taxes are due. If the purchaser of the
business or stock of goods fails to withhold purchase money, the
purchaser is personally liable for the payment of the taxes,
interest, and penalties accrued and unpaid during the operation
of
the business by the qualifying entity. If the amount of those
taxes,
interest, and penalty unpaid at the time of the purchase
exceeds the total
purchase money, the tax commissioner may adjust
the qualifying entity's
liability for those taxes, interest, and
penalty, or adjust the responsibility
of the purchaser to pay that
liability, in a manner calculated to maximize the
collection of
those liabilities. (B) Annually, on the last day of each qualifying taxable
year of
a qualifying entity, the taxes imposed under section
5733.41 or 5747.41
of the Revised Code, together with any
penalties subsequently accruing
thereon, become a lien on all
property in this state of the qualifying entity,
whether such
property is employed by the qualifying entity
in the prosecution
of its business or is in the hands of an
assignee, trustee, or
receiver for the benefit of the qualifying entity's
creditors and
investors. The lien shall continue until
those taxes, together
with any penalties subsequently accruing, are
paid. Upon failure of such a qualifying entity to pay those taxes
on the day
fixed for payment, the treasurer of state shall
thereupon notify
the tax commissioner, and the commissioner may
file in the office of the
county recorder in each county in this
state in which the qualifying entity
owns or has a beneficial
interest in real estate, notice of the
lien containing a brief
description of such real estate. No fee shall be
charged for such
a filing. The lien is not valid as against any mortgagee,
purchaser, or judgment creditor whose rights have attached prior
to the time
the notice is so filed in the county in which the real
estate
which is the subject of such mortgage, purchase, or
judgment lien
is located. The notice shall be recorded in a book
kept by the
recorder, called the qualifying entity tax lien
record,
and indexed under the name of the qualifying entity
charged with
the tax. When the tax, together with any penalties
subsequently accruing
thereon, have been paid, the tax
commissioner shall furnish to the
qualifying entity an
acknowledgment of such payment that the
qualifying entity may
record with the recorder of each county in
which notice of such
lien has been filed, for which recording the
recorder shall charge
and receive a fee of two dollars. (C) In addition to all other remedies for the
collection of
any taxes or penalties due under law, whenever any
taxes,
interest, or penalties due from any qualifying entity under
section
5733.41 of the Revised Code or this chapter have remained
unpaid for a
period of ninety days, or whenever any qualifying
entity has failed for a
period of ninety days to make any report
or return required by law, or to pay
any penalty for failure to
make or file such report or return, the attorney
general, upon the
request of the tax commissioner, shall file a petition in
the
court of common pleas in the county of the state in which such
qualifying entity has its principal place of business for a
judgment
for the amount of the taxes, interest, or penalties
appearing to be due, the enforcement of any lien in favor of the
state, and an
injunction to restrain such qualifying entity and
its officers, directors, and
managing agents from the transaction
of any business within this
state, other than such acts as are
incidental to liquidation or
winding up, until the payment of such
taxes, interest, and penalties,
and the costs of the proceeding
fixed by the
court, or the making and filing of such report or
return. The petition shall be in the name of the state. Any of the
qualifying
entities having its principal places of business
in the
county may be joined in one suit. On the motion of the
attorney
general, the court of common pleas shall enter an order
requiring
all defendants to answer by a day certain, and may
appoint a
special master commissioner to take testimony, with
such other
power and authority as the court confers, and
permitting process
to be served by registered mail and by
publication in a newspaper
of general circulation published in
the county, which publication
need not be made more than once,
setting forth the name of each
delinquent qualifying entity, the matter
in which the qualifying
entity is delinquent, the names of its
officers, directors, and
managing agents, if set forth in the
petition, and the amount of
any taxes, fees, or penalties claimed
to be owing by the
qualifying entity. All or any of the trustees or other fiduciaries, officers,
directors, investors, beneficiaries, or
managing agents of any
qualifying entity may be joined as defendants
with the qualifying
entity. If it appears to the court upon hearing that any
qualifying
entity that is a party to the proceeding is indebted to
the state
for taxes imposed under section 5733.41 or 5747.41 of the Revised
Code, or interest or penalties thereon, judgment shall be entered
therefor
with interest; and if
it appears that any qualifying
entity has failed to make or file any report or
return, a
mandatory injunction may be issued against the qualifying entity,
its trustees or other fiduciaries, officers, directors, and
managing agents,
enjoining them from the
transaction of any
business within this state, other than acts
incidental to
liquidation or winding up, until the making and
filing of all
proper reports or returns and until the payment in
full of all
taxes, interest, and penalties. If the trustees or other fiduciaries, officers, directors,
investors,
beneficiaries, or managing agents of a qualifying
entity are not made parties
in the first instance, and a judgment
or an injunction is rendered or issued
against the qualifying
entity, those officers, directors, investors,
or managing agents
may be made parties to such proceedings upon
the motion of the
attorney general, and, upon notice to them of
the form and terms
of such injunction, they shall be bound
thereby as fully as if
they had been made parties in the first instance. In any action authorized by this division, a statement of
the
tax commissioner, or the secretary of state, when duly certified,
shall be prima-facie evidence of the amount of taxes, interest, or
penalties due from any qualifying entity, or of the failure of any
qualifying entity to file with the commissioner or the secretary
of
state any report required by law, and any such certificate of
the
commissioner or the secretary of state may be required in
evidence in any such proceeding. On the application of any defendant and for good cause
shown,
the court may order a separate hearing of the issues as to
any
defendant. The costs of the proceeding shall be apportioned among the
parties as the court deems proper. The court in such proceeding may make, enter, and enforce
such other judgments and orders and grant such other relief as is
necessary or incidental to the enforcement of the claims and lien
of the state. In the performance of the duties enjoined upon the attorney
general by this division, the attorney general may direct any
prosecuting
attorney to bring an action, as authorized by this
division, in the name of
the state with respect to any delinquent
qualifying entities within the
prosecuting attorney's county, and
like proceedings and orders shall be
had as if such action were
instituted by the attorney general. (D) If any qualifying entity fails to make and file the
reports or returns required under this chapter, or to pay the
penalties
provided by law for failure to make and file such
reports or returns for a
period of
ninety days after the time
prescribed by this chapter, the attorney general,
on the request
of the tax commissioner, shall commence an action in quo
warranto
in the court of appeals of the county in which that qualifying
entity
has its principal place of business to forfeit and annul
its privileges and
franchises. If the court is satisfied that any
such qualifying entity is in
default, it shall render judgment
ousting such qualifying entity from the
exercise of its privileges
and
franchises within this state, and shall otherwise proceed as
provided in
sections 2733.02 to 2733.39 of the Revised Code. (E) With the advice and consent of the tax commissioner, the
attorney general may, before or after any action for the recovery
of
taxes imposed under section 5733.41 or 5747.41 of the Revised
Code, or
interest or penalties
thereon and
certified to the
attorney general as delinquent, compromise or settle any
claim for
delinquent taxes, interest, or penalties so certified.
Section 2. That existing sections 131.02 and 5747.451 and
sections 5727.59 and 5733.25 of the Revised Code are hereby
repealed.
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