To amend section 5747.98 and to enact sections 4141.322 and 5747.063 of the Revised Code to allow an individual to have Ohio income taxes withheld from unemployment compensation benefits payable to that individual.

Section 1. That section 5747.98 be amended and sections 4141.322 and 5747.063 of the Revised Code be enacted to read as follows:

Sec. 4141.322. (A) The director of job and family services shall inform an individual who files an application for determination of benefit rights on and after the effective date of this section of all of the following at the time the individual files the application:

(1) Unemployment compensation is subject to the income tax of this state.

(2) Requirements exist pertaining to estimated tax payments.

(3) An individual may elect to have income tax of this state deducted and withheld from the unemployment compensation benefits payable to that individual at a rate of two per cent of the unemployment benefits payable.

(4) An individual may change the withholding status the individual has previously elected once during the individual's benefit year.

(B) The director shall deduct and withhold from unemployment compensation benefits payable to an individual after the effective date of this section income tax in the amount of two per cent of the unemployment benefits payable, if the individual informs the director that the individual elects to have the director make the deduction.

(C) In making the deduction specified in division (B) of this section, the director shall comply with section 5747.063 of the Revised Code and any rules adopted by the tax commissioner pursuant to that section. The director shall adopt rules establishing priorities for the deduction and withholding of amounts under division (B) of this section and establishing a procedure by which an individual may inform the director of the individual's election to have the director make the deduction.

(D) Amounts deducted and withheld pursuant to division (B) of this section shall remain in the unemployment compensation fund until transferred to the tax commissioner as a payment of income tax.

Sec. 5747.063. (A)(1) The director of job and family services shall deduct and withhold from unemployment compensation benefits payable to an individual an amount equal to two per cent of the payment if the individual informs the director that the individual elects to have the director make the deduction in accordance with section 4141.322 of the Revised Code.

(2) On or before the tenth banking day of each month, the director shall file a return and remit to the tax commissioner all amounts deducted and withheld pursuant to this section during the preceding month.

(3) On or before the thirty-first day of January of each year, the director shall file with the tax commissioner an annual return, in the form prescribed by the commissioner, indicating the total amount deducted and withheld pursuant to this section or section 4141.322 of the Revised Code during the preceding calendar year. At the time of filing that return, the director shall remit any amount deducted and withheld during the preceding calendar year that was not previously remitted.

(4) The director shall issue to each individual with respect to whom tax has been deducted and withheld by the director pursuant to this section or section 4141.322 of the Revised Code during the preceding calendar year, an information return in the form prescribed by the tax commissioner.

(B) Amounts withheld pursuant to this section or section 4141.322 of the Revised Code shall be treated as a credit against the tax imposed pursuant to section 5747.02 of the Revised Code upon the individual to whom the unemployment compensation benefits are payable on the date on which those amounts are deducted and withheld. The credit is a refundable credit and shall be claimed in the order required under section 5747.98 of the Revised Code. The credit is available to the recipient even if the director does not remit to the tax commissioner the amount withheld. Nothing in this division shall be construed to allow more than one person to claim the credit for any portion of each amount deducted and withheld.

(C) Failure of the director to deduct and withhold the required amounts from unemployment compensation benefits or to remit amounts withheld as required by this section and section 4141.322 of the Revised Code shall not relieve a taxpayer described in division (B) of this section from liability for the tax imposed by section 5747.02 of the Revised Code.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(39) The refundable motion picture production credit under section 5747.66 of the Revised Code;

(40) The refundable credit for tax withheld under division (B) of section 5747.063 of the Revised Code.

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

Section 2. That existing section 5747.98 of the Revised Code is hereby repealed.