To amend sections 126.35 and 5747.11 and to enact section 5747.114 of the Revised Code to allow the Department of Taxation to provide taxpayers who file electronic returns the option of receiving their income tax refund in the form of a credit card, debit card, prepaid card, or other device used to electronically transfer funds.

Section 1. That sections 126.35 and 5747.11 be amended and section 5747.114 of the Revised Code be enacted to read as follows:

Sec. 126.35.  (A) The director of budget and management shall draw warrants against the treasurer of state pursuant to all requests for payment that the director has approved under section 126.07 of the Revised Code.

(B) Unless a cash assistance payment is to be made by electronic benefit transfer, payment by the director of budget and management to a participant in the Ohio works first program pursuant to Chapter 5107. of the Revised Code, a recipient of disability financial assistance pursuant to Chapter 5115. of the Revised Code, or a recipient of cash assistance provided under the refugee assistance program established under section 5101.49 of the Revised Code shall be made by direct deposit to the account of the participant or recipient in the financial institution designated under section 329.03 of the Revised Code. Payment by the director of budget and management to a recipient of benefits distributed through the medium of electronic benefit transfer pursuant to section 5101.33 of the Revised Code shall be by electronic benefit transfer. Payment by the director of budget and management as compensation to an employee of the state who has, pursuant to section 124.151 of the Revised Code, designated a financial institution and account for the direct deposit of such payments shall be made by direct deposit to the account of the employee. Payment to any other payee who has designated a financial institution and account for the direct deposit of such payment may be made by direct deposit to the account of the payee in the financial institution as provided in section 9.37 of the Revised Code. Accounts maintained by the director of budget and management or the director's agent in a financial institution for the purpose of effectuating payment by direct deposit or electronic benefit transfer shall be maintained in accordance with section 135.18 of the Revised Code.

(C) All Except as provided in section 5747.114 of the Revised Code, all other payments from the state treasury shall be made by paper warrants or by direct deposit payable to the respective payees. The director of budget and management may mail the paper warrants to the respective payees or distribute them through other state agencies, whichever the director determines to be the better procedure.

(D) If the average per transaction per-transaction cost the director of budget and management incurs in making direct deposits for a state agency exceeds the average per transaction per-transaction cost the director incurs in drawing paper warrants for all public offices during the same period of time, the director may certify the difference in cost and the number of direct deposits for the agency to the director of administrative services. The director of administrative services shall reimburse the director of budget and management for such additional costs and add the amount to the processing charge assessed upon the state agency.

Sec. 5747.11.  (A) The tax commissioner shall refund to employers, qualifying entities, or taxpayers, with respect to any tax imposed under section 5733.41, 5747.02, or 5747.41, or Chapter 5748. of the Revised Code:

(1) Overpayments of more than one dollar;

(2) Amounts in excess of one dollar paid illegally or erroneously;

(3) Amounts in excess of one dollar paid on an illegal, erroneous, or excessive assessment.

(B) Except as otherwise provided under divisions (D) and (E) of this section, applications for refund shall be filed with the tax commissioner, on the form prescribed by the commissioner, within four years from the date of the illegal, erroneous, or excessive payment of the tax, or within any additional period allowed by division (B)(3)(b) of section 5747.05, division (B) of section 5747.10, division (A) of section 5747.13, or division (C) of section 5747.45 of the Revised Code.

On filing of the refund application, the commissioner shall determine the amount of refund due and certify such amount to the director of budget and management and treasurer of state for payment from the tax refund fund created by section 5703.052 of the Revised Code. Payment shall be made as provided in section 5747.114 or division (C) of section 126.35 of the Revised Code.

(C)(1) Interest shall be allowed and paid upon any illegal or erroneous assessment in excess of one dollar in respect of the tax imposed under section 5747.02 or Chapter 5748. of the Revised Code at the rate per annum prescribed by section 5703.47 of the Revised Code from the date of the payment of the illegal or erroneous assessment until the date the refund of such amount is paid. If such refund results from the filing of a return or report, or the payment accompanying such return or report, by an employer or taxpayer, rather than from an assessment by the commissioner, such interest shall run from a period ninety days after the final filing date of the annual return until the date the refund is paid.

(2) Interest shall be allowed and paid at the rate per annum prescribed by section 5703.47 of the Revised Code upon any overpayment in excess of one dollar in respect of the tax imposed under section 5747.02 or Chapter 5748. of the Revised Code from the date of the overpayment until the date of the refund of the overpayment, except that if any overpayment is refunded within ninety days after the final filing date of the annual return or ninety days after the return is filed, whichever is later, no interest shall be allowed on such overpayment. If the overpayment results from the carryback of a net operating loss or net capital loss to a previous taxable year, the overpayment is deemed not to have been made prior to the filing date, including any extension thereof, for the taxable year in which the net operating loss or net capital loss arises. For purposes of the payment of interest on overpayments, no amount of tax, for any taxable year, shall be treated as having been paid before the date on which the tax return for that year was due without regard to any extension of time for filing such return.

(3) Interest shall be allowed at the rate per annum prescribed by section 5703.47 of the Revised Code on amounts refunded with respect to the taxes imposed under sections 5733.41 and 5747.41 of the Revised Code. The interest shall run from whichever of the following days is the latest until the day the refund is paid: the day the illegal, erroneous, or excessive payment was made; the ninetieth day after the final day the annual report was required to be filed under section 5747.42 of the Revised Code; or the ninetieth day after the day that report was filed.

(D) "Ninety days" shall be substituted for "four years" in division (B) of this section if the taxpayer satisfies both of the following conditions:

(1) The taxpayer has applied for a refund based in whole or in part upon section 5747.059 of the Revised Code;

(2) The taxpayer asserts that either the imposition or collection of the tax imposed or charged by this chapter or any portion of such tax violates the Constitution of the United States or the Constitution of Ohio.

(E)(1) Division (E)(2) of this section applies only if all of the following conditions are satisfied:

(a) A qualifying entity pays an amount of the tax imposed by section 5733.41 or 5747.41 of the Revised Code;

(b) The taxpayer is a qualifying investor as to that qualifying entity;

(c) The taxpayer did not claim the credit provided for in section 5747.059 of the Revised Code as to the tax described in division (E)(1)(a) of this section;

(d) The four-year period described in division (B) of this section has ended as to the taxable year for which the taxpayer otherwise would have claimed that credit.

(2) A taxpayer shall file an application for refund pursuant to division (E) of this section within one year after the date the payment described in division (E)(1)(a) of this section is made. An application filed under division (E)(2) of this section shall claim refund only of overpayments resulting from the taxpayer's failure to claim the credit described in division (E)(1)(c) of this section. Nothing in division (E) of this section shall be construed to relieve a taxpayer from complying with division (A)(16) of section 5747.01 of the Revised Code.

Sec. 5747.114.  The tax commissioner may establish a program under which taxpayers that file income tax returns electronically may elect to receive a tax refund in the form of a financial transaction device. Under the program, the commissioner shall provide taxpayers with information on the features of the financial transaction device program, including any fee or fees which may be charged to a taxpayer in accessing the taxpayer's refund, and on the other refund options available to taxpayers.

The commissioner may enter into agreements with one or more issuers of financial transaction devices whereby the issuer agrees to supply financial transaction devices for taxpayers and to credit financial transaction devices with the refund amounts specified by the commissioner. Each such agreement may specify that any fees associated with the use of a financial transaction device shall be incurred by the taxpayer.

As used in this section, "financial transaction device" has the same meaning as in section 113.40 of the Revised Code.

Section 2.  That existing sections 126.35 and 5747.11 of the Revised Code are hereby repealed.