130th Ohio General Assembly
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Am. Sub. S. B. No. 263  As Reported by the House Finance and Appropriations Committee
As Reported by the House Finance and Appropriations Committee

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


Senators Peterson, Beagle 

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

Representatives Amstutz, Beck 



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

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 5703.05 and 5739.121 be amended and section 5703.77 of the Revised Code be enacted to read as follows:
Sec. 5703.05.  All powers, duties, and functions of the department of taxation are vested in and shall be performed by the tax commissioner, which powers, duties, and functions shall include, but shall not be limited to, the following:
(A) Prescribing all blank forms which the department is authorized to prescribe, and to provide such forms and distribute the same as required by law and the rules of the department.
(B) Exercising the authority provided by law, including orders from bankruptcy courts, relative to remitting or refunding taxes or assessments, including penalties and interest thereon, illegally or erroneously assessed or collected, or for any other reason overpaid, and in addition, the commissioner may on written application of any person, firm, or corporation claiming to have overpaid to the treasurer of state at any time within five years prior to the making of such application any tax payable under any law which the department of taxation is required to administer which does not contain any provision for refund, or on the commissioner's own motion investigate the facts and make in triplicate a written statement of the commissioner's findings, and, if the commissioner finds that there has been an overpayment, issue in triplicate a certificate of abatement payable to the taxpayer, the taxpayer's assigns, or legal representative which shows the amount of the overpayment and the kind of tax overpaid. One copy of such statement shall be entered on the journal of the commissioner, one shall be certified to the attorney general, and one certified copy shall be delivered to the taxpayer. All copies of the certificate of abatement shall be transmitted to the attorney general, and if the attorney general finds it to be correct the attorney general shall so certify on each copy, and deliver one copy to the taxpayer, one copy to the commissioner, and the third copy to the treasurer of state. Except as provided in section 5725.08 of the Revised Code, the taxpayer's copy of any certificates of abatement may be tendered by the payee or transferee thereof to the treasurer of state, or to the commissioner on behalf of the treasurer, as payment, to the extent of the amount thereof, of any tax payable to the treasurer of state.
(C) Exercising the authority provided by law relative to consenting to the compromise and settlement of tax claims;
(D) Exercising the authority provided by law relative to the use of alternative tax bases by taxpayers in the making of personal property tax returns;
(E) Exercising the authority provided by law relative to authorizing the prepayment of taxes on retail sales of tangible personal property or on the storage, use, or consumption of personal property, and waiving the collection of such taxes from the consumers;
(F) Exercising the authority provided by law to revoke licenses;
(G) Maintaining a continuous study of the practical operation of all taxation and revenue laws of the state, the manner in which and extent to which such laws provide revenues for the support of the state and its political subdivisions, the probable effect upon such revenue of possible changes in existing laws, and the possible enactment of measures providing for other forms of taxation. For this purpose the commissioner may establish and maintain a division of research and statistics, and may appoint necessary employees who shall be in the unclassified civil service; the results of such study shall be available to the members of the general assembly and the public.
(H) Making all tax assessments, valuations, findings, determinations, computations, and orders the department of taxation is by law authorized and required to make and, pursuant to time limitations provided by law, on the commissioner's own motion, reviewing, redetermining, or correcting any tax assessments, valuations, findings, determinations, computations, or orders the commissioner has made, but the commissioner shall not review, redetermine, or correct any tax assessment, valuation, finding, determination, computation, or order which the commissioner has made as to which an appeal or application for rehearing, review, redetermination, or correction has been filed with the board of tax appeals, unless such appeal or application is withdrawn by the appellant or applicant or dismissed;
(I) Appointing not more than five deputy tax commissioners, who, under such regulations as the rules of the department of taxation prescribe, may act for the commissioner in the performance of such duties as the commissioner prescribes in the administration of the laws which the commissioner is authorized and required to administer, and who shall serve in the unclassified civil service at the pleasure of the commissioner, but if a person who holds a position in the classified service is appointed, it shall not affect the civil service status of such person. The commissioner may designate not more than two of the deputy commissioners to act as commissioner in case of the absence, disability, or recusal of the commissioner or vacancy in the office of commissioner. The commissioner may adopt rules relating to the order of precedence of such designated deputy commissioners and to their assumption and administration of the office of commissioner.
(J) Appointing and prescribing the duties of all other employees of the department of taxation necessary in the performance of the work of the department which the tax commissioner is by law authorized and required to perform, and creating such divisions or sections of employees as, in the commissioner's judgment, is proper;
(K) Organizing the work of the department, which the commissioner is by law authorized and required to perform, so that, in the commissioner's judgment, an efficient and economical administration of the laws will result;
(L) Maintaining a journal, which is open to public inspection, in which the tax commissioner shall keep a record of all final determinations of the commissioner;
(M) Adopting and promulgating, in the manner provided by section 5703.14 of the Revised Code, all rules of the department, including rules for the administration of sections 3517.16, 3517.17, and 5747.081 of the Revised Code;
(N) Destroying any or all returns or assessment certificates in the manner authorized by law;
(O) Adopting rules, in accordance with division (B) of section 325.31 of the Revised Code, governing the expenditure of moneys from the real estate assessment fund under that division;
(P) Informing taxpayers in a timely manner to resolve credit account balances as required by section 5703.77 of the Revised Code.
Sec. 5703.77.  (A) As used in this section:
(1) "Taxpayer" means a person subject to or previously subject to a tax or fee, a person that remits a tax or fee, or a person required to or previously required to withhold or collect and remit a tax or fee on behalf of another person.
(2) "Tax or fee" means a tax or fee administered by the tax commissioner.
(3) "Credit account balance" means the amount of a tax or fee that a taxpayer remits to the state in excess of the amount required to be remitted, after accounting for factors applicable to the taxpayer such as accelerated payments, estimated payments, tax credits, and tax credit balances that may be carried forward.
(4) "Tax debt" means an unpaid tax or fee or any unpaid penalty, interest, or additional charge on such a tax or fee due the state.
(B) As soon as practicable, but not later than sixty days before the expiration of the period of time during which a taxpayer may file a refund application for a tax or fee, the tax commissioner shall review the taxpayer's accounts for the tax or fee and notify the taxpayer of any credit account balance for which the commissioner is required to issue a refund if the taxpayer were to file a refund application for that balance, regardless of whether the taxpayer files a refund application or amended return with respect to that tax or fee. The notice shall be made using contact information for the taxpayer on file with the commissioner.
(C) Notwithstanding sections 128.47, 3734.905, 4307.05, 5726.30, 5727.28, 5727.42, 5727.91, 5728.061, 5735.122, 5736.08, 5739.07, 5739.104, 5741.10, 5743.05, 5743.53, 5747.11, 5749.08, 5751.08, 5753.06, and any other section of the Revised Code governing refunds of taxes or fees, the commissioner may apply the amount of any credit account balance for which the commissioner is required to issue a refund if the taxpayer were to file a refund application for that balance as a credit against the taxpayer's liability for the tax or fee in the taxpayer's next reporting period for that tax or fee or issue a refund of that credit account balance to the taxpayer, subject to division (D) of this section.
(D) Before issuing a refund to a taxpayer under division (C) of this section, the tax commissioner shall withhold from that refund the amount of any of the taxpayer's tax debt certified to the attorney general under section 131.02 of the Revised Code and the amount of the taxpayer's liability, if any, for a tax or fee. The commissioner shall apply any amount withheld first in satisfaction of the amount of the taxpayer's certified tax debt and then in satisfaction of the taxpayer's liability.
(E) The tax commissioner may adopt rules to administer this section.
Sec. 5739.121.  (A) As used in this section, "bad:
(1) "Bad debt" means any debt that has become worthless or uncollectible in the time period between a vendor's preceding return and the present return, has been uncollected for at least six months, and that may be claimed as a deduction pursuant to the "Internal Revenue Code of 1954," 68A Stat. 50, 26 U.S.C. 166, as amended, and regulations adopted pursuant thereto, or that could be claimed as such a deduction if the vendor kept accounts on an accrual basis. "Bad debt" does not include any interest or sales tax on the purchase price, uncollectible amounts on property that remains in the possession of the vendor until the full purchase price is paid, expenses incurred in attempting to collect any account receivable or for any portion of the debt recovered, and repossessed property.
(2) "Lender" means a person or an affiliate, assignee, or transferee of a person that owns a private label credit card account, or an interest in a private label credit card receivable, provided that interest was any of the following:
(a) Transferred from a third party;
(b) Purchased directly from a vendor that remitted tax imposed under this chapter or from an affiliate of the vendor;
(c) Originated according to a written agreement between the person and a vendor that remitted tax imposed under this chapter or an affiliate of the vendor.
(3) "Private label credit card" means a charge card or credit card on which the name or logo of a vendor appears.
(4) "Accounts or receivables bad debt" means the unpaid balance on private label credit card accounts or receivables that are bad debt and are charged off as uncollectible on the books of a lender on or after July 1, 2014, and against which a deduction or refund has not previously been taken or allowed, respectively, under this section. For the purposes of division (A)(4) of this section only, "bad debt" shall be determined without regard to when the debt has become worthless or uncollectible relative to the period between a vendor's returns, and the deductibility of the debt for federal income tax purposes shall be determined with respect to the lender instead of the vendor.
(5) "Affiliate" means any person that is a member of an affiliated group or that would be a member of an affiliated group if the person was a corporation.
(6) "Affiliated group" has the same meaning as in section 1504 of the Internal Revenue Code.
(B) In computing taxable receipts for purposes of this chapter, a vendor may deduct the amount of bad debts. The Except as provided in division (F) of this section, the amount deducted must be charged off as uncollectible on the books of the vendor. A deduction may be claimed only with respect to bad debts on which the taxes pursuant to sections 5739.10 and 5739.12 of the Revised Code were paid in a preceding tax period. If the vendor's business consists of taxable and nontaxable transactions, the deduction shall equal the full amount of the debt if the debt is documented as a taxable transaction in the vendor's records. If no such documentation is available, the maximum deduction on any bad debt shall equal the amount of the bad debt multiplied by the quotient obtained by dividing the sales taxed pursuant to this chapter during the preceding calendar year by all sales during the preceding calendar year, whether taxed or not. If a consumer or other person pays all or part of a bad debt with respect to which a vendor claimed a deduction under this section, the vendor shall be liable for the amount of taxes deducted in connection with that portion of the debt for which payment is received and shall remit such taxes in the vendor's next payment to the tax commissioner.
(C) Any claim for a bad debt deduction under this section shall be supported by such evidence as the tax commissioner by rule requires. The commissioner shall review any change in the rate of taxation applicable to any taxable sales by a vendor claiming a deduction pursuant to this section and adopt rules for altering the deduction in the event of such a change in order to ensure that the deduction on any bad debt does not result in the vendor claiming the deduction recovering any more or less than the taxes imposed on the sale that constitutes the bad debt.
(D) In any reporting period in which the amount of bad debt exceeds the amount of taxable sales for the period, the vendor may file a refund claim for any tax collected on the bad debt in excess of the tax reported on the return. The refund claim shall be filed in the manner provided in section 5739.07 of the Revised Code, except that the claim may be filed within four years of the due date of the return on which the bad debt first could have been claimed.
(E) When the filing responsibilities of a vendor have been assumed by a certified service provider, the certified service provider shall claim the bad debt allowance provided by this section on behalf of the vendor. The certified service provider shall credit or refund to the vendor the full amount of any bad debt allowance or refund.
(F) No person other than the vendor in the transaction that generated the bad debt or, as provided in division (E) of this section, a certified service provider, may claim the bad debt allowance provided by this section (1) A vendor may deduct on a return or obtain a refund of tax remitted by the vendor on accounts or receivables bad debt.
A vendor taking a deduction or claiming a refund under division (F)(1) of this section shall include all credit sale transactions outstanding in the account or receivable at the time the account or receivable is charged off as uncollectible on the books of a lender in calculating the deduction or refund, regardless of the date on which the credit sale transaction occurs.
(2) The deduction or refund authorized under division (F)(1) of this section may be taken or obtained by the vendor only on the basis of accounts or receivables bad debt from purchases from the vendor whose name or logo appears on the private label credit card or from purchases from any of the vendor's affiliates or franchisees.
(3) A vendor taking a deduction or receiving a refund under division (F)(1) of this section shall maintain books, records, or other documents verifying the accounts or receivables bad debt, which shall be open to inspection by the commissioner upon request.
(4) If the vendor collects in whole or part any accounts or receivables bad debt on the basis of which the vendor took a deduction or received a refund under division (F) of this section, the vendor shall include the amount collected in the vendor's first return filed after the collection and pay tax on the portion of that amount with respect to which the vendor took the deduction or received a refund.
For the purpose of calculating the amount of tax to remit under division (F)(4) of this section, the vendor shall allocate payments made by the holder of a private label credit card on the holder's accounts based on the agreement between the account holder and the vendor or lender.
(G) The tax commissioner may adopt rules necessary to administer this section.
Section 2.  That existing sections 5703.05 and 5739.121 of the Revised Code are hereby repealed.
Section 3. All appropriation items in this act are appropriated out of any moneys in the state treasury to the credit of the designated fund that are not otherwise appropriated. For all appropriations made in this act, the amounts in the first column are for fiscal year 2014 and the amounts in the second column are for fiscal year 2015. The appropriations made in this act are in addition to any other appropriations made for the FY 2014-FY 2015 biennium.
TAX DEPARTMENT OF TAXATION
GRF 110321 Operating Expenses $ 0 $ 682,000
TOTAL GRF General Revenue Fund $ 0 $ 682,000
TOTAL ALL BUDGET FUND GROUPS $ 0 $ 682,000

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