Ohio State and Local Tax Updates June 2020

Do you have a pass-through entity or trust?

During the COVID-19 crisis, the Ohio Dept. of Taxation is recommending that these taxpayers make first- and second-quarter 2020 estimated pass-through entity and fiduciary tax payments electronically. Both are due July 15, 2020. The Dept. encourages entities and fiduciaries to make the payments using electronic funds transfer (EFT) on the OH Treasurer of State’s website. Taxpayers that haven’t made previous payments using EFT should complete the EFT Agreement Form which can be found on the same website. Instructions for the online registration process are given, as well as requirements for payments made by regular mail.

Do you have questions about either your Ohio estimated income or school district tax payments?

The OH Dept. of Taxation has updated its COVID-19 Tax Relief webpage by providing answers to additional FAQs. For example, the new material includes how personal income tax filers should pay their first and second quarter 2020 estimated income and school district tax payments, which are both due on July 15, 2020. The Dept. continues to encourage using its online services and outlines the payment options available to taxpayers.

Ohio Amazon workers can pursue certain overtime claims

Amazon workers can pursue certain overtime claims, a U.S. District Court in Ohio has ruled. It held that the warehouse workers can pursue their overtime claims for time spent in mandatory security, pre-lunch screenings. Amazon hadn’t paid the workers for the time spent in the security checks and they filed a lawsuit under the OH Minimum Fair Wage Standards Act. Amazon had cited the Portal-to-Portal Act, which provides that employers aren’t required to pay for the time employees spend on activities occurring before or after they perform their principal work duties. However, the court ruled that the pre-lunch screenings weren’t explicitly covered by the Act. (Dkt. No. 1:19-CV-01696, 5/22/20)

Ohio sales tax revenue took another plunge in May

Ohio sales tax revenue took another plunge in May, according to the recent Monthly Financial Report from the governor’s office. Sales and use tax collections, excluding auto sales, totaled $681.2 million. That was $133.4 million, or 16.4%, below budget estimates. But according to forecasts used by the governor’s office, a large decrease in gross domestic product in the second quarter will be followed by a recovery starting in the second half of calendar-year 2020. Also, the number of claims for unemployment compensation appears to have peaked in mid-April and began declining throughout May, according to the report. This suggests that workers began returning to jobs during the month.

Community housing agency tax exemption rules challenged

An Ohio community housing agency wasn’t entitled to a tax exemption for property used for charitable purposes. The taxpayer used the residential facility to house individuals with significant mental health issues, addiction disorders, and a history of homelessness. The OH Board of Tax Appeals (BTA) reversed a tax commissioner determination, finding that the agency used the property primarily as a private residence. The BTA noted that case precedent is clear: When a property is used mainly as a private residence, it can’t qualify for an exemption based on a charitable use, despite the residents’ circumstances. (Columbus City Schools Bd. of Ed. v. McClain, Dkt. No. 2018-649)

Property tax collection postponed in two more Ohio counties

The collection of property tax is postponed in two more Ohio counties. The OH Dept. of Taxation has approved extensions to pay real property taxes and assessments for the second-half collection of tax year 2019 to Columbiana County (from July 20 to Sept. 4) and Trumbull County (from July 20 to Aug. 7). A number of counties were previously granted extensions. The COVID-19 Tax Relief section provides links to supporting journal entries for the extensions under “Extensions Granted to OH Counties for Collecting Real Property Tax.” The website also provides other tax relief information, including FAQs.

Ohio Dept. of Taxation amends its commercial activity tax (CAT) regulation

The Ohio Dept. of Taxation recently amended its commercial activity tax (CAT) regulation. The amendments explain the registration and filing responsibilities of pre-income tax trusts for CAT purposes. The changes relate to the option for quarterly taxpayers to make estimated payments and to the revocation procedures for pre-income tax trusts. The amendments were part of the department’s 5-year rule review process. The rulemaking took effect May 10. (OH Tax Information Release No. CAT 2007-02, 5/1/20)

Ohio Dept. of Taxation proposes several new rules and rule changes

The Ohio Dept. of Taxation has proposed several new rules and rule changes, including the following. Proposed new rule No. 5703-7-01 relates to the determination of the NAICS Codes for the OH Business Income deduction. Proposed new rule No. 5703-7-03 establishes documentation to support a taxpayer’s Joint Filing and Residency credits. Proposed rule change No. 5703-7-08 clarifies what income qualifies for OH’s Disability and Survivor Benefits deduction. Questions? Contact your Brady Ware State and Local Tax advisor.

 

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