BIENNIAL BUDGET BOASTS RELIEF FOR OHIO BUSINESSES
How Will New Rules Impact Your Business ’ s Bottom Line ?
This past summer , Gov . John Kasich signed Ohio ’ s biennial budget into law . Tucked within its pages were several key tax provisions that could impact your bottom line .
New Year , New Tax Collection Rules For Out-of-State Retailers
State legislators have tried to get a handle on how to define a retailer ’ s nexus , or sufficient physical presence , for a while . So , it ’ s no surprise that Gov . Kasich took a stab at it in his current budget .
Beginning on Jan . 1 , 2018 , a seller is deemed to have substantial nexus with the state if it :
• Uses in-state computer software to sell or lease tangible personal property or services and has gross receipts totaling more than $ 500,000 in the current or preceding calendar year from sales of tangible personal property consumed or intended for consumption in Ohio .
• Enters into an agreement with a third-party to provide a content distribution network in an attempt to accelerate or enhance the delivery of its web site to Ohio consumers and has gross receipts totaling more than $ 500,000 in the current or preceding calendar year from sales of tangible personal property consumed or intended for consumption in Ohio .
OBG Filing / Payment for City Net Profits Returns
Beginning Jan . 1 , businesses may begin to file their net profit tax returns and remit payment through the Ohio Business Gateway ( OBG ). While businesses are not necessarily required to use this option , those that do may find the OBG to be a significant time-saver , particularly among those required to file in 10 or more cities . Instead of completing and filing a stack of forms , business owners can file one form on the OBG , which would satisfy the filing requirement in other Ohio municipalities . Additionally , rather than writing a handful of checks and mailing returns all over the state , the gateway significantly simplifies the payment process .
Throwing Out The Throwback Rule
Also beginning Jan . 1 , the law will change how sales are allocated on business returns . Currently , if a good is shipped from a warehouse in an Ohio municipality to an out-of-state customer , that sale would be apportioned to the Ohio municipality where the good was shipped . In 2018 , that sale would not be apportioned to the Ohio municipality . Additionally , if a good is shipped from municipality “ A ” to municipality “ B ,” but employees do not regularly solicit business in municipality
“ B ,” the sale is not apportioned to either municipality . Current law apportions this sale to municipality “ A .”
The big winners here are our Ohio companies that ship out of state or
to other municipalities without soliciting sales at the place of delivery . Ohio-based manufacturers and distributers could see significant tax savings starting in 2018 .
Estimate and Pentaly Housekeeping Changes
Starting in taxable years beginning in 2018 , individual fourth quarter estimates for municipalities will be due by Jan . 15 . Business fourth quarter payments will still be due by Dec . 15 . So if a taxpayer is in subject to alternative minimum tax ( AMT ) in 2018 , he or she could wait until January to make a fourth quarter estimate for a potential Schedule A deduction in 2019 .
Also , if municipal income tax withholding is not paid on time , the penalty is no longer required to be 50 percent of the unpaid amount – which is what current law dictates . Moving forward , while the penalty may be as high as 50 percent , depending on the municipality , it can also be less . Current law mandates a 50 percent penalty .
Ohio Tax Help
For help with your state and local tax planning efforts or to learn more about how this new budget will affect you , give us a call .
by : Tom Jeffries CPA , Principal
212 North Washington St . Millersburg , OH 44654
( 330 ) 521-4533 tom . jeffries @ reacpa . com