Governor Kasich signed the final version of Ohio’s biennial budget (House Bill 49) on June 29, 2017 after review and debate by the Ohio House of Representatives and the Ohio Senate. HB 49 results in many changes to the tax policy and will impact several Ohio businesses.

The following reforms may impact your businesses in Ohio:

  • Centralized collection of net profit taxes through the Ohio Business Gateway
  •  Reduce Ohio’s income tax brackets from 9 to 7
  •  No increase in the Commercial Activity Tax rate
  •  Eliminated the municipal throwback rule

The enactment of HB 49 provides business taxpayers the option to file one municipal net profit tax return through the Ohio Business Gateway (OBG) for processing by the Ohio Department of Taxation. The Department will handle all administrative functions for centrally filed municipal net profit tax returns and distribute the funds to the appropriate municipalities.

Businesses can now electronically file all of the municipal tax returns through OBG instead of filing and mailing multiple cities returns to multiple jurisdictions. Every taxpayer’s situation is different and some additional analysis may be needed in order to determine if switching over to OBG filing makes sense for you.

Taxpayers have two options moving forward. You can continue to file under the current method of mailing your returns or you can elect to opt-in for OBG filing by the first day of the third month of your taxable year. For example, taxpayers with a calendar year basis are required to opt-in with the tax commissioner on or before March 1, 2018, for the 2018 tax year. The first year OBG filing is allowed is in 2018. Your 2017 municipal net profit returns will still be filed under the current method. The election will remain in effect until terminated by the taxpayer.

Please contact a tax advisor at Barnes Wendling to determine if opting in makes sense for you. I you decide to opt-in, we can make the election on your behalf.

In all likelihood, your advisor will need to gain access to your OBG account. Tax preparation software is expected to create a process where the software will transfer the city return data directly into OBG. After the transfer process, they would need to log into OBG to review the data before submission to the Department.

There is always the chance that the process will not be ready in time for the next filing season. In that case, your advisor will need to manually enter the data into OBG.