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Lawmakers seek to extend certain tax credits

Special to the Legal News

Published: September 4, 2014

A pair of lawmakers from Mason and Sidney have introduced a collection of bills into the Ohio General Assembly focused on remote seller tax collections, expiring federal tax provisions, a disaster victims tax credit and exempting the sale of Internet access.

House Bill 600 would earmark new Ohio use tax collections by remote sellers for the purposes of paying back amounts borrowed by the state from the federal government to issue unemployment benefits and reducing the rates of the sales and use tax and commercial activity tax.

House Bill 601 would authorize taxpayers to continue applying certain expiring federal tax provisions in calculating Ohio income tax.

House Bill 602 aims to authorize an income tax credit for the amount of sales tax included in the cost of essential post-disaster goods and services purchased by disaster victims.

Lastly, House Bill 603 would exempt the sale of Internet access used in business from sales and use tax.

The four proposals are jointly sponsored by Republican Reps. Peter Beck and John Adams.

In a memorandum to House members, Beck and Adams said HB 600 would take the sales tax revenue collected from remote sellers who conduct business over the Internet on such websites as Amazon or eBay and pay back the entities in a “waterfall” sequence beginning with unemployment debt and ending with commercial activity tax.

With regard to HB 601, Beck and Adams said there are 60 tax incentives that expired in 2013.

“Out of those, 19 will impact Ohio taxpayers,” the pair wrote. “Taxpayers are unable to claim certain tax credits due to this expiration.”

On a federal level, the lawmakers said the proposed EXPIRE Act only addresses federal tax incentives.

For example, EXPIRE would extend the renewable energy protection tax credit through the end of 2015.

“However, in the Ohio Revised Code we rely on the federal adjusted gross income as a baseline for computing Ohio adjusted gross income and the coupling of certain tax credits to similar federal credits,” Beck and Adams wrote.

HB 601 would permanently authorize numerous adjustments to a taxpayer’s Ohio adjusted gross income that accounts for the expiring federal tax incentives.

The measure would decouple the state’s new market tax credit from the federal new market tax credit and eliminate the requirement that recipients of the state version also receive the federal new market credit.

In addition, HB 601 would essentially authorize Ohio taxpayers to adjust their state income tax return as if Congress had extended many of the expiring federal tax incentives referenced in the EXPIRE Act.

The bill would be effective immediately if signed into law.

In pushing for the passage of HB 602, Beck and Adams said if the governor designates a disaster area, those individuals who are victims would have the opportunity to purchase essential items and be refunded when they file their taxes.

According to the proposed legislation, the tax credit would equal the total amount of state, county or transit authority sales and use tax imposed.

If the credit exceeds the amount of tax otherwise due for the taxable year, the excess would be refunded to the taxpayer.

Concerning HB 603, Beck and Adams said current state law authorizes the sale of Internet access used in business.

“This bill will create a clear definition of ‘Internet access service’ and exempt it from all sales and use tax which is prohibited under the Internet Tax Freedom Act,” the pair wrote.

HB 600 and HB 602 are co-sponsored by Reps. Wes Retherford and Andrew Brenner.

HB 601 is co-sponsored by Retherford, Brenner and Rep. Mark Romanchuk.

HB 603 is co-sponsored by Retherford, Brenner and Rep. Andrew Thompson.

The four bills are awaiting committee assignments.

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