Ohio Passes Emergency Tax Legislation in Response to COVID-19 Pandemic

On March 25, 2020, the Ohio General Assembly passed House Bill 197 (H.B. 197/the Bill), providing a needed legislative response to the COVID-19 pandemic, as well as extending the filing and payment deadlines for state-administered taxes in Ohio. Importantly, H.B. 197 does not change the filing or payment deadlines for taxes directly administered by municipalities or agencies acting on their behalf.

H.B. 197 empowers the Ohio Tax Commissioner to extend the filing and payment deadlines during the period of Executive Order 2020-01D (the Executive Order) emergency declaration for all taxes the Tax Commissioner administers. In addition, Section 28 of the Bill gives the Tax Commissioner power to extend the due dates for estimated tax or accelerated tax payments and to waive the accrual of interest on those payments, for the taxes in Ohio Revised Code Chapters 718 (municipal income tax), 3734 (relating to solid waste management), 3769 (relating to horse racing), 4303 (relating to liquor permits), 4305 (relating to bulk sales of beer), and in Title 57 of the Revised Code (e.g., sales and use tax, state personal income tax, pass-through entity tax, commercial activity tax, public utility taxes, etc.) during the same period. If the Tax Commissioner extends the period for filing state income tax returns, the period for filing municipal net profits taxes administered by the Tax Commissioner is automatically extended for the same period.

Section 29 of H.B. 197 also addresses the problem of employers having to withhold income taxes in a multitude of municipal jurisdictions for employees working from home. In Ohio, an employer is generally required to withhold municipal income taxes for any municipality in which an employee performs services for 20 or more days during a taxable year (starting on the 21st day). Section 29 of the Bill provides that for the duration of the Executive Order emergency declaration, and for 30 days thereafter, an employee is considered to be working from his or her principal work location, regardless of where the employee is actually performing services.

Sections 28 and 29 of H.B. 197 are significantly broader in scope than a similar extension proposal, H.B. 565, introduced on March 23. Notably absent from the Bill is a provision extending the filing or payment deadlines for locally administered municipal net profits or personal income taxes. Under existing law, if the Tax Commissioner extends the state income tax filing date for all taxpayers under Revised Code section 5747.08(G), the filing date for municipal income tax returns is extended to the same date.

Businesses and individuals required to file municipal income tax returns directly with municipalities or with agencies administering the taxes on their behalf should look to those municipalities or agencies for guidance on filing and payment extensions. Ohio Governor Mike DeWine is expected to sign H.B. 197, and because it is declared emergency legislation, H.B. 197 will take effect immediately.

Dinsmore lawyers are carefully monitoring state and local tax, incentive legislation, and administrative orders relating to the COVID-19 pandemic, and will post more information as it becomes available on the Dinsmore COVID-19 Business Strategies Hub. If you have questions about tax laws or incentives relating to the COVID-19 pandemic, please contact any of Dinsmore’s tax attorneys.