PEO-Related Ohio Taxpayers May See Tax Relief as Legislation is Pending
On September 7, 2017, the Ohio Department of Taxation (“ODT”) issued a statement that it was suspending audit activities for individuals who own 20% or more of a pass-through entity and who receive compensation through a Professional Employer Organization (“PEO”) structure and claim the small business and/or business income deduction for the compensation received from the PEO. The announcement by ODT was in response to House Bill 334 and Senate Bill 186 that were recently introduced in the Ohio General Assembly. If enacted, House Bill 334 and Senate Bill 186 would clarify the existing law. The clarification would allow compensation and guaranteed payments paid by a PEO to a 20% or more owner of a pass-through entity using a PEO structure to constitute a distributive share of income eligible for the small business and/or business income deduction computation. The ODT statement can be viewed here.
If you would like to discuss ODT’s announcement, current issues for taxpayers using a PEO structure, or House Bill 334 and Senate Bill 186, please contact Steve Hall, Tom Fagan or any of the other professionals at Zaino Hall & Farrin LLC.