Spring 2016 Legislative Wrap Up

As the first half of the Ohio General Assembly's legislative session for 2016 comes to a close, most around Capital Square would classify the past five months as a bit unusual. Election years are always a slightly lighter load due to many reasons, but this election year saw Ohio's Governor John Kasich running for President. That created an interesting dynamic for all who roam the halls of the Ohio Statehouse. The legislature has held fewer session days for the first half of the year than in normal years, but the issues it tackled have been difficult. Unemployment Surcharge One issue that created a flurry of activity as the session days dwindled was repayment to the federal government of a lo

Ohio Tax on Certain Non-Residents Ruled Unconstitutional

Printer Friendly Version/PDF R.C. 5747.212, as applied, violates the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution Refund claims may be warranted for open Ohio tax years if tax paid under the “Closely-Held Statute” Introduction and Overview of Closely-Held Statute R.C. 5747.212 (The Closely Held Statute) imposes Ohio income tax on nonresidents with respect to the gains from the sale of debt or equity interests in certain closely held Ohio businesses. This attempt by Ohio to impose its personal income tax on a non-resident with respect to gain from the sale of an intangible that is not sitused in Ohio was found to be invalid, as applied, in Corrigan v. Testa, Slip O

Lights Out for Ohio’s Bright-Line Tax Residency Test

Printer Friendly Version/PDF May 31, 2016 Deadline for Filing Ohio Form IT-DA Pending Ohio tax law contains what many practitioners refer to as the “Bright-Line” Residency Test, which is a law designed to simplify the residency determination for Ohio tax purposes and mitigate the economic impact of individuals leaving Ohio for lower income tax states, such as Florida, Texas and Nevada. An Ohio Supreme Court decision from last year, Cunningham v. Testa, Slip Opinion No. 2015-Ohio-2744 (2015), eliminates these benefits of the Bright-Line Test and effectively reinstates the common-law domicile test for determining tax residency. As a result, individuals seeking to change, or that have alread

Does the Ohio CAT Have Nine Lives?

Printer Friendly Version/PDF On July 1, 2005, Ohio began to impose the Commercial Activity Tax ("CAT") for the privilege of doing business in Ohio. The CAT is measured on the amount of taxable gross receipts in Ohio. The CAT law includes bright-line nexus provisions which subject a person to the CAT if that person has at least $50,000 in payroll, $50,000 in property, or $500,000 in taxable gross receipts during a calendar year. Thus, a person could be subject to the CAT under the Ohio Revised Code and have no physical presence in Ohio. The constitutionality of this provision has been frequently challenged by taxpayers undergoing audits and on appeals. Initially, it appeared that the Supr

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