H.B. 45 would create a tax amnesty program from April 1 to May 31, during which businesses and individuals could pay certain unreported or underreported taxes without incurring penalties or interest, provided those taxes aren't under audit or have been issued a notice of assessment. The amnesty would apply to Ohio's commercial activity tax, sales and use taxes, income tax, financial institutions tax, and cigarette and vaping excise taxes, among others.
Rep. Thomas West, D-Canton, who sponsored a similar bill in 2020, announced in a statement that he refiled the bill on Wednesday along with Rep. Bill Roemer, R-Richfield. The state House of Representatives and Senate unanimously passed different versions of the bill last year but didn't reconcile their differences over the legislation before Ohio's two-year legislative session ended in December.
West told Law360 on Friday that a tax amnesty program would generate revenue for the state by providing an incentive for taxpayers to settle their back taxes quickly, while offering them a leg up during the pandemic by removing the threat of penalties and interest.
"A lot of people are hurting," he said. "They can use this program to eliminate some of their debt by coming forward."
The bill was referred to the House Ways and Means Committee on Thursday. West said he would prefer to pass the bill quickly to provide tax relief for businesses that have suffered financially amid the spread of COVID-19, the respiratory illness caused by the virus. However, he added that he'd also be open to including it in the state's budget bill that is due by the end of June, which would require pushing back the program's start date.
The latter option may be preferable to the Ohio Department of Taxation. Gary Gudmundson, a spokesperson for the tax agency, told Law360 on Friday that the department would need more time to successfully administer the program if the bill were to become law.
"The department plans to work with the sponsors on the timeframe as the bill moves through the committee process," he said.
West said he considers the bill to be more urgent now that the pandemic has lingered into 2021, but would understand if the department might need additional time to market the program and prepare to administer it.
Ohio's chapter of the National Federation of Independent Business, which testified in support of last year's bill, supports the concept of a tax amnesty program but has not yet taken an official position on H.B. 45, Chris Ferruso, the chapter's legislative director, told Law360 on Friday.
Ferruso said that tax amnesty programs can provide some relief to small companies that have seen their business drop off during the pandemic, but that the federation doesn't want "to create an unlevel playing field" for businesses that have timely remitted their taxes.
The department has worked with certain taxpayers who have needed additional time to file their taxes on a case-by-case basis during the pandemic, Ferruso said. But because that flexibility isn't cemented into statute, he said a tax amnesty program could provide taxpayers with some certainty about the relief they may be able to receive.
"If and when that changes, some taxpayers may be in a situation where a tax amnesty program is attractive to them," he said.
If the bill is enacted, it will offer the fifth type of tax amnesty program in Ohio since 2001. The state last provided tax amnesty for about a month and half in 2018, generating $14.3 million in tax collections.
For the 2018 program, Ohio collected $7.2 million in sales and use taxes and $3.3 million in commercial activity taxes, which accounted for about 75% of the program's collections, according to figures the department provided to Law360 last year.
House Majority Floor Leader Bill Seitz, R-Green Township, did not respond to a request for comment on Friday, although he told Law360 in December that he supported last year's bill.
--Additional reporting by Abraham Gross and James Nani. Editing by Vincent Sherry.
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