James E. Newland, CPA

Ohio Energy Efficient Appliance Rebate Program

2010-02-23T07:08:00.000-08:00

Ohio will be issuing 89,000 rebate vouchers to Ohio residents who replace their old refrigerators, clothes washers, dishwashers, hot water tanks, and electric heat pumps with new energy efficient ones that have the ENERGY STAR label. In addition, the hot water tanks must be replaced with a gas water heater certified after 1-1-09. The clothes washer must be certified after 7-7-09 and the dishwasher after 8-11-09.
The rebates are $100 for the refrigerators, dishwashers, and gas hot water tanks. They are $150 for the clothes dryer and $250 for the heat pump. The vouchers are issued on a first come - first served basis and when they are gone, their gone. There will be approximately 20,000 vouchers each for the refrigerators, clothes dryers, and dishwashers. there will be approximately 15,000 vouchers for the hot water tank and 2,000 vouchers for the heat pumps. You old appliance MUST be hauled away and recycled so they are no longer used. The new appliance MUST be purchased during the program, which is scheduled to begin in March, 2010. The official start date will be announced by the State of Ohio no later than March 31, 2010.

You may be subject to California Taxes and not know it!

2010-02-22T11:25:00.000-08:00

The California legislature has passes a bill to make many people who believe that they are not subject to taxation by California. This bill states that you are subject to tax if you "enter into an agreement with a California business or other entity under which the California entity, for a commission or other consideration, directly or indirectly refers potential customers of tangible personal property." "The referral could be by a link or an Internet Web Site or any other means." If you have an independent sales rep or any affiliates in California, you could be subject to California taxes. If the governor signs this bill into law, you will suddenly discover you are subject to California taxes even though you have never been to the state. Worse yet, twenty-one other state are looking into this method of increasing their taxes. New York started this scam with the so-called Amazon Tax. All we can do is petition Congress to forbid this scam under the Commerce Clause of the U.S. Constitution. The time to fight this monstrosity is now.

Hatian Relief Donations Qualify for 2009 Deduction

2010-01-26T07:10:00.000-08:00

Taxpayers who make cash donations to charities providing earthquake relief in Haiti between January 11, 2010 and February 28, 2010 can choose to deduct these donations on their 2009 or 2010 tax returns, but not both. This deduction does not cover donations of property, but only cash given to local, not foreign, organizations.

You must itemize your deductions if you wish to claim this deduction. The Federal record keeping requirements are in effect. A copy of your telephone bill showing the name of the donee organization, the date of donation, and the amount of the donation will be acceptable for text donations. For all other cash donations, you need the bank record (cancelled check)or a receipt from the charity showing the name of the organization, the date of donation, and the amount of donation.

2009 Ohio Tax Changes

2010-01-25T09:07:00.001-08:00

Ohio Governor Ted Strickland and the ohio legislature has postponed for two years (2009 and 2010) the scheduled tax rate reduction for 2009. By not lowering the tax rate for 2009 and 2010, Ohio has effectively raised your taxes for these two years.

Ohio now requires that all 2009 and later income tax returns to be filed electronically.

Beginning January 1, 2010 Sales tax is now sourced to the location where the order is recieved, not where it is delivered. This does not apply to sales of autos, trucks, boats or sales of out-of-state vendors which will still be sourced to the point of delivery.

2009 Ohio Income Tax Changes

2010-01-25T09:07:00.000-08:00

2009 Homebuyer's Credit

2010-01-25T05:37:00.000-08:00

The IRS has issued new instructions about the documentation that must be attached to your 2009 Federal Income Tax Return if you wish to claim the new homebuyer's tax credit. All taxpayers must attach a copy of the settlement statement showing all parties' names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed form HUD-1 Settlement Statement.

In addition, those taxpayers who qualify for the long-time resident of the same main home, must attach the following documentation covering a five-consecutive-year period. Form 1098 Mortgage Interest Statement, or Property Tax Records, or Homeowner's Insurance Records.

If the required documentation is not attached, the claim will be denied! The need to attach this documentation to your Federal return means that you will not be able to E-file your Federal return. Ohio residents are required to E-file their Ohio state income tax returns. Also, the IRS expects those returns claiming this credit to take at least an extra 3 weeks to process.

2008 Business Year-end Tax Planning

2008-12-15T06:27:00.000-08:00

Disregarded entities (generally LLC's that are taxed as sole proprietorships or LLC's wholly owned by a corporation or partnership) are treated as if they have no separate existence but are rather a part of their owners for tax purposes. For this reason they use their owners identification number and report their activities on their owners returns. Effective January 1, 2009, their is a major change. For payroll purposes only, they will now need their own separate identification number and will report all payroll taxes as if they were a separate entity. This means that all LLC's that are disregarded entities must obtain a new identification number for payroll purposes only and register as a separate payroll taxpayers with the IRS, state withholding agencies, state unemployment agencies, workers compensation, and city withholding agencies NOW! These LLC's will still report their income taxes as part of their owners with their owners identification numbers. This is sure to cause much confusion with both the LLC's and the taxing agencies as they attempt to match the payroll returns with the income tax returns.

New assets with a MACRS life of 20 years or less purchased and placed in service during 2008 are subject to a new 50% bonus depreciation deduction in addition to the regular depreciation deduction on the balance. This is not limited to the income of the business like the Section 179 deduction is. Property is placed in service when it is ready and available for its intended use. Property is purchased or acquired when it is in your personal control or possession. Eligible new property includes service station buildings, depreciable land improvements (parking lots, lighting, sewers, etc.) farm buildings, and qualified leasehold improvement property. A qualified leasehold improvement property is any improvement to the interior of a non-residential real property that is more than 3 years old subject to a lease. The interior of the building must be occupied exclusively by the lessee. Enlargement of the building, elevators and escalators, structural components of the common area and structural interior framework of the building are not qualified leasehold improvements. For property with a 10 year life or more and transportation property, the placed in service date is extended to 2009. For used property the 2008 Section 179 deduction is increased to $250,000. This deduction is limited to the profit of the business and cannot create a loss.

The deduction for business mileage was $0.505 for the first half of 2008 and $0.585 for the second half of the year. Be sure to calculate your mileage for each half of the year to calculate the correct deduction. For 2009 the deduction for business mileage will be $0.55. IMPORTANT! REMEMBER: NO BUSINESS MILEAGE LOG = NO BUSINESS MILEAGE DEDUCTION. KEEP ACCURATE RECORDS!

The deduction for medical miles or moving was $0.19 for the first half of the 2008 and $0.27 for the last half of 2008. For 2009 the deduction is $0.24.

The deduction for charitable miles was $0.14 for all of 2008 and is the same for 2009.

If you have any questions about these changes, contact our office.

2008 Individual Year-end Tax Planning

2008-12-12T13:44:00.000-08:00

Congress has enacted many changes to the Internal Revenue Code this year that affect individuals. A one year patch has been added to the Alternate Minimum Tax for 2008. This years exemption is $69,950 for married taxpayers who file a joint return, $42,600 for single taxpayers, and $34,975 for married taxpayers who file separate returns. Also, AMT relief in the form of a current year credit for AMT taxes paid in prior years due to cashing stock options is now available.

Non-itemizers can take for 2008 and 2009 an additional standard deduction for real estate taxes paid up to $500 for single returns and $1,000 for joint returns.

The deduction for sales tax instead of state and local income taxes has been extended to 2008 and 2009.

The above the line deduction for educator expenses has been extended to 2008 and 2009.

Contributions to charities from and IRA has been extended for another two years.

The credit for energy saving improvements to the principal residence has been extended until 2010. However, the credit expired 12-31-07 and was extended starting 1-1-09. Therefore, there is no credit for 2008. Solar, wind, and geothermal energy expenditures have been included in qualified improvements.

First-time home buyers (who did not own a home in the last 3 years) may take a refundable credit of 10% of the purchase price to a maximum of $7,500 ($3,750 for a taxpayer filing married filing separately). Starting two years later you begin to repay the credit over a 15 year period. The amount that must be repaid is limited to the profit on the sale of the home if it is sold during the 15 year period. If the property is held for more than 15 years the entire amount of the credit will be repaid. In the mean time you have a tax free loan that you can use as you desire. If you use it to reduce your mortgage balance, you will effectively save the mortgage rate compounded for 15 years.

Sales of vacation homes after 12-31-08 will not receive the entire exclusion available to the sale of your personal residence. A planning note, to insure that you receive the exclusion when you buy a new home while selling your old, be sure to buy the new home after you sell the old home.

The Mortgage Forgiveness Debt Relief Act of 2007 provides that a qualified taxpayer does not need to pay federal income taxes on up to $2,000,000 of debt forgiven on a qualified loan that is secured by a qualified principal residence. This change affects debts forgiven between January 1, 2007 and December 31, 2009. This will prevent the tax disaster of owing taxes on the mortgage forgiven even though the taxpayer suffered a financial loss of the home. Their are many complicated rules that go with this provision. See us to discuss your particular case.

Now that the November election is over and we have a new president and congress, expect many changes to happen in the near future. The new president and congress have stated the the "Bush Tax Cuts" will either be repealed soon or will be allowed to expire at the end of 2010. Either way look for many changes and tax increases.

Ohio Homestead Exemption

2007-07-04T07:09:00.000-07:00

Saturday, June 30, 2007, Governor Ted Strickland signed into law a new Homestead Exemption for Ohio home owners and eliminates the old exemption rules. The new exemption will allow home owners to shelter the first $25,000 of MARKET VALUE, not taxable value, from real estate taxation. An application must be filed with the county auditor before October 1st in order to reduce the taxes due in 2008.

To be eligible the homeowner must live in the home as their primary residence and be 65 years old or will be 65 in 2007 or, be certified totally and permanently disabled as of january 1, 2007 or, be the surviving spouse of a qualified homeowner who was at least 59 years old on the date that the spouse died.

If you believe that you qualify, contact your county auditor and request an application form or contact our office for assistance. You MUST file the application before October 1, 2007 to receive the exemption in 2008.

YEAR-END TAX PLANNING

2005-12-15T10:18:00.000-08:00

The standard plan for most taxpayers is to defer income until next year and accelerate deductions into this year. This time tested formula may back fire if it is applied without considering the alternate minimum tax. Alternate Minimum Tax (AMT) was designed to make sure that 155 high income families would pay some tax. However, unless Congress acts to change the law 35 million, mostly middle class taxpayers, will pay an extra $120 billion of AMT a year. If you are married and earn $75,000, have exemptions, Claim the standard deduction, pay state or local taxes, have a home equity loan, have medical expenses, or have employee business expenses, then the AMT is targeting you. Call our office to discuss how to avoid being subject to this tax.

Wait until next year to upgrade your home with new windows, furnace, central air, water heaters, or insullation. Improvements made during 2006 and 2007 to your personal residence will qualify for a new $500 tax credit. Improvements made in 2005 do not.

This is the last year for the $4,000 deduction for education. This is the last year for the deduction for teachers' classroom expenses. Unless Congress acts, 2005 will be the last year these deductions will be available.

Interest income from certificates of deposit have two rules that you can use to plan how much interest income you will have in a tax year. Certificates that have a maturity of a year or more will report income based on the number of days in the tax year. Certificates that have a maturity of less than a year report all of the interest in the year the certificate matures. If you want the interest in the current year, use a certificate with a maturity of a year or more. If you wish to defer the income to 2006, use a certificate with a maturity of less than a year.

Donations of autos to charity will probably be limited to the amount the charity receives from it's sale, not the blue book value.

Donations of stock to charity allow you to deduct the market value of the stock rather than you cost. This can give you a larger deduction than you would normally expect.

OHIO OFFERS TAX AMNESTY UNTIL FEBRUARY 15, 2006

2005-12-15T09:12:00.000-08:00

The state of Ohio is offering taxpayers a chance to pay off previous tax liabilities with no penalty and only one-half of the interest due. Taxpayers must file under this amnesty program between january 1, 2006 and february 15, 2006. The prograns covers withholding taxes, sales and use taxes, franchise tax, income tax, pass-through entity tax, personal property tax, and school district tax. To obtain tax amnesty, taxpayers must file an amnesty application along with the delinquent returns and full payment of tax due and 1/2 of the interest due by February 15, 2006. Contact our office if you have any questions about this program.

Residential Energy Property Tax Credit

2005-08-17T11:31:00.000-07:00

The Energy Tax Incentives Tax Act of 2005 provides a new Residential Energy Property Tax Credit of up to $500 to individual taxpayers for nonbusiness energy property installed on the individual's principal residence located in the United States during 2006 and 2007. Eligible improvements include: insulation; exterior windows and skylights(this includes new locations and replacements); exterior doors (including insulated garage doors); metal roofs with special pigmented coatings; electric heat pump water heaters; electric and geothermal heat pumps; central air conditioners; natural gas, propane, or oil water heaters or furnaces; hot water boilers; and advanced main air circulating fans. Outdoor caulking and weather-stripping appear to qualify id done according to IECC code and will likely last at least 5 years or more. Set-back thermostats and ceiling fans do not qualify for this credit. The credit is limited to $500 for the lifetime of the taxpayer. The credit is equal to 10% of the qualified energy efficiency improvements plus the cost of qualified energy property (heat pumps, water heaters, furnaces, and central air conditioners) subject to the following limits:

1. $200 for windows,

2. $ 50 for an advanced main air circulating fan,

3. $150 for any qualifying natural gas, propane, or oil furnace or hot water boiler, and

4. $ 300 for any item of energy-efficient building property.

Qualified energy efficiency improvements is a building envelope component such as: any insulation or system specifically designed to reduce heat loss or heat gain when installed in or on a dwelling unit; exterior windows or skylights; exterior doors; any metal roof only if it has appropriate pigmented coatings specifically designed to reduce the heat gain of the dwelling unit. The 2000 IECC (International Energy Conservation Code) prescribes the R-values for the insulation and specifications for heating & cooling systems. The Energy Star Program prescribes the requirements for metal roofs with heat-reduction pigmentation. Not all insulation material is eligible for the credit, only insulation of the building envelope qualifies. Therefore, lined or insulated drapes would not qualify.

The credit is for an eligible dwelling unit. A owner of a single family home, used as his principal residence, will qualify for the credit for improvements to his property. Improvement to two or more dwelling units are more complex. The tenant-stockholder of a cooperative housing corporation or the condominium owner is treated as having paid a proportionate share of the cost of any qualified energy efficiency improvements done by the corporation or association. In the case of joint owners of a qualifying dwelling unit owned and used as a principal residence. The total credit cannot exceed $500 by all of the owners combined. The credit is to be claimed by each owner is the percentage each owner paid for the energy improvements.

Vacation home and rental units do not qualify for this credit.

The credit is only available for energy improvements placed in service during 2006 and 2007. The expenditure is considered made when the original installation is complete. For a construction project it is considered complete when the taxpayer first uses the new structure.

If your residence has mixed business and personal use, only the percentage of the costs properly allocated to personal use may be used to calculate the credit. If the business use is less than 20% of the total use, no allocation is required. Taxpayers with an office at home need to watch this with care.

Any energy improvements financed with subsidized energy financing is not eligible for the credit. Theses subsidized loans may be from any federal, state, or local program.

Any improvement made during 2005 will not qualify for the credit. You would need to wait until 2006 to make the improvement, if you wish to claim the credit.

The total lifetime credit is $500. If you claim the full credit in 2006 there will be no additional credit in 2007 even if you move to a new principal residence in 2007.

The credit is limited to your tax liability. Any unused credits due to this limitation are lost! There is no carry forward or carry back of any unused credits.

The basis of the dwelling is reduced by the amount of the credit claimed on the tax return.

Ohio Workers Compensation

2005-07-19T05:44:00.000-07:00

Every Ohio employer is required to maintain worker's compensation coverage for their employees. However, coverage is optional for owners in the following categories: sole proprietors, partners, LLC acting as a proprietorship, LLC acting as a partnership, family farm corporate officers, an individual incorporated as a corporation, and ordained ministers of a religious organization.

An individual incorporated as a corporation is a corporation that employees only one owner. It cannot have any other owners or any other employees. You may choose to not carry coverage if you desire. If you do not elect to cover yourself, Worker's Compensation will not provide coverage and your other insurance plans may not cover your work-related disability or medical bills. Please contact you insurance carriers to confirm your coverage. If you elect not to cover yourself and you later have other employees, you will be required to cover them and yourself.

If you elect to be covered, you must report and pay premiums on payroll of at least $100 per week or $5,200 per year even if your actual payroll is less. The maximum payroll to be reported is $800 per week or $41,600 per year. Officers who earn between these amounts, must report their actual wages based on their tax forms.

Ohio Estate Tax

2005-06-30T08:15:00.000-07:00

The state of Ohio's Estate Tax has four parts: the basic tax, the additional estate tax, the generation-skipping tax, and the tax on nonresidents. Changes to the federal estate tax laws have affected the Ohio estate tax laws. The additional estate tax is equal to the maximum credit allowable by federal estate tax law for the paying of state estate taxes. In effect, this allows Ohio to collect more taxes without increasing the total state and federal taxes. The Economic Growth and Tax Relief Reconciliation Act of 2001 phases out the credit for paying state estate taxes. For estates of decedents dying after December 31, 2004, these credits no longer exist. However, unless congress changes the laws again they will reappear in 2011. The budget bill will effectively repeal the additional estate tax for decedents dying after the day the governor signs the bill. In addition, the bill grants a credit for the amount of the additional estate tax for estates for those who died after December 31, 2001 but before the governor signed the bill. Executors of larger estates of individuals who died after 2001 may consider amending their Ohio Estate Tax Returns.

The generation-skipping tax is also affected by the Economic Growth and Tax Relief Reconciliation Act of 2001. This is a tax on the transfer of property to a person who is two or more generations below the decedent, such as a grandparent to a grandchild. The federal credit is elimated for estates of decedents who die after 2004. The budget bill will effectively repeal this tax for taxpayers who die on or after the governor signs this bill. There is not a credit for taxpayers who die before the governor signs this bill.

Ohio allows a deduction for the value of a family-owned business or farm to the extent it is passed on to other family members and the deduction is claimed on the federal return. The Economic Growth and Tax Relief Reconciliation Act of 2001 suspends the deduction for taxpayers dying after 2003. For Ohio purposes, the suspension is effective on or after the governor signs the bill. This deduction will reappear in 2011 unless congress acts to change it.

The governor signed this legislation on June 30, 2005.

Ohio Franchise Tax

2005-06-29T07:17:00.000-07:00

The Ohio budget bill HB66 phases out the Ohio franchise tax for corporations subject to the Commercial Activities Tax over five years beginning in 2006. In 2006 corporations will owe 80% of the calculated tax or 100% of the minimum tax, which ever is greater. If a nonrefundable credit is available. the carryover is calculated before the 80% is applied. If a refundable credit is available, the credit is not included in the 80% calculation. In 2007 corporations will use 60%. In 2008 corporations will use 40%. In 2009 corporations will use 20%. In 2010 and thereafter, corporations subject to the commercial activities tax will be exempt from the franchise tax. A credit for unused net operating losses in excess of $50,000,000 after 2010. Any entity that elects to be taxed as a corporation for federal purposes is a corporation for franchise tax purposes.

The credit for purchases of new equipment is changed. The equipment must be purchased prior to June 30, 2005 and installed no later than June 30, 2006. The budget bill requires that taxpayers file a notice to claim this credit by September 30, 2005 with the Department of Development. No credit or carryover may be claims for any taxable year ending after June 30, 2006. Any unused credit may be converted to a grant administered by the Department of Development. Taxpayers must apply this grant against tax liabilities after allowing for all nonrefundable credits but prior to refundable credits.

Ohio Property Taxes

2005-06-27T10:43:00.000-07:00

The current 10% Rollback of Real Estate Taxes will not be allowed for real property used primarily in a business activity beginning in tax year 2005. The 2005 tax bills will start to be mailed in December, 2005. The budget bill specifically states that the following are not business activities and thus are still eligible for the 10% rollback: farming, leasing property for farming, leasing property with single-family, two-family, or three family dwellings, or holding land that will be used for farming or to develop single-family, two-family, or three-family dwellings.

The Personal Property Tax for personal property used in a trade or business will be phased out beginning in tax year 2006 and will be totally eliminated in 2009. All machinery and equipment that is first used by a taxpayer in manufacturing after 2004 is now exempt from taxation. Manufacturing Equipment includes machinery, equipment, tools, implements, patterns, jigs, dies, drawings and business fixtures used by a manufacturer (including property leased by a manufacturer). This does not include general office property. The budget bill provides that the exclusion from taxation of patterns, jigs, dies, and drawings that are held for use and not sale remains the same. A Manufacturing Facility is defined as a facility used for manufacturing, mining, refining, rectifying, or combining different materials with a view of making a gain or profit, including a portion of a facility to store or transport raw materials, work-in-process, or finished goods inventory, for the purpose of packaging, research, or testing for quality control, so long as manufacturing , mining, refining, rectifying, or combining is also performed at the facility. a manufacturing facility does not include any portion of a facility used primarily for making retail sales. All other personal property will be phased-out by using a listing % of 18.75% for 2006, 12.5% for 2007, 6.25% for 2008, and 0% for 2009 and thereafter.

Ohio Income Tax

2005-06-24T05:05:00.000-07:00

The new budget bill for the state of Ohio reduces the Income Tax Rates in each bracket by 21%. This reduction is phased in over a 5 year period until in 2009 the entire reduction becomes effective. Starting in 2010 the bracket income amounts will be adjusted for inflation. It will be interesting to see if these adjustments will ever come to pass based on our legislature's track record for keeping its word.

The deduction for qualified tuition and fees for state universities and other postsecondary education located in Ohio will be eliminated for years after 2005.

A special nonrefundable credit for taxpayers with Ohio Taxable Income under $10,000 begins in 2005. This credit will effectively eliminate the Ohio income tax for taxpayers who have income under $10,000. If married Ohio taxpayers each earned $10,000 and file separate returns, their tax would b $-0-. If they file a joint return, the tax would be approximately $260.

Effective in 2005, the taxation of trusts become permanent.

Ohio Commercial Activity Tax

2005-06-23T06:41:00.000-07:00

Ohio has created a new Commercial Activity Tax on business and other entities that generate business income effective July 1, 2005. This tax is imposed on "the privilege of engaging in any activity conducted for or resulting in gain, profit, or income." This tax is part of the price used in determining sales and use tax. The new law specifies the tax is only on the person receiving the gross receipts and may not be passed on as a separately stated item to the consumer. However, the price of the goods or services may be increased to cover this tax.

The tax applies to any legal person with more than $150,000 in annual taxable gross receipts except for the state and its agencies and political subdivisions, banks, financial companies, savings and loans, financial service companies and their affiliates. For the first six months of the tax, the $150,000 exclusion applies to all the receipts during 2005.

For 2006 and later, the tax is $175 on the first $1,000,000 of annual taxable receipts and 0.26% on the excess over $1,000,000. This tax is phased in. For 2005 the tax is $88 on the first $500,000 and 0.06% on the excess of $500,000.

Taxable gross receipts are the total receipts without any deductions reduced by any allowable exclusions. Gross receipts includes the fair market value of any property or service transferred and any debt transferred or forgiven. It includes any amounts received from the sale, exchange or disposition of property, any amount received for services, and any rental, leases, or payments for the use or possession of the taxpayer's property or capital.

Exclusions are as follows:

Interest income not in the ordinary course of business, except credit card sales.
Dividend income, distributions received from corporations and pass-through entities.
Receipts from capital gains, except in the normal course of business.
Receipts of principal payments of a loan, bond, mutual fund,certificate of deposit, or other marketable instrument.
Principal amount received under a repurchase agreement of a loan.
Contributions received by a retirement plan.
compensation received by and employee or former employee including fringe benefits and expense reimbursements.
Proceeds from the sale of the taxpayer's own stock, options, warrants, puts, or calls or the sale of treasury stock.
Proceeds from life insurance policies.
Damages in excess of amounts that, if received without litigation, would be gross receipts.
Property, money and other amounts received by an agent in excess of the agent's commission.
Receipts realized by a person engaged in selling securities in excess of the gain on those securities.
Tax refunds and other tax benefit recoveries.
Pension reversions.
Contributions to capital.
Sales and use taxes collected by vendors, including out of state vendors.
Federal and state excise taxes on cigarettes, tobacco, liquor, alcoholic beverages,gasoline, diesel and other motor fuels.
Receipts of an auto dealer from the sale to another dealer to meet the need of a specific customer's preference for a motor vehicle.
Receipts for a loan or credit account management services provided to a financial institution, provided they are both at least 50% controlled by common owners.
Receipts from selling accounts receivable, provided the receivable was included in the seller's taxable gross receipts.
Receipts from administering anti-neoplastic drugs and other cancer chemotherapy, biologicals, therapeutic agents, and supportive drugs in a physician's office to cancer patients.
From commissions of horse racing permit holders, any amounts that must be paid as a tax under horse racing law and amounts specified under that law that are required to be used as purse money.
Amounts received by a professional employer organization from a client in excess of the administrative fee.
Amounts received from the sale of tangible personal property that is delivered or shipped from a qualified foreign trade zone or a qualified intermodal facility.
Funds received by a mortgage broker under a table-funded or warehouse-lending mortgage loan.
Receipts of a real estate broker in excess of the fees retained by the broker and not paid to another broker or associated sales person.

After July 1, 2008, there will be allowed four credits to be applied against this tax. They are the refundable jobs creation credit, the nonrefundable jobs retention credit, the non refundable qualified research expenses credit, and the non refundable credit for research and development loan payments.

Everyone subject to the tax must register by November 15, 2005 or within 30 days of becoming subject to the tax. If you register on line, the one time fee is $15. If you register by paper the one time fee is $20. If you register on time the fee will be credited against the tax due. If a taxpayer registers late the penalty is up to $100 per month with a maximum penalty of $1,000. This penalty cannot be credited against the tax. If you do not begin business before December 1st or do not have more than $150,000 taxable gross receipts by this date are exempt from the fee.

Controlled groups may elect to pay the tax on a consolidated basis and thus exclude any intercompany transactions from taxable gross receipts. A controlled group is defined as having " at least 80% ownership interest or a more-than-50% ownership interest as chosen by the group." You may include all foreign corporations if you wish. You may included excluded entities if you wish.

Controlled groups that do not elect to pay the tax on a consolidated basis are required to file as a combined taxpayer group. The exemption for taxpayers having taxable gross receipts of $200,000 does not apply to combined taxpayers. Also, combined taxpayers may not exclude intercompany transactions from gross taxable receipts.

All taxpayers will calculate their tax on a calendar year period. Taxpayers with less than $1,000,000 in gross taxable receipts will file annual returns. Taxpayers with greater than $1,000,000 in gross taxable receipts will file quarterly returns and must file them electronically.

Taxpayers must file their final commercial activities tax returns within 15 days of quitting business or selling their business. The purchaser or successor must hold enough money in escrow from the purchase price to cover the final commercial activities tax obligation until the former owner produces a receipt showing the tax is paid or no tax is due. The purchaser will be liable for any unpaid tax due.

Ohio Sales Tax Update

2005-06-22T07:03:00.000-07:00

Our hardworking, compassionate Ohio Legislature has almost kept it's promise to eliminate the TEMPORARY 1% increase of the sales tax rate that was due to expire on July 1, 2005. The new budget has now given us a PERMANENT 1/2% decrease effective July 1, 2005. It sure is comforting to know that Ohio politicians ALMOST keep their promises. What do we expect, when the same bunch of people gave us a TEMPORARY, 1%, PASSED IN THE GREAT DEPRESSION TO PROVIDE POOR RELIEF SALES TAX!

The sales tax discount rate for merchants will remain at 0.9%.

The requirement to collect sales tax for the district and rate the items are shipped to have once again been postponed for most merchants. Merchants with delivery sales in excess of $30 million in 2005 must change by May 1, 2006. Merchants within delivery sales in excess of $5 million in 2005 must change by May 1, 2007. All other merchants must change by January 1, 2008. Any vendor may change prior to these dates, but once they change they may not go back to their old method of collecting the rate of where the item was sold. Ohio vendors are now eligible for partial reimbursement for the costs of converting to the new system. If you wish to be reimbursed SAVE THE INVOICES THAT SHOW HOW MUCH IT COST YOU!

The statute of limitations for sales tax assessments has been extended to four years after the date the return was filed or should have been filed, which ever is later. This change is effective January 1, 2006.

The exemption from sales tax for DRUGS AND MEDICAL EQUIPMENT has been changed. Now, "sales of drugs for a human being that may be dispensed only pursuant to a prescription are exempt, and hospital beds and medical oxygen and medical oxygen-dispensing equipment when purchased by hospitals, nursing homes, or other medical facilities are exempt." People who use these items at home to stay alive are now subject to tax.

Sales of investment metal bullion and coins will now be subject to tax. That's right, the sale of money is now taxable! Investment coins are defined as "numismatic coins or other forms of money and legal tender manufactured of gold, silver, platinum, or other metal under the law of the United States or a foreign nation that have a fair market value greater than any statutory or nominal value."