The Ohio Department of Taxation oversees a variety of taxes within the state. The most common taxes include the Commercial Activity Tax (CAT), Sales and Use Tax, individual tax and non-resident pass-through entity withholding tax. With all of these taxes, many taxpayers (especially those based outside of Ohio) may not realize they have tax filing responsibilities and exposure to Ohio. When such exposure is realized, the question then becomes, how can we best fix the tax liability problem before it gets worse? (For example, if no returns have been filed the statute of limitations never runs out and tax exposure will just continue to grow.) Luckily, Ohio is currently offering an option for taxpayers to become compliant and address these past tax liabilities without any penalties and significant interest reductions. Utilize this time to review and manage your taxes before the window for the Ohio Tax Amnesty Program closes on February 15, 2018.
What Is the Ohio Tax Amnesty Program?
Specifically, Ohio has created a new tax amnesty program that started January 1, 2018 and runs through February 15, 2018. The program will allow a waiver for all penalties and one-half of the interest for eligible delinquent taxes that were due and payable as of May 1, 2017. This applies to both businesses and individuals, but does not cover taxes for which there has been a previous contact by the Ohio Department of Taxation.
Are You Eligible?
To receive the tax amnesty benefits, Ohio requires that the application form, completed and signed tax returns, and if applicable, registration forms be filed by the February 15, 2018 due date. A complete list of eligible taxes along with FAQ’s can be found here.
Ohio’s Voluntary Disclosure Agreement Program
Before registering for the tax amnesty program, a taxpayer should first consider another program that Ohio offers: the Voluntary Disclosure Agreement (VDA) program. This VDA program allows a taxpayer to disclose Ohio liabilities with a limited look-back period and come to an agreement of how to resolve the liabilities. Penalties are also abated as part of this program, but full interest will apply. This program is particularly beneficial to non-filers that have more than four years of tax exposure. More information on Ohio’s VDA program can be found here.
Sikich LLP highly recommends businesses and individuals review all potential state tax exposures (not just in Ohio) to be proactive in meeting their state tax compliance requirements while minimizing potential assessments of tax, interest and penalties. If you believe you have an unpaid Ohio or other state tax liabilities, please contact your Sikich tax professional to help you begin the process.
By: Dustin Sheppard, CPA, CCIFP, MBA and Brian Kelley, CPA, MST