The Senate on Tuesday voted to pass H.B. 609 by a 31-to-0 vote, with 2 absent or not voting, sending the measure back to the House to concur in changes made by the Senate Ways and Means Committee on Dec. 17 and on the Senate floor just before the bill was passed.
The bill would create an amnesty program from April 1 to May 31, during which businesses and individuals could pay any unreported or underreported state-administered 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, public utility excise, and cigarette, tobacco and vaping excise taxes, alcoholic beverage tax and liquor gallonage tax, among others.
The bill will return to the House of Representatives, which unanimously passed the measure in May, to approve the changes to the bill that occurred in the Senate, including an alteration to the amnesty program's timeline. Under the House bill, the amnesty program would have run from Jan. 1 to March 31.
The Senate Ways and Means Committee also reinstated a sales tax exemption for bullion and coins and established property tax exemption for privately owned wetlands, which codifies the current practice of exempting property used for wetland mitigation. Additional amendments made in the committee and on the floor of the Senate would alter the property tax exemption filing procedures for charter schools.
Ways and Means Chairwoman Kristina D. Roegner, R-Hudson, told Law360 on Dec. 17 that allowing taxpayers to catch up on back taxes has taken on vital importance as businesses and individuals are financially struggling due to the pandemic.
"This allows them to pay the outstanding liability without penalty and so we are hopeful that this will also bring some money to the state," Roegner said. "So we see this as a win-win."
Roegner noted the General Assembly had gone back and forth on the sales tax exemption for investment bullion, which was removed as part of H.B. 166, the state's biennial budget bill that passed in 2019. A similar exemption was also recently added to an unrelated measure, S.B. 95, which was informally passed by the House last week and seeks to extend hefty tax incentives to so-called megaprojects.
"Many people use bullion as an investment and we don't tax similar investments this way, so why should we tax bullion that way?" Roegner told Law360.
H.B. 609 would earmark most of the amnesty tax collections for the state's budget stabilization fund, or rainy day fund, which currently consists of nearly $2.7 billion.
As with many states, Ohio's revenue projections have plummeted as businesses have been closed to curb the spread of the virus. Republican Gov. Mike DeWine cut about $755 million from the fiscal year 2020 budget to account for the shortfall from the virus instead of tapping into the state's reserves. However, he has said Ohio will likely use the rainy day fund to help balance the budget for future fiscal years.
The bill's primary sponsor, Rep. Thomas West, D-Canton, previously said that the bill aims to provide relief for taxpayers and generate revenue for the state to help its budget. By offering the amnesty program, West said he believes that some taxpayers might come forward and pay back taxes that are due to the state if they don't have the threat of penalties and interests hanging over them.
If the bill is enacted, it will offer the fifth type of tax amnesty program in Ohio since 2001. The state last offered tax amnesty for about a month and half in 2018, generating $14.3 million in tax collections, according to a fiscal note on the legislation.
For the 2018 program, the state collected $7.2 million in sales and use taxes and $3.3 million in corporate activity taxes, which accounted for more than 75% of the program's collections, according to figures the state Department of Taxation provided to Law360.
Ohio's lame-duck session officially ends Dec. 31. If the bill fails to pass the House, the measure would die and would have to be refiled after the state's next two-year legislative session begins on Jan. 4.
House Majority Floor Leader Bill Seitz, R-Green Township, told Law360 that while he is generally supportive of the underlying reasoning of Senate amendments regarding the uniform treatment of businesses in public health measures, the House was currently not scheduled to reconvene before the end of the session.
"I would anticipate that if we had the time to come back and consider the amendments to House Bill 609, we might very well agree," Seitz said. "We're just not sure how many people would be willing to come back next week. I certainly would be."
He added that the House was still waiting for the Senate to override DeWine's veto of other legislation that would modify public health measures and that it was the decision of House Speaker Bob Cupp, R-Lima, to schedule a session and notify representatives within 24 hours.
Senate President Larry Obhof, R-Medina, told Law360 that he sponsored the amendment to prevent small businesses from closing during public health measures related to the virus while larger competitors stayed open. Obhof said he hoped the House would reconvene to pass the measure, noting that his office received strong feedback in support of the public health protection.
"This would hopefully keep small businesses open in the future," Obhof said. "I hope they come back and I hope they do what's necessary to protect small businesses."
The offices of West, DeWine, Cupp and leadership for the minority in the House and Senate did not immediately respond to requests for comment on Wednesday.
--Additional reporting by Paul Williams. Editing by Joyce Laskowski.
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