Fiscal Note & Local Impact Statement

124 th General Assembly of Ohio

Ohio Legislative Service Commission

77 South High Street, 9th Floor, Columbus, OH 43215-6136 ² Phone: (614) 466-3615

² Internet Web Site: http://www.lsc.state.oh.us/

BILL:

Am. S.B. 200

DATE:

February 13, 2002

STATUS:

As Reported by Senate Ways & Means

SPONSOR:

Sen. Spada

LOCAL IMPACT STATEMENT REQUIRED:

No

Minimal Cost

 


CONTENTS:

Revises tax law and administration – Taxpayer Services II

State Fiscal Highlights

 

STATE FUND

FY 2002

FY 2003

FUTURE YEARS

General Revenue Fund

     Revenues

- 0 -

Potential minimal loss

Potential minimal loss

     Expenditures

- 0 -

- 0 -

- 0 -

Note: The state fiscal year is July 1 through June 30. For example, FY 2002 is July 1, 2001 – June 30, 2002.

 

Local Fiscal Highlights

 

LOCAL GOVERNMENT

FY 2002

FY 2003

FUTURE YEARS

Counties and other local governments

     Revenues

- 0 -

Potential minimal loss

Potential minimal loss

     Expenditures

- 0 -

- 0 -

- 0 -

 

 

 

 


 

 

Detailed Fiscal Analysis

 

Generally, the bill makes numerous changes in the laws governing the administration of various taxes.  The bill clarifies existing law, removes language that had become obsolete, and makes a variety of technical changes.  Some of the technical changes involve assessment correction notices, refund hearings, and indexing of various exemptions, deductions, and credits. Most of the provisions in SB 200 either have no fiscal effect or the expected revenue loss is minimal. The Department of Taxation and the Legislative Service Commission do not believe there will be any significant revenue consequences due to the passage of this bill. 

 

Corporate Franchise Tax

 

The bill changes the statute of limitations for the franchise tax and extends the time in which a taxpayer may file for a corporation franchise tax refund. The bill extends the net operating loss carryforward. Current law provides that for net operating losses incurred in taxable years ending on or after January 1, 1982, the carryover period for such losses is 15 consecutive taxable years after the taxable year in which the net operating loss occurs. The bill changes the carryover period to 20 years for net operating losses incurred in taxable years beginning on or after August 6, 1997.  The bill eliminates the penalty for underpaying estimated income taxes if the taxpayer pays at least 90 percent of current year or 100 percent of the previous year tax liability. Interest on tax liability due, however, is maintained and calculated from the due dates. The bill makes technical changes to the valuation of outstanding shares of stocks for the calculation of the net worth tax. Each franchise tax change could potentially reduce franchise tax revenues in future years. However, revenue loss from each change is expected to be minimal.

 

Individual Income Tax

 

The bill also relieves an employee from being liable for income taxes withheld by the employer and not paid to the state, unless there is evidence of collusion between  the employer and employee. The fiscal impact from this change is expected to be minimal.

 

Sales and Use Tax

 

The bill modifies public disclosure of vendor’s license information, allows direct sales tax refunds to consumers (under certain conditions), expands direct pay authority, extends statistical sampling to use-tax assessments, and changes the definition of transient vendors. In addition, the bill modifies statutes related to the research and development tax exemption and the exemption for fuel used to produce electricity. The bill also exempts from sales tax all magazines delivered by mail, not just those delivered by second-class mail.  The bill also makes changes to the sourcing of mobile telecommunications to taxing juridisctions. All sales tax provisions are expected to result in a mimimal reduction in sales tax revenue.

 

Miscellaneous  provisions

 

The bill authorizes the Tax Commissioner one opportunity to issue a reassessment for various taxes without a hearing. If a reassessment is issued, the Tax Commissioner must sent it to the taxpayer by ordinary mail.  This is the current practice of the Tax Commissioner and should not result in an increase in expenditures. 

 

State tax revenue losses under the various taxes are expected to be minimal. Therefore, counties and other local government revenue loss is also expected to be small.  The Local Government Fund (LGF) receives 4.2 percent of corporate, personal income and sales taxes. The Local Government Revenue Assisance Fund (LGRAF) receives 0.6 percent corporate, personal income and sales taxes. The Library and Local Government Support Fund (LLGSF) receives 5.7 percent of the personal income tax.  The changes in the sales and use tax law will also reduce revenues to counties and transit authroties from the permissive sales tax.  However, this impact is expected to be minimal, also.

 

 

LSC fiscal staff:  Jean Botomogno, Economist

 Nickie Ringer, Economist

                       

 

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