Senate Bill 18 passed the Ohio Senate today by a vote of 32-0. SB 18 conforms the Ohio tax code to the internal revenue code (IRC). This conformity of the two tax codes begins with any changes made to the IRC from March 2020 to the date of enactment of SB 18. The bill picked up two important amendments during the deliberation of the bill in the Ways & Means Committee. These two amendments made the bill important enough to become a key vote by the Ohio Chamber of Commerce.
During the Ways & Means Committee hearing process, the committee added an amendment that excluded the Paycheck Protection Program (PPP) loans awarded by the federal government from the Ohio commercial activity tax (CAT). This mirrors the exclusion allowed in HB 481 during the 133rd General Assembly.
The other amendment became necessary after the Bureau of Workers’ Compensation (BWC) sent employers surplus monies from the state insurance fund in 2020. In the past, only rebate of premium amounts was awarded. In 2020, an additional payment of surplus monies above the amount of premiums paid into the system was available and sent to employers. It became clear over the last two months that the monies were taxable receipts under the CAT. SB 18 added an amendment to make it clear that state insurance surplus monies are excluded receipts and not taxable under Ohio’s CAT.
As we stated in our key vote letter, both of these changes simply protect employers from an additional tax burden that would be detrimental at this time and run counter to the purpose for why Congress enacted PPP and the BWC issued the surplus payment in the first place: to provide businesses with cash flow so they have a better chance to survive the current public health crisis. Thank you both Senator Schaffer and Senator Roegner for sponsoring the bill and Senate President Huffman for making the legislation a priority. We look forward to continuing the effort to get SB 18 enacted when the Ohio House begins its work on the bill.