Last month the Senate passed Senate Bill 18 to conform the Ohio tax code with the federal tax code. This conformity will date back to March of 2020 and will include any changes to the Internal Revenue Code (IRC) from last March until the date of enactment. Here is a link to the first blog on this legislation.

On March 24, the House passed SB 18 with a few changes added during the committee process. SB 18 picked up amendments to: limit the Bureau of Workers’ Compensation surplus payments from commercial activity tax (CAT) to tax years 2020 and 2021; allow unemployment benefit recipients to check the box to withhold state income tax, starting in 2022; grant the Ohio Department of Taxation the ability to waive penalty and interest in certain situations concerning unemployment benefits; and added language from House Bill 124 to reduce the withholding tax rate on pass through entities to the business income tax rate (currently 3%). This last amendment is a public policy priority for the Ohio Chamber.

The Senate then concurred in the changes after the House voted on the bill. The measure now goes to the governor for his signature. Because SB 18 contains an emergency clause, it will become effective on the date it is signed by the governor. This is important given the approaching tax filing date. Although that date was recently extended until May 17, 2021, for both federal and state income tax returns, it is important to give time to tax preparers to calculate returns and review the returns with their clients before the returns are filed.