Ohio has enacted legislation that amends the job creation and historic building rehabilitation tax credits and the small business investment certificate program.
Job Creation Tax Credit
The legislation amends the job creation tax credit program where the Tax Credit Authority (TCA) awards a credit to an employer proposing a project to create jobs in Ohio if the project meets certain criteria. The amount of the credit is calculated as a percentage of the increase in employees’ Ohio income tax withholdings from a 12-month base period. Currently, the base period is the 12-month period ending when the credit is approved by the TCA. However, an earlier base period may be utilized if the employer submits the tax credit application and asks the Director of Development Services and JobsOhio to make a recommendation to the TCA. If such a recommendation is made, the base period is the 12-month period ending on the date of the recommendation. The earlier base period is not available to any employer project completed prior to the effective date of the legislation.
Historic Building Rehabilitation Tax Credit
The eligibility for the historic building rehabilitation tax credit is extended to “qualified lessees.” A qualified lessee is a person subject to a lease agreement for a historic building and eligible for the federal rehabilitation tax credit. The state, state agencies, and political subdivisions are excluded from obtaining the tax credit as qualified lessees. Also, the qualified rehabilitation expenditures paid or incurred by the owner after April 4, 2007, are attributed to the qualified lessee if the owner enters into a pass-through agreement with the lessee for purposes of the federal rehabilitation tax credit.
Small Business Investment Certificate
The legislation adds requirements to the small business investment certificate program, which permits investors to claim a credit against the personal income tax for qualifying investments in a small business enterprise. At the time of the qualifying investment, the enterprise must meet the following conditions:
– the enterprise is in good standing with the Secretary of State, if is required to be registered with the office;
– the enterprise has no outstanding tax or liabilities to the state;
– the enterprise is current with any court-ordered payments; and
– the enterprise is not engaged in any illegal activity.
At the time of an investment, the enterprise’s assets must not exceed $50 million or its annual sales must not exceed $10 million. The legislation adds that the assets and annual sales of the enterprise’s related or affiliated entities are included in the calculation.
Any investment of money that is the basis of a tax credit granted under any provision of state law does not qualify as an eligible investment. In order to qualify as an eligible investor, an individual, estate, trust, or pass-through entity must not owe any outstanding tax or other liability to the state at the time of the qualifying investment. The applicant is required to submit an application fee equal to the greater of one-tenth of 1% of the amount of the intended investment or $100.
The legislation allows the Director of Development to reserve certificates in the order in which applications are received and to issue certificates as applications are completed. An application is considered complete when the director has validated that an eligible investor has made a qualified investment and the small business enterprise has made the proper reinvestment of the qualified investment pursuant to the program’s requirements. The director may only issue a certificate if, at the time of issuance, the small business enterprise has met all requirements under the program and the eligible investor does not owe any outstanding liability or tax to the state.
S.B. 314, Laws 2012, effective 91 days after filing with the Secretary of State; Bill Analysis, Ohio Legislative Service Commission