(A) "Assessment tool" means the methodology or process by which an eligible company identifies the skill deficiencies or training needs of its workforce. The tool or process must be an objective and documented source. The tool must be an industry-recognized measure of employment skill levels (for example, work-keys, national skill standard evaluations, or such tools designated\tested\validated by educational institutions, vendors, or testing associations). An eligible company may also design its own instruments or system through an employee survey, employee self-disclosure statement, or other method (for example, management observation) as long as the method meets the objective and documented requirements.
(B) "Director" means director of the Ohio department of job and family services (ODJFS).
(C) "Duplication of benefits" is that portion of the training tax credit approved to cover a taxpayer's eligible training costs that have been remunerated by another public funding source.
(D) "Eligible company," "taxpayer," and "applicant" all include the following types of business entities/forms:
(1) "C-corps," which are corporations subject to the Ohio franchise tax;
(2) Entities subject to the dealers in intangible tax;
(3) Insurance companies (domestic and foreign) subject to the franchise or premium tax;
(4) Public utilities subject to the gross receipts tax;
(5) "S-corps," which may apply on behalf of their investors subject to the Ohio income tax;
(6) Partnerships whose partners are subject to the Ohio income tax;
(7) Limited liability companies (LLCs);
(8) Sole-proprietorships subject to the Ohio income tax; and
(9) Pass-through entities, s-corps, partnerships, and LLCs having one or more investors listed in this paragraph.
(E) "Eligible employee" means an individual who is employed in this state by a taxpayer and has been so employed by the same taxpayer for at least one hundred eighty consecutive days before the day an application for the credit is filed under section 5733.42 of the Revised Code. Eligible employee does not include any employee for whom a credit is claimed pursuant to division (A)(5) of section 5709.65 of the Revised Code for all or any part of the same year, an employee who is not a full-time employee, or an employee who is executive or managerial personnel except for the immediate supervisors of non-executive, non-managerial personnel.
Eligible employee is further defined as an individual working at least thirty-five hours per week and excludes executive or managerial personnel who act as an immediate supervisor of executive or managerial personnel serving as decision-making or managerial personnel. Eligible employee includes first-line supervisors of clerical or support staff for non-executive or non-managerial functions. The eligible employee must be on the applicant taxpayer's payroll as of the date of application and the employer must have paid the training costs.
(F) "Eligible training costs" means direct instructional costs, such as instructor salaries, materials and supplies, textbooks and manuals, videotapes, and other instructional media and training equipment used exclusively for the purpose of training eligible employees. Eligible training costs also means wages paid to eligible employees for time devoted exclusively to an eligible training program during normal paid working hours.
"Eligible training costs" is further defined to include costs associated with assessment tools and training-specific travel expenses. If on-the-job training is required during the course of the employee's regular duties, the employee must be under supervision and no more than fifty per cent of the employee's time may be spent fulfilling the normal employment function. Duplication of benefits is not permitted and eligible training costs do not include expenditures funded, reimbursed, or subject to the reimbursement by another source of funding, other than the taxpayer's investment through any state or federal training program.
(G) "Eligible training program" means a program to provide job skills to eligible employees who are unable effectively to function on the job due to skill deficiencies or who would otherwise be displaced because of their skill deficiencies or inability to use new technology, or a program to provide job training programs do not include executive, management, or personal enrichment training programs, or training programs intended exclusively for personal career development.
Eligible training program is further defined to be a designated training activity or set of training activities that enhances or furthers the eligible employee's ability to perform employment functions, the completion of which provides an additional level of security for continued employment.
Eligible training program specifically excludes any "ineligible training program" as defined in paragraph (J) of this rule.
(H) "Engaged primarily in manufacturing" means that at least fifty-one per cent of the taxpayer's sales revenues are generated from the act of adding to the value of existing tangible personal property through the processes of refining, combining, manufacturing, or the changing of the tangible personal property and is reflected in standard industry code.
(I) "Full-time employee" means an individual who is employed for consideration for at least thirty-five hours per week, or who renders any other standard of service generally accepted by custom or specified by contract as full-time employment.
(J) "Ineligible training program" means a mandated governmental training program. Examples of ineligible training programs are those required by or provided pursuant to the following: occupational safety and health administration (OSHA), health insurance portability and accountability act (HIPAA), Americans with disabilities act (ADA), consolidated omnibus budget reconciliation act (COBRA), equal employment opportunity commission (EEOC), family medical leave act (FMLA), sexual harassment, human resource information system (HRIS), benefits\payroll, privacy, or drug testing. These types of training programs are considered ineligible because the taxpayer is going forward with the training primarily due to governmental mandates and not primarily due to the tax credit, as required under division (C)(3) of section 5733.42 of the Revised Code.
(K) "Multiplier" means the applicable franchise tax rate allowed in the tax year the taxpayer uses his or her Ohio training tax credit (OTTC) certificate amount against his or her franchise tax liability. If the taxpayer first uses his or her tax credit certificate in tax year 2007, the multiplier is sixty per cent. If the taxpayer either first uses, or carries forward any portion of, his or her tax credit certificate in tax year 2008, the multiplier for that portion is forty per cent. If the taxpayer carries forward an unused portion of his or her tax credit, as permitted in division (J) of section 5733.42 of the Revised Code, in tax year 2009, the multiplier is twenty per cent.
(L) "ODJFS" and "agency" both refer to the Ohio department of job and family services.
(M) "Partnership" includes a limited liability company formed under Chapter 1705. of the Revised Code or under the laws of another state, provided that the company is not classified for federal income tax purposes as an association taxable as a corporation.
(N) "Permanently transferred or relocated employee" is defined as any employee with respect to whom the employer has changed the employee's primary post of duty to an address outside the state of Ohio, and such address constitutes the employee's primary post of duty for more than one year during the two year period defined in paragraph (U) of this rule.
(O) "Qualifying portion" means the total number of eligible employees identified on the taxpayer's 2006 OTTC application, or any subsequent year application, as reported by the taxpayer, that the taxpayer permanently relocated or transferred to another state or country within the seven hundred thirty days after the tax credit certificate is issued, divided by the total number of eligible employees trained, identified on the applicant's OTTC application, times the tax credit certificate amount issued to the employer, times the multiplier.
(P) "Record retention period" means the one thousand four hundred sixty-one consecutive day period following the end of the tax year for which a taxpayer has received a tax credit certificate.
(Q) "Reissued certificate" is a replacement certificate for the lost or damaged original certificate and may be utilized by the taxpayer in place of the original document.
(R) "Skill deficiencies" are defined as the lack of specific knowledge or ability to perform identified and necessary employment tasks. Skill deficiencies can be determined either on an individual basis or for a designated class of employees.
(S) "Staff leasing company" is a business that provides long term contractual employment services to another company. For the purposes of the OTTC, a staff leasing company will be distinguished from a temporary employment agency and will be eligible for the training tax credit if all requirements are met. The eligible employees of a staff leasing company must be providing the employment services for the same operating company during the one hundred eighty day employment period and providing the payment for training services rendered to the eligible employees.
(T) "Tax year" is the company's required reporting year for which the franchise tax privilege to do business in Ohio is due or in which an insurance premium or franchise tax is due to be filed. For the calendar year 2001, taxpayers may select 1998 or 1999 as their base year to determine their three year average. The OTTC program was not offered in calendar years 2002 and 2003. For calendar years 2004 and beyond, the OTTC applicant shall use the current application year and two prior calendar years to determine the three year eligible training costs.
(U) "Taxpayer" means a business entity that is subject to the state of Ohio corporate franchise tax, an insurance premium or franchise tax, or any other operational tax, that has facilities in Ohio and that has conducted an eligible training program during the most recent tax year. Each taxpayer will be identified by its nine digit federal employer identification number or social security number.
(V) "Within two years of receiving the certificate," as referenced in division (F) of section 5733.42 of the Revised Code, is defined as the seven hundred thirty days immediately following the date the tax credit certificate is issued to the applicant.
119.032 review dates:
Promulgated Under: 119.03
Statutory Authority: 5733.42(F)
Rule Amplifies: 5725.31, 5729.07, 5733.42, 5747.39
Prior Effective Dates: 12/30/99 (Emer), 10/6/00, 4/4/05, 1/1/07, 8/13/09