Chapter 5703-7 Income Tax

5703-7-01 [Rescinded].

Cite as Ohio Admin. Code 5703-7-01

Effective: 10/23/2017
Five Year Review (FYR) Dates: 8/8/2017
Promulgated Under: 119.03
Statutory Authority: 5703.05
Rule Amplifies: 5747.08
Prior Effective Dates: 02/25/72, 06/02/2014

5703-7-02 Applications for personal income tax refunds.

The filing of a properly completed annual personal income tax return, as provided by section 5747.08 of the Revised Code, or rule 5703-7-01 of the Administrative Code, will be deemed an application for refund under section 5747.11 of the Revised Code only to the extent of an overpayment resulting from the withholding or estimated payments in excess of the tax liability initially determined by the tax commissioner.

If the taxpayer is not in agreement with the amount of tax liability initially determined by the tax commissioner or if the refund claim is based upon substantive interpretation of the law, then such claims must be filed on form IT AR titled "Application for Personal Income Tax Refund," which is hereby prescribed for all income tax refund claims for which the annual tax return is not deemed an application for refund within this rule.

Nothing contained herein shall prohibit the tax commissioner from any subsequent action or review authorized by Chapter 5747. of the Revised Code, notwithstanding his initial determination of the amount of tax liability or the subsequent payment of such refund claims.

The following form, located on the department's website at http://www.tax.ohio.gov/Forms, is incorporated in this rule by reference: "Application for Personal Income Tax Refund," revised September 2008.

Cite as Ohio Admin. Code 5703-7-02

Effective: 06/02/2014
R.C. 119.032 review dates: 03/18/2014 and 06/02/2019
Promulgated Under: 5703.14
Statutory Authority: 5703.05
Rule Amplifies: 5747.08, 5747.11
Prior Effective Dates: 2-25-72; 10-29-73

5703-7-03 [Rescinded] Filing of partnership nonresident partners income tax returns.

Cite as Ohio Admin. Code 5703-7-03

Effective: 10/9/2015
Five Year Review (FYR) Dates: 07/20/2015
Promulgated Under: 5703.14
Statutory Authority: 5703.14
Rule Amplifies: 5747.08
Prior Effective Dates: 2/25/1972

5703-7-04 Option to filing of declaration of estimated income tax returns by farmers and fishermen.

(A) A farmer or fisherman whose total estimated gross income is at least two-thirds from farming or fishing, as those terms are defined and determined under Sections (b)(2) and (b)(3) of the Federal Income Tax Regulations, 26 CFR 1.6073-1, may, in lieu of filing the individual declaration of estimated tax as provided by section 5747.09 of the Revised Code, file Ohio personal income tax returns as provided in paragraph (C) of this rule.

(B) A farmer or fisherman shall use the same option or method for filing Ohio personal income tax returns as the farmer or fisherman uses for filing federal income tax returns .

(C) A farmer or fisherman meeting the requirements of paragraphs (A) and (B) of this rule may;

(1) File declaration of estimated tax returns as provided by section 5747.09 of the Revised Code;

or

(2) File only the annual individual income tax return for a taxable year, making payment in full of the tax reflected thereon, on or before the first day of March of the subsequent year, or, in the case of a fiscal year taxpayer, on or before the first day of the third month following the close of the taxpayer's taxable year;

or

(3)

(a) File a declaration of estimated tax, making payment in full of the tax reflected thereon, on or before January fiftenth of the year following the taxable year, or, in the case of a fiscal year taxpayer, on or before the fifteenth day of the first month following the close of the taxpayer's taxable year;

and

(b) File the annual individual income tax return on or before the fifteenth day of April of the year following the taxable year, or, in the case of a fiscal year taxpayer, on or before the fifteenth day of the fourth month following the close of the taxpayer's taxable year.

Cite as Ohio Admin. Code 5703-7-04

Effective: 10/9/2015
Five Year Review (FYR) Dates: 07/20/2015 and 10/09/2020
Promulgated Under: 5703.14
Statutory Authority: 5703.14
Rule Amplifies: 5747.08, 5747.09
Prior Effective Dates: 4/3/1972

5703-7-05 Income tax; extensions; penalties and interest.

(A)

(1) Any term used in this rule has the same definition as in section 5747.01 or 5733.40 of the Revised Code, or if undefined in those sections, when used in a comparable context in Chapter 5747. of the Revised Code.

(2) The term "unextended due date" means the date prescribed for filing an annual return under Chapter 5747. of the Revised Code, without any extension.

(B)

(1)

(a) For any taxable year, a taxpayer that receives an extension for filing the taxpayer's federal income tax return shall automatically receive an extension for filing the taxpayer's corresponding Ohio tax return under this chapter to the same due date, provided that the federal extension due date is beyond the unextended due date for the corresponding Ohio return.

(b) For any taxable year, a qualifying entity that receives an extension for filing the taxpayer's federal income tax return shall automatically receive an extension for filing the taxpayer's corresponding Ohio tax return under this chapter to the same due date, provided that the federal extension due date is beyond the unextended due date for the corresponding Ohio return.

(2) If a taxpayer or qualifying entity is eligible for the extension under paragraph (B)(1) of this rule, such extension shall apply to any annual return, required to be filed under section 5747.08 or 5747.42 of the Revised Code, due for the taxable year.

(C)

(1) An extension of time to file under paragraph (B)(1) or (B)(2) of this rule does not extend the due date for payment of any tax due or for the purposes of imposing interest on any tax due, unless the tax commissioner expressly extends the due date for payment of tax.

(2) Nothing in this rule shall abate any penalty or interest imposed for failure to pay taxes in a timely manner if, after the filing of the taxpayer's or qualifying entity's return, it is determined that the taxpayer or qualifying entity owes taxes in addition to those shown due on the originally filed return.

(D) Nothing in this rule precludes or modifies the applicability of section 5747.026 of the Revised Code.

Replaces: 5703-7-05

Cite as Ohio Admin. Code 5703-7-05

Effective: 10/23/2017
Five Year Review (FYR) Dates: 10/23/2022
Promulgated Under: 119.03
Statutory Authority: 5703.05
Rule Amplifies: 5747.09, 5747.15, 5748.01
Prior Effective Dates: 12/20/71, 10/16/72, 7/20/73, 6/10/74, 6/13/75, 6/30/79, 11/15/81, 7/9/82, 3/19/93, 7/1/94, 9/19/96, 9/29/97, 9/16/98, 9/29/99, 9/6/02, 6/2/05, 6/30/05, 3/28/06 (Emer.), 6/30/06, 12/28/06, 10/9/2015

5703-7-06 Personal income tax form required for withholding purposes.

Pursuant to the authority of division (B) of section 5747.18 of the Revised Code, it is hereby required that for purposes of withholding , as required by section 5747.06 of the Revised Code, Ohio employers and employees shall utilize Ohio form IT-4.

The number of exemptions to which an employee is entitled shall be determined only from a properly completed IT-4. If such form is not properly completed by the employee and filed with the employer, the employer shall withhold under section 5747.06 of the Revised Code without exemptions.

Cite as Ohio Admin. Code 5703-7-06

Effective: 10/9/2015
Five Year Review (FYR) Dates: 07/20/2015 and 10/09/2020
Promulgated Under: 5703.14
Statutory Authority: 5703.14
Rule Amplifies: 5747.18(B), 5747.06
Prior Effective Dates: 12/28/72

5703-7-07 Requirements for requesting inspection of income tax returns.

Any returns required to be filed pursuant to Chapter 5747. of the Revised Code shall not be open to inspection, except upon proper judicial order or upon application by a requesting authority which is lawfully charged with the performance of duties requiring the inspection of tax returns or related information available to the department of taxation. The application shall be made in writing and signed by the head of the authority requesting the information and shall be addressed to the tax commissioner. The application shall contain:

(A) The title of the requesting authority for whom the inspection is to be made;

(B) By specific reference, the law which such requesting authority is charged with administering, the law under which the requesting authority is so charged, and the relationship of said laws to administration of the tax laws of Ohio;

(C) The name or names of the person or persons whose income tax returns are to be inspected, together with sufficient identifying data to distinguish those persons whose returns are requested from other persons with the same or similar names;

(D) The purpose of the proposed inspection, and the procedure by which it will be accomplished;

(E) The name or names of any persons to be permitted to examine the return(s) requested or share information related thereto; and

(F) A statement that the person signing the request is fully aware of the confidentiality requirements of the law and the penalties applicable to a breach thereof, and, by making the request, accepts both officially and personally, full responsibility for any breach of confidentiality of the tax returns of the persons named in response to paragraph (C) of this rule or any information related thereto.

There shall be attached to the request a separate statement signed by each of the persons named in response to paragraph (E) of this rule, certifying that he is familiar with the confidentiality requirements of the law and the penalties applicable to a breach thereof, and that he will maintain that confidentiality.

Within a reasonable time after receipt of the application, the tax commissioner shall determine whether such request is proper and whether such request can be granted without an unreasonable disruption of the administration of the tax laws and shall thereupon notify said requesting authority of the time and place for such inspection, which inspection shall be conducted under the supervision of the tax commisioner or his designated agent; or notify the requesting authorities of the reason such request is denied.

Nothing provided herein shall restrict the furnishing of information to the internal revenue service, as provided in section 5747.18 of the Revised Code.

Cite as Ohio Admin. Code 5703-7-07

Effective: 10/9/2015
Five Year Review (FYR) Dates: 07/20/2015 and 10/09/2020
Promulgated Under: 5703.14
Statutory Authority: 5703.14
Rule Amplifies: 5747.18
Prior Effective Dates: 3/15/75

5703-7-08 Deduction of disability and survivorship benefits.

(A) In accordance with division (A) of section 5747.01 of the Revised Code, a taxpayer may deduct, to the extent otherwise included in federal adjusted gross income, the amount of:

(1) Disability benefits received pursuant to a contributory or non-contributory employee disability and survivorship plan; or

(2) Survivor benefits received pursuant to a contributory or non-contributory disability and survivorship plan.

(B) In determining the eligibility of benefits for the deduction under division (A)(4) of section 5747.01 of the Revised Code, the terms of the plan, or the authority creating the plan, under which the benefits at issue are paid shall serve as the sole means of determining their character.

(C) A taxpayer may not deduct:

(1) As disability benefits, any "sick pay" or similar temporary wage and salary continuation payments;

(2) Payments initiated as disability benefits that are deemed retirement benefits, annuities, or distributions when, by virtue of the attained age of the employee or any other cause, the plan no longer deems such benefits as disability benefits, or

(3) As survivorship benefits, any payments received under a plan if the payments are deemed as other than survivorship payments or are authorized to be paid without the death of a covered employee as a pre-condition.

Replaces: 5703-7-08

Cite as Ohio Admin. Code 5703-7-08

Effective: 10/9/2015
Five Year Review (FYR) Dates: 10/09/2020
Promulgated Under: 5703.14
Statutory Authority: 5703.14
Rule Amplifies: 5747.01(A)
Prior Effective Dates: 11/24/75

5703-7-09 Taxpayers reporting of school district of residence.

Pursuant to Section 5747.04 of the Revised Code, each taxpayer, required by Chapter 5747. of the Revised Code to file an annual Ohio income tax return, shall indicate thereon the public school district in which the taxpayer resided during the taxable year for which the return is filed.

The appropriate public school district shall be indicated using the number for such public school district as designated by the tax commissioner and reflected in the instructions to the return.

Taxpayers who file a joint return but reside in different public school districts shall report the public school district of the spouse earning the majority of the income.

Taxpayers who moved from one location in Ohio to another location in Ohio during the year shall indicate the public school district in which they resided when the majority of income was earned.

Taxpayers who moved into or out of Ohio during the year shall indicate the public school district in which they resided while in Ohio.

Taxpayers who were not residents of Ohio during the year shall indicate such nonresidence in accordance with the instructions to the return.

Cite as Ohio Admin. Code 5703-7-09

Effective: 9/29/2016
Five Year Review (FYR) Dates: 06/29/2016 and 09/29/2021
Promulgated Under: 119.03
Statutory Authority: 5703.05
Rule Amplifies: 5747.04
Prior Effective Dates: 9-15-76

5703-7-10 Withholding on supplemental compensation for Ohio individual income tax purposes.

Withholding agents shall use a flat rate percentage of at least three and one-half per cent for withholding on supplemental compensation such as bonuses, commissions, and other nonrecurring types of payments other than salaries and wages.

Cite as Ohio Admin. Code 5703-7-10

(former TX-47-10); Eff 5-26-84; 7-1-87
Rule promulgated under: RC 5703.14
Rule authorized by: RC 5703.05
Rule amplifies: RC 5747.06

5703-7-12 [Rescinded] Release of information for the collection of overdue or overpaid child support.

Cite as Ohio Admin. Code 5703-7-12

Effective: 9/29/2016
Five Year Review (FYR) Dates: 06/29/2016
Promulgated Under: 119.03
Statutory Authority: 5703.05
Rule Amplifies: 5747.121, 5747.123
Prior Effective Dates: 11-11-04

5703-7-13 State income tax refund offsets; portion of joint refund not belonging to obligor or recipient.

(A) Refunds of income taxes under Chapter 5747. of the Revised Code are subject to offset under sections 5747.12, 5747.121, 5747.122 and 5747.123 of the Revised Code. The tax commissioner will identify those taxpayers due a refund who are subject to such offset based upon information provided by any state or federal agency.

The commissioner will immediately disburse the refunds of those taxpayers to the appropriate fund or agency, to the extent they do not exceed the outstanding balance to be collected by such offset, and except as provided in paragraph (B) of this rule. Any remaining portion of the tax refunds will be paid to the taxpayer.

(B)

(1) A "liable spouse" is a taxpayer, included on a jointly filed individual income tax return, who is liable for a debt under sections 5747.12, 5747.121, 5747.122 and 5747.123 of the Revised Code. A "non-liable spouse" is a taxpayer, included on a jointly filed individual income tax return, who is not liable for a debt under sections 5747.12, 5747.121, 5747.122, and 5747.123 of the Revised Code.

(2) In the case of taxpayers who file joint returns, where one taxpayer is a liable spouse and one taxpayer is a non-liable spouse, only the portion of the refund belonging to the liable spouse is subject to the offset under paragraph (A) of this rule. The burden is on the taxpayers to prove that a portion of the refund is not subject to offset based on the information shown on the taxpayers' joint income tax return and the attachments thereto.

(3) The commissioner will notify the taxpayers that they have twenty-one days from receipt of the notice to prove the portion of the taxpayers' refund not subject to offset by utilizing the following calculation:

(a) Step 1: The taxpayer shall compute the ratio of the non-liable spouse's portion of the taxpayers' Ohio adjusted gross income to the total Ohio adjusted gross income as reporting for the tax year at issue. In computing this amount, the taxpayer shall utilize only those adjustments contained in division (A) of section 5747.01 of the Revised Code related to the income included in the non-liable spouse's portion of federal adjusted gross income.

(b) Step 2: The taxpayer shall multiply the taxpayers' total tax liability prior to applying any payments or withholding, by the ratio obtained in step 1.

(c) Step 3: The taxpayer shall subtract the product obtained in step 2 from the portion of all payments, including withholdings and estimated payments, belonging to the non-liable spouse.

(4) If the taxpayers have provided a calculation under paragraph (B)(3) of this rule, the commissioner shall review the calculation.

(a) If the commissioner concurs, the offset under paragraph (A) of this rule will not include any amounts due to the non-liable spouse. The commissioner will immediately disburse such portion of the refund belonging to the liable spouse to the appropriate fund or agency.

(b) If the commissioner does not concur, the commissioner will notify the taxpayers and provide a revised calculation. The notice will advise them that they have twenty-one days from receipt of the notice to:

(i) For amounts subject to offset under section 5747.12 of the Revised Code, submit any additional documentation to refute the revised calculation;

(ii) For amount subject to offset under sections 5747.121, 5747.122, and 5747.123 of the Revised Code, file a complaint with the commissioner concerning the revision, along with an optional request for a hearing.

(5) If the taxpayers submit additional documentation pursuant to paragraph (B)(4)(b)(i) of this rule, the commissioner shall review the documentation and make any necessary adjustments. If the taxpayers file a complaint pursuant to paragraph (B)(4)(b)(ii) of this rule, the commissioner shall proceed according to the relevant statutory provisions. Otherwise, the commissioner's revised calculation will be substituted for that of the taxpayers. The commissioner will then make any disbursements in the same manner as under paragraph (A) of this rule.

(6) If no such proof or review request is submitted within the time specified, the full refund will be subject to offset under a paragraph (A) of this rule.

(C) For purposes of this rule, notices sent by the commissioner by ordinary mail are rebuttably presumed to be received by the taxpayers seven days after the mailing thereof.

(D) Nothing in this rule shall be construed to limit any subsequent corrections, assessments, or refunds within the applicable statutes of limitation.

Replaces: 5703-7-13 and 5703-7-14

Cite as Ohio Admin. Code 5703-7-13

Effective: 9/29/2016
Five Year Review (FYR) Dates: 09/29/2021
Promulgated Under: 119.03
Statutory Authority: 5703.05
Rule Amplifies: 5747.121, 5747.123
Prior Effective Dates: 1/10/87, 11/11/04, 3/21/06

5703-7-14 Income tax refund offset; portion of joint refund due to obligor's spouse. [Rescinded].

Rescinded eff 11-11-04

5703-7-15 Income tax; withholding; corporate officer liability.

(A) Pursuant to division (G) of section 5747.07 of the Revised Code, a person is personally liable for an employer's responsibility to file returns and make payments required under section 5747.07 of the Revised Code, if the employer is a corporation, limited liability company, or business trust and either:

(1) The person is an employee with control or supervision over, or charged with the responsibility of, filing the required returns or making the required payments; or

(2) The person is an officer, member, manager, or trustee responsible for the execution of the employer's fiscal responsibilities.

(B)

(1) Pursuant to section 5747.453 of the Revised Code, a person is personally liable for a qualifying entity's responsibility to file returns and make payments required under sections 5747.40 to 5747.453 of the Revised Code, if either:

(a) The person is an employee of, investor in, or beneficiary of the qualifying entity with control or supervision over, or charged with the responsibility of, filing the required returns or making the required payments; or

(b) The person is an officer, member, manager, or trustee of the qualifying entity responsible for the execution of the qualifying entity's fiscal responsibilities.

(2) An investor or beneficiary with an indirect or constructive interest in a qualifying entity is personally liable for the responsibilities described in section 5747.453 of the Revised Code if such investor or beneficiary otherwise meets the requirements for personal liability under that section.

(C) For the purposes of this rule and sections 5747.07 and 5747.453 of the Revised Code:

(1) The term "person" specifically contemplates non-individuals.

(2) A person has "control or supervision" over filing the required returns and making the required payments if either:

(a) The person directly or indirectly supervises or manages any person described in paragraph (C)(3) of this rule; or

(b) The person has direct or indirect authority over any person described in paragraph (C)(3) of this rule.

(3) A person is "charged with the responsibility" of filing the required returns and making the required payments if any of the following apply:

(a) The person is statutorily or contractually responsible for the preparation and/ or filing of the required returns and/or transmission of the required payments;

(b) The person signs and/or submits any required Ohio tax filing or payment;

(c) The person retains, directs, or consults with any outside persons who are charged with filing and remitting the required Ohio tax returns and payments;

(d) The person performs the duties required under section 5747.06 or 5747.41 of the Revised Code, or performs any other payroll or withholding functions, for the employer or qualifying entity;

(e) The person has the direct or delegated authority to sign checks or initiate electronic funds transfers on behalf of the employer or qualifying entity; or

(f) The person's position is one that would ordinarily be responsible for any fiscal duty, including but not limited to those listed in this paragraph, even if the person does not actually participate in or supervise said duty.

(4) A person is "responsible for the execution of the employer or qualifying entity's fiscal responsibilities" if any of the following apply:

(a) The person is statutorily or contractually responsible for the financial affairs of the employer or qualifying entity;

(b) The person performs any of the duties or functions, or has any of the authority, described in paragraph (C)(2) or (C)(3) of this rule; or

(c) The person delegates, or has the power to delegate, any of the duties or functions described in paragraph (C)(2) or (C)(3) of this rule to any other person.

(5) Performance of any duty by either electronic and non-electronic means, or both, is contemplated.

(D)

(1) Nothing in this rule or Chapter 5747. of the Revised Code shall be construed to limit the number of persons derivatively liable for the taxes described in paragraphs (A) and (B) of this rule.

(2) If more than one person described in paragraph (A) or (B) of this rule is personally liable for any unpaid liability, their liabilities shall be joint and several.

(E) The provisions of this rule are not exclusive or exhaustive. The commissioner may use any relevant evidence to establish the personal liability of any person for an unpaid tax liability under either section 5747.07 or 5747.41 of the Revised Code.

Cite as Ohio Admin. Code 5703-7-15

Effective: 10/23/2017
Five Year Review (FYR) Dates: 10/23/2022
Promulgated Under: 119.03
Statutory Authority: 5703.05
Rule Amplifies: 5747.07
Prior Effective Dates: 9/20/92

5703-7-16 Personal income tax: determination of resident status.

(A) The following factors shall not be considered in making a determination of an individual's domicile under division (B), (C) or (D) of section 5747.24 of the Revised Code:

(1) The location of financial institutions in which the individual or the individual's spouse have any accounts, including, but not limited to, checking, savings, certificates of deposit, or individual retirement accounts.

(2) The location of issuers of credit cards to the individual or the individual's spouse or any other persons making installment loans to the individual or the individual's spouse.

(3) The location of institutional lenders which have made loans to or loans which are guaranteed by the individual or the individual's spouse.

(4) The location of investment facilities, brokerage firms, realtors, financial advisors or consultants used by the individual or the individual's spouse.

(5) The location of either the insurance company that issued or the insurance agent that sold any policy of insurance to the individual or the individual's spouse including, but not limited to, life, health, disability, automobile, or homeowner's insurance.

(6) The location of law firms, accounting firms, and similar professionals utilized by the individual or the individual's spouse for legal, tax, accounting, financial, or retirement services.

(7) The location of physicians, dentists, osteopaths, optometrists, or other health care providers, or veterinarians utilized by the individual or the individual's spouse.

(8) The location of organizations described in section 501(c) of the Internal Revenue Code, except organizations described in paragraphs (2), (7), and (10) of that section, to which the individual or the individual's spouse make contributions or other payments or in which they participate as a congregant, member, board member, committee member, adviser, or consultant provided that participation does not exceed attendance at more than twelve meetings or functions of any one such organization during a calendar year.

(9) The location of funeral facilities or the burial plot of the individual or the individual's spouse.

(10) The location of business ventures or business entities in which the individual or the individual's spouse hold board membership unless the individual or the individual's spouse exercise significant control, either individually or jointly, over the affairs of the entity. An individual or individual's spouse exercises significant control, either jointly or individually, over the affairs of a corporation if he or she owns more than five percent of the stock in or five percent of the value of such corporation including constructive ownership as defined in section 1563(e) of the Internal Revenue Code. An individual or individual's spouse exercises significant control, either individually or jointly, over the affairs of a partnership or limited liability company or other business entity or business venture if he or she owns more than a five percent interest in the capital or profits of the partnership, limited liability company, or other business entity or business venture applying constructive ownership principles parallel to those in section 1563(e) of the Internal Revenue Code.

(11) The location, place of business, or place of organization or incorporation of a corporation, partnership, limited liability company, or other business entity or business venture in which the individual or the individual's spouse is a shareholder or limited partner unless the individual or the individual's spouse exercises significant control, either individually or jointly, over the affairs of the corporation, partnership, limited liability company, or other business entity or business venture as defined in paragraph (A)(10) of this rule.

(12) The recitation of residency or domicile in a will, trust, or other estate planning document.

(13) The location of the individual's friends, dependents as defined in section 152 of the Internal Revenue Code, and family members other than his or her spouse, if not legally separated from his or her spouse under a decree of divorce or separate maintenance as provided in section 7703(a)(2) of the Internal Revenue Code.

(14) The location of educational institutions attended by the individual's dependents as defined in section 152 of the Internal Revenue Code, unless those dependents pay tuition at that educational institution based on the residency of the individual or the individual's spouse in the state where the educational institution is located.

(15) The location of trustees, executors, guardians, or other fiduciaries named in estate planning documents of the individual or the individual's spouse.

(16) The location of a business at which the individual or the individual's spouse makes purchases of tangible personal property.

(17) The location where the individual married.

(18) The location or identity of recipients of political contributions made by the individual or the individual's spouse.

(B) The following factors may be considered in making a determination of an individual's domicile under division (B), (C) or (D) of section 5747.24 of the Revised Code:

(1) The number of contact periods (determined under paragraph (C) of this rule) which the individual has in Ohio.

(2) The individual's activities in tax years other than the tax year or years at issue.

(3) Any other fact the tax commissioner deems relevant, excepting those set forth in paragraph (A) of this rule.

(C)

(1) If the tax commissioner challenges the number of contact periods an individual claims to have in this state during a taxable year, the individual bears the burden of proof to verify such number, by a preponderance of the evidence. An individual challenged by the tax commissioner is presumed to have a contact period in this state for any period for which he or she does not prove by a preponderance of the evidence that he or she had no such contact period.

(2) An individual can support his or her claim of the number of contact periods in this state by oral or written statements or by writings or recordings. The absence of writings or recordings shall not prevent the individual from supporting his or her claims of the number of contact periods and meeting the individual's burden of proof, but such evidence shall be subject to review for veracity and credibility for determining whether the individual has met the burden of proof.

(3) The tax commissioner can request that any statement offered by the individual be made under penalty of perjury, and any such statement which the individual cannot or will not make under penalty of perjury shall be given no weight and shall not be considered by the tax commissioner as evidence which would otherwise allow the individual to meet or help meet the individual's burden of proof.

(D) If the tax commissioner challenges the number of contact periods an individual claims to have in this state during the taxable year, the type of writings or recordings that an individual can submit to support a claim that he or she did not have a contact period or contact periods in this state includes, but are not limited to, the following:

(1) Credit card or cash receipts;

(2) Personal diaries, calendars or expense reports for business travel;

(3) Written statements of the individual or others having knowledge of the facts;

(4) Mail forwarding;

(5) Transportation tickets or receipts, travel vouchers, logs of airplanes, yachts, or other means of transportation;

(6) Personal checks;

(7) Payroll records;

(8) Evidence of use of club facilities;

(9) Utility shut-off, disconnect statements, or bills;

(10) Photographs and videotape;

(11) Health care practitioner statements;

(12) Attendance records of schools;

(13) Minutes of meetings of any business or other organization;

(14) Voting records and other public records;

(15) Armed services records; and

(16) Any other writings or recordings tending to show the physical whereabouts of the individual.

(E) As used in this rule, "Internal Revenue Code" means the "Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended.

Cite as Ohio Admin. Code 5703-7-16

Effective: 11/5/2016
Five Year Review (FYR) Dates: 08/12/2016 and 11/05/2020
Promulgated Under: 119.03
Statutory Authority: 5703.05
Rule Amplifies: 5747.01, 5747.24, 5747.25, 5748.01
Prior Effective Dates: 12-31-93

5703-7-17 [Rescinded] Credit against individual income tax if Ohio adjusted gross income less exemptions is ten thousand dollars or less.

Cite as Ohio Admin. Code 5703-7-17

Effective: 9/29/2016
Five Year Review (FYR) Dates: 06/29/2016
Promulgated Under: 119.03
Statutory Authority: 5703.05
Rule Amplifies: 5747.056
Prior Effective Dates: 03/21/2006

5703-7-18 Nonresident married filing jointly.

(A) For purposes of this rule a "non-liable MFJ spouse" is an individual who for the taxable year meets all the requirements in paragraphs (A)(1) to (A)(3) of this rule.

(1) The individual's filing status for federal income tax purposes is "married filing jointly;"

(2) For purposes of Chapters 5747. and 5748. of the Revised Code, the individual is a full-year nonresident of this state; and

(3) The individual did not directly, or indirectly on account of either (or both) an equity investment in a pass-through entity or a distribution from a trust, earn or receive income which, for purposes of computing the nonresident credit allowed by division (A) of section 5747.05 of the Revised Code, would be apportioned or allocated to this state under sections 5747.20 to 5747.231 of the Revised Code.

(B) Section 5747.08 of the Revised Code requires that an individual's filing status for the taxable year for Ohio personal income tax purposes and for school district income tax purposes be the same as the individual's filing status for federal income tax purposes (Title 26 of the United States Code) for that taxable year. As such, each individual whose filing status for federal income tax purposes is "married filing jointly" for the taxable year must use the "married filing jointly" status for that taxable year for both Ohio personal income tax purposes and school district income tax purposes. This requirement applies even if one or both of the "married filing jointly" taxpayers are full-year nonresidents of Ohio.

(C)

(1)

(a) Except as set forth in paragraph (C)(1)(c) of this rule, when computing Ohio adjusted gross income less exemptions, no individual is allowed a deduction for any item of income or gain unless division (A) of section 5747.01 of the Revised Code expressly provides for the deduction.

(b) Nothing in division (A) of section 5747.01 of the Revised Code allows a deduction for income or gain of a non-liable MFJ spouse solely because such income or gain is neither earned nor received in this state.

(c) Paragraph (C)(1)(a) of this rule does not apply to military service compensation described in the Servicemembers Civil Relief Act of 2003, 50 U.S.C. 501 (hereineafter, "Servicemembers Act") as it existed on November 1, 2006. Pursuant to that act a nonresident, when computing Ohio adjusted gross income less exemptions, can deduct such compensation.

(2) All items of income and gain which are not allowed as a deduction under division (A) of section 5747.01 of the Revised Code, and all compensation which is not deducted pursuant to the Servicemembers Act, will enter into the computation of the nonresident credit. Paragraph (C)(2) of this rule applies even if the items and compensation are those of a non-liable MFJ spouse.

(D)

(1) The non-liable MFJ spouse shall not be liable for any tax, interest penalty, or penalty due for the taxable year by the spouse of the non-liable MFJ spouse.

(2) The non-liable MFJ spouse shall not be required to sign the personal income tax return or the school district income tax return required to be filed for the taxable year by the spouse of the non-liable MFJ spouse.

(3) The non-liable MFJ spouse shall not be required to file the personal income tax return or the school district income tax return required to be filed for the taxable year by the spouse of the non-liable MFJ spouse.

(E) Paragraphs (E)(1), (E)(2), and (E)(3) of this rule each set forth an example illustrating the application of this rule.

(1) H and W are a married couple with no dependents. H is a full-year resident of Ohio with wages of $40,000 earned in this state. W is a full-year resident of Pennsylvania with wages of $60,000 earned in that state. They have no other sources of income. They file a joint federal income tax return reporting federal adjusted gross income of $100,000.

H is liable for Ohio tax, both as a resident of this state and as an individual with income earned or received from sources within this state. Since H and W filed a joint federal income tax return, H must compute tax beginning with the $100,000 joint federal adjusted gross income. Accordingly, H must calculate Ohio income tax on $100,000 less the deduction allowed under section 5747.025 of the Revised Code for two personal exemptions. H can then reduce the tax so calculated by two exemption credits allowed by section 5747.022 of the Revised Code and then reduce the net amount by the joint filing credit allowed by division (G) of section 5747.05 of the Revised Code. From that second net amount H can then claim, under division (A) of section 5747.05 of the Revised Code, the nonresident credit. In this example the nonresident credit will be sixty per cent ($60,000/$100,000) of the Ohio income tax after reduction for the exemption credit and for the joint filing credit. The remaining forty per cent of the calculated Ohio income tax after reduction for the exemption credit and for the joint filing credit is the net Ohio income tax that H owes before reduction for refundable credits such as estimated tax payments made.

Because for the taxable year W meets the definition of "non-liable MFJ spouse" set forth in paragraph (A) of this rule, W is not liable for any Ohio income tax and related interest, interest penalty, or penalty due for that taxable year; W is not required to sign the Ohio "married filing jointly" income tax return, and W is not required to file the Ohio "married filing jointly" income tax return (but H is required to sign and file the Ohio "married filing jointly" income tax return).

(2) H and W, a married couple with no dependents, are both full-year residents of a state other than Ohio. They are rental property owners in that state and earn profits from their rental activities of $50,000 and $30,000, respectively. W is also a limited partner in a partnership conducting business in Ohio (assume the partnership's property, payroll, and sales Ohio apportionment ratio is .500000). For the taxable year W has a $20,000 distributive share of ordinary income from the limited partnership. Other than H's profit from rental properties located outside Ohio, H has no other sources of income. H's and W's filing status for federal income tax purposes for the year is married filing jointly. They have no other income and no adjustments to gross income; so, their adjusted gross income for federal income tax purposes is $100,000.

Because W has a distributive share of income from a pass-through entity doing business in Ohio, W is liable for Ohio's personal income tax. Since H and W filed a joint federal income tax return, W must compute tax beginning with the $100,000 joint federal adjusted gross income. Accordingly, W must calculate Ohio income tax on $100,000 less the deduction allowed under section 5747.025 of the Revised Code for two personal exemptions. W can then reduce the tax so calculated by two exemption credits allowed by section 5747.022 of the Revised Code. From that net amount W can then claim, under division (A) of section 5747.05 of the Revised Code, the nonresident credit. For purposes of computing the nonresident credit, only $10,000 of W's $20,000 distributive share of partnership income is apportioned to Ohio; so, the nonresident credit will be ninety per cent ($90,000/$100,000) of the Ohio income tax after reduction for the exemption credit. The remaining ten per cent of the calculated Ohio income tax after reduction for the exemption credit is the net Ohio income tax that W owes before reduction for refundable credits such as estimated tax payments made.

Because for the taxable year H meets the definition of "non-liable MFJ spouse" set forth in paragraph (A) of this rule, H is not liable for any Ohio income tax and related interest, interest penalty, or penalty due for that taxable year; H is not required to sign the Ohio "married filing jointly" income tax return, and H is not required to file the Ohio "married filing jointly" income tax return (but W is required to sign and file the Ohio "married filing jointly" income tax return).

(3) For the taxable year immediately preceding the current taxable year, H and W were full-year residents of Ohio. At some time during the current taxable year W, but not H, leaves Ohio and establishes residency in another state. Meanwhile, H continues to reside full-time in Ohio. For the current taxable year their federal income tax return shows the following:

Their filing status is married filing jointly and they have no dependents. H has wages of $25,000 earned in Ohio. W has wages of $20,000 earned in Ohio (prior to establishing residency in the other state) and wages of $30,000 earned in the other state (subsequent to establishing residency in the other state). W also has $10,000 of long-term capital gain from the sale of publicly-traded securities (the sale occurred prior to W's establishing residency in the other state) and has $15,000 of long-term capital gain from the sale of publicly-traded securities (the sale occurred subsequent to W's establishing residency in the other state). They have no other items of income or deductions, so their federal adjusted gross income and their Ohio adjusted gross income is $100,000.

For the taxable year H and W must file an Ohio income tax return and indicate a filing status of married filing jointly. They must enter on line 1 of their Ohio form IT-1040 for the taxable year the "married filing jointly" adjusted gross income of $100,000 as shown on their federal income tax return. They can claim two personal exemption deductions and the credit allowed by sections 5747.025 and 5747.022 of the Revised Code, respectively. They then can claim the joint filing credit allowed by division (G) of section 5747.05 of the Revised Code. With respect to the income W earned after establishing residency in another state and with respect to the capital gain W recognized after establishing residency in another state, H and W can claim the nonresident credit allowed by division (A) of section 5747.05 of the Revised Code. In this example the nonresident credit will be forty-five per cent ([$15,000 + $30,000]/$100,000) of the Ohio income tax after reduction for the exemption credit and for the joint filing credit.

Because for the taxable year neither W nor H meets the definition of "non-liable MFJ spouse" set forth in paragraph (A) of this rule, W are H are jointly and severally liable for any Ohio income tax and related interest, interest penalty, or penalty due. W and H are both required to sign the Ohio income tax return, and they are both required to file the "married filing jointly" Ohio income tax return.

Cite as Ohio Admin. Code 5703-7-18

Effective: 03/17/2007
R.C. 119.032 review dates: Exempt
Promulgated Under: 5703.14
Statutory Authority: 5703.05
Rule Amplifies: 5747.01, 5747.02, 5747.022, 5747.05, 5747.08

5703-7-19 All employer withholding and school district employer withholding taxpayers must file and pay electronically.

(A) Except as provided in paragraph (B) of this rule, effective January 1, 2015, each person required to file employer income tax withholding returns and school district employer income tax withholding returns shall file such returns and remit such payments of the tax liability as follows:

(1) The returns shall be filed electronically using the Ohio business gateway as defined in section 718.051 of the Revised Code or by any other electronic means prescribed by the tax commissioner.

(2) The payment for employer income tax withholding shall be made electronically using Ohio business gateway as defined in section 718.051 of the Revised Code, by the manner prescribed by rules adopted by the treasurer of state under section 113.061 of the Revised Code, or by any other electronic means prescribed by the commissioner.

(3) The payment for school district employer income tax withholding shall be made electronically using Ohio business gateway as defined in section 718.051 of the Revised Code or by any other electronic means prescribed by the commissioner.

(B)

(1) Any person may apply to the commissioner to be excused from the requirement to file and pay electronically under paragraph (A) of this rule as authorized pursuant to division (D) of section 5703.059 of the Revised Code. If a form is prescribed by the commissioner for such purpose, which shall be posted on the department of taxation's web site, the person shall complete such form.

(2) The commissioner will notify the person in writing of the commissioner's decision. Unless an earlier date is specified in the notice, the excuse shall continue to apply until revoked in writing by the commissioner. The denial or revocation of an excuse under this paragraph is not a final determination of the commissioner and is not subject to further appeal.

(3) Nothing in this rule affects any person's obligation to timely file all returns and timely pay all amounts required by Chapter 5747. of the Revised Code.

Cite as Ohio Admin. Code 5703-7-19

Effective: 11/13/2014
Five Year Review (FYR) Dates: 11/13/2019
Promulgated Under: 5703.14
Statutory Authority: 5703.05
Rule Amplifies: 5703.059

5703-7-20 Electronic software providers; approval and suspension.

(A) For purposes of this rule, "electronic software provider" means any of the following:

(1) An electronic return originator (ERO);

(2) An intermediate service provider;

(3) A software developer;

(4) A transmitter;

(5) A vendor of tax return preparation software or other electronic software product used in the preparation of tax related forms; or

(6) Any other person reasonably determined by the commissioner to effectuate the electronic preparation of tax returns.

(B) In fulfillment of the authority and duties established under sections 5703.05, 5703.054, 5703.059 and 5747.082 of the Revised Code to authorize an electronic form of filing of any document required to be filed with the commissioner and to determine the acceptability of electronic technology, the commissioner may approve an electronic software provider for participation in the commissioner's electronic filing programs who substantially meets the following criteria:

(1) Files the electronic software provider letter of intent form or other submissions prescribed by the commissioner no later than November fifteenth of the year prior to the tax year for which the letter of intent is being filed;

(2) Provides evidence of approval as a registered vendor / accepted participant with the internal revenue service; and

(3) Passes electronic software tests prescribed by the commissioner no later than January thirty-first of the tax year for which the letter of intent is being filed. The commissioner shall post these tests on the department's website no later than December first of the year prior to the tax year for which the letter of intent is being filed.

(C) Once the commissioner approves an electronic software provider, the commissioner may rescind the approval for or suspend the electronic filing privilege of any electronic software provider who varies from the requirements, specifications, and procedures stated in this rule and (or) who has demonstrated poor business practices that could include the following:

(1) Poor software performance or quality;

(2) Unacceptable format quality of individual transmissions;

(3) Conviction of any criminal offense arising from a violation of the Ohio Revised Code or the laws of the United States relating to federal income taxes, or any offense involving dishonesty or breach of trust;

(4) Violation of any provision in Chapter 57. of the Revised Code relating to tax preparers;

(5) Failure to file timely and accurate tax returns, both business and personal;

(6) Failure to pay personal or business tax liabilities;

(7) Suspension or disbarment from practice before the internal revenue service;

(8) Unethical practices in return preparation;

(9) Material misrepresentation on an application;

(10) Violation of advertising standards, including those promulgated in Internal Revenue Service Publication 1345, last revised April 2014.

Cite as Ohio Admin. Code 5703-7-20

Effective: 1/10/2015
Five Year Review (FYR) Dates: 01/10/2020
Promulgated Under: 5703.14
Statutory Authority: 5703.05
Rule Amplifies: 5703.054, 5703.059, 5747.082