Chapter 5703-7 Income Tax

5703-7-01 Time for filing annual personal income tax return for person on a fiscal year basis.

A person whose annual accounting period for individual income tax purposes is a fiscal year basis shall file the annual Ohio personal income tax return, provided by section 5747.08 of the Revised Code, on or before the fifteenth day of the fourth month following the close of such fiscal year.

Any penalties or interest for failure to file timely returns or make timely remittance of any tax due under this rule shall begin when such report is due as therein provided.

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
Prior Effective Dates: 2/25/72

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.

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 Filing of partnership nonresident partners income tax returns.

(A) Any partnership having two or more nonresident partners who derive no taxable income from Ohio other than a distributive share of the partnership income, may file a single return on behalf of such partners.

Such return shall set forth the name, address and social security number of each such partner and shall indicate the distributive share of each partner's income taxable in this state together with the number of exemptions to which each partner is entitled.

The tax due with such return shall be paid by a single check drawn by the partnership.

If any such partners are required to file a declaration of estimated tax as provided by Section 5747.09 , Revised Code, such returns and payments may be made by the partnership as provided for the annual return in the preceding three paragraphs.

Such returns shall be filed on or before the fifteenth day of the fourth month following the close of the partnership's fiscal year, or by April 15 if the partnership is on a calendar year basis.

Such returns of a partnership on a fiscal year basis due for a period after December 31, 1971, ending prior to December 31, 1972, shall be required to be filed between January 1, and April 15, 1973.

(B) If the taxable year of a partner is different from that of the partnership, the share of the partnership's income to be reported by the partner shall be based upon the income of the partnership for the taxable year of the partnership ending with or within the partner's taxable year.

(former TX-47-03); Eff 2-25-72
Rule promulgated under: RC 5703.14

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 Federal Income Tax Regulations Sec. 1.6073 -1(b)(2) and (3),may,in lieu of filing the individual declaration of estimated tax as provided by Section 5747.09 , 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, unless request is made to and permission is granted by the Tax Commissioner to file on a different option or method.

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

(1) file declaration of estimated tax returns as provided by Section 5747.09 , 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 15 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.

(former TX-47-04); Eff 4-3-72
Rule promulgated under: RC 5703.14

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

(A) Except as otherwise expressly provided or clearly appearing from the context, any term in this rule has the same meaning as when used in a comparable context in Chapter 5747. of the Revised Code.

As used in this rule:

(1) "Annual return" means the annual return required by section 5747.08 of the Revised Code.

(2) "Unextended due date" means the date prescribed for filing the annual return without extension. For taxpayers whose return is based on a taxable year ending on the last day of December, section 5747.08 of the Revised Code prescribes a due date of the fifteenth day of April of the following year. For taxpayers whose taxable year is a fiscal year, rule 5703-7-01 of the Administrative Code prescribes a due date of the fifteenth day of the fourth month following the close of the fiscal year.

(3) "Tax" includes both the tax imposed by section 5747.02 of the Revised Code and any tax imposed under Chapter 5748. of the Revised Code and the interest penalty imposed by division (D) of section 5747.09 of the Revised Code.

(B)

(1) A taxpayer shall be granted an automatic six-month extension of time for filing the taxpayer's annual return if the taxpayer satisfies both of the following conditions by the unextended due date:

(a) The taxpayer has duly requested an automatic six-month extension of time for filing the taxpayer's federal income tax return;

(b) By the unextended due date for filing the return, the taxpayer has paid at least ninety per cent of the tax through withholding payments, estimated payments, and the crediting of overpayments from the immediately preceding taxable year. Such tax shall be reduced by all allowable credits described in section 5747.98 of the Revsied Code, all allowable credits provided by Chapter 5748. of the Revised Code, and all allowable grants.

(2) In addition to the automatic extension granted in paragraph (B)(1) of this rule, each taxpayer that has been granted an extension of time to file the taxpayer's federal income tax return by the Internal Revenue Service for reasons such as a calamitous act of nature shall have the same extension of time to file, and to make any elections with respect to, the taxpayer's related Ohio income tax return.

(C)

(1) A filing extension granted by paragraph (B)(1) of this rule is to the fifteenth day of the tenth month following the last day to the taxable year. For example, a taxpayer whose unextended due date is the fifteenth day of April is granted a filing extension to the fifteenth day of October;

(2) An extension under paragraph (B) of this rule does not extend the due date for purposes of imposing interest on any tax paid after the due date.

(D) A taxpayer granted a filing extension under paragraph (B) of this rule:

(1) Shall not be subject to the penalty imposed by division (A)(1) of section 5747.15 of the Revised Code for failure to file a timely return if either of the following applies:

(a) The taxpayer files his annual return by the extended due date set forth in paragraph (B) of this rule.

(b) The taxpayer files his annual return at a later date if the taxpayer has secured an approved federal extension to such later date.

(2) Shall not be subject to the penalty imposed under division (A)(2) of section 5747.15 of the Revised Code for failure to make timely payment of tax if both of the following apply:

(a) By the unextended due date, the taxpayer has paid at least ninety per cent of the taxes on the return through withholding payments, estimated payments, and the crediting of overpayments from an earlier tax year;

(b) By the extended due date set forth in paragraph (B) of this rule, or by a later date with an approved federal extension to such later date, the taxpayer has paid one hundred per cent of the tax.

(E) No interest penalty shall be charged under division (D) of section 5747.09 of the Revised Code for the period from the unextended due date until the date of payment. However, interest required under division (G) of section 5747.08 of the Revised Code shall apply to any underpayment of tax and shall run from the unextended due date until the date of payment.

(F) Nothing in this rule shall abate any penalty or interest imposed for failure to pay taxes in a timely manner if, subsequent to the filing of the taxpayer's return, the tax commissioner ascertains that the taxpayer owes taxes in addition to those shown to be due on the taxpayer's return or the taxpayer files an amended return showing additional taxes are due.

(G) This rule does not state the exclusive bases for abatement of penalty, but in all circumstances other than those described in this rule, the taxpayer shall have the burden of proving that the taxpayer's failure to file a return timely or to pay the tax timely resulted from a reasonable cause.

(H) Nothing in this rule precludes a member of the national guard or of a reserve component of the armed forces of the United States from qualifying for an extension under section 5747.026 of the Revised Code for the taxable year.

Effective: 12/28/2006
R.C. 119.032 review dates: Exempt
Promulgated Under: 5703.14
Statutory Authority: 5703.05 , 5747.08
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

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

Under the provisions of Section 5747.18(B) , Ohio Revised Code, it is hereby required that for purposes of withholding the Ohio personal income tax, as required by Section 5747.06 , Ohio Revised Code, Ohio employers and employees shall utilize Ohio Form IT-4.

The number of personal exemptions to which an employee is entitled shall be determined only from a properly completed IT-4, and if such form is not properly completed and filed with the employer, the employer shall withhold the Ohio personal income tax without exemptions.

(former TX-47-06); Eff 12-28-72
Rule promulgated under: RC 5703.14

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

State of Ohio Personal Income tax returns 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 (C) above 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 letter (E) (above), certifying that he is familiar with the confidentiality requirements of the law and the penalties applicable to a breach thereof and 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 bureau of internal revenue, treasury department of the United States as provided in section 5747.18 of the Revised Code.

(former TX-47-07); Eff 3-15-75
Rule promulgated under: RC 5703.14

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

In accordance with Section 5747.01(A) , Revised Code, a taxpayer may deduct, to the extent otherwise included in Federal Adjusted Gross Income, the amount of disability benefits received pursuant to a contributory or non-contributory employee disability and survivorship plan; provided, that the establishment of the employee's permanent or presumed permanent inability to engage in gainful employment for which qualified by training or experience as a result of a physical or mental impairment is a pre-condition to the receipt of such benefits.

A taxpayer may not deduct, as disability benefits, any "sick pay" or similar temporary wage and salary continuation payments, nor any payments received under a plan, regardless of the nature of such plan, if the plan deems such payments to be, or in lieu of, retirement benefits, annuities, or distributions. Payments initiated as disability benefits are deemed retirement benefits, annuities, or distributions, subject to separate Ohio tax treatment, when, by virtue of the attained age of the employee or any other cause, the plan no longer requires the pre-condition of physical or mental impairment for the receipt of such benefits.

In accordance with Section 5747.01(A) , Revised Code, a taxpayer may deduct, to the extent otherwise included in Federal Adjusted Gross Income, the amount of survivor benefits received as a qualified survivor pursuant to a contributory or non-contributory disability and survivorship plan. A taxpayer may not deduct, as survivorship benefits, any payments received under a plan, regardless of the nature of the plan, if such plan deems the payments as other than survivorship payments or authorizes payments without the death of a covered employee as a pre-condition. Annuities, lump sum settlements, retirement payments, or other similar benefits received by a beneficiary under an option or election made by an employee and commencing upon such employee's death, are not deductible as survivor benefits, but are deemed retirement benefits subject to separate Ohio tax treatment.

(former TX-47-08); Eff 11-24-75
Rule promulgated under: RC 5703.14

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

Pursuant to Section 5747.04 of the Revised Code, as amended by Am. Sub. S.B. No. 170 of the 111th General Assembly and the decision inState, ex rel. Akron Edn. Assn. v. Essex,47 Ohio St. 2d 47 (July 14, 1976), each taxpayer required by Chapter 5747., Revised Code, to file an annual Ohio income tax return shall indicate thereon the public school district in which the taxpayer resides.

The appropriate public school district shall be indicated on the return by the taxpayer by the use of a 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.

Resident taxpayers who have 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.

Partial year taxpayers who have moved into or out of Ohio during the year shall indicate the Ohio 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.

(former TX-47-09); Eff 9-15-76
Rule promulgated under: RC 5703.14

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.

(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 Release of information for the collection of overdue or overpaid child support.

At the request of the department of job and family services in connection with the collection pursuant to sections 3123.821 and 5747.121 of the Revised Code of overdue child support from obligors, or the collection pursuant to sections 3123.821 and 5747.123 of the Revised Code of overpaid child support from recipients, the tax commissioner shall release to that department the name, home address, and social security number of any obligor or recipient with a refund of paid state income taxes from which such child support may be collected.

(former TX-47-12); Eff 7-24-86; 7-1-87; Replaces: 5703-7-12, eff. 11-11-04
Rule promulgated under: RC 5703.14
Rule authorized by: RC 5703.05
Rule amplifies: RC 5747.121
R.C. 119.032 review dates: Exempt

5703-7-13 State income tax refund offsets to collect overdue child support from obligors and overpaid child support from recipients; portion of joint refund not belonging to obligor or recipient.

(A) Refunds of income taxes under Chapter 5747. of the Revised Code, after application of section 5747.12 of the Revised Code, are subject to offset under section 5747.121 of the Revised Code to collect overdue child support from obligors and under section 5747.12 3 of the Revised Code to collect overpaid child support from recipients. The tax commissioner will identify those taxpayers due a refund who are subject to such offset based upon information provided by the department of job and family services.

The refunds of those taxpayers will be deposited into the child support intercept special account in the case of obligors, or sent to the department of job and family services in the case of recipients, to the extent the refunds do not exceed the outstanding balance to be collected by such offset. Any remaining portion of the tax refunds will be paid to the taxpayers. The commissioner will immediately make such payments except as provided in paragraph (B) of this rule.

(B)

(1) In the case of taxpayers who file joint returns, only the portion of the refund belonging to the obligor or recipient 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 does not belong to the obligor or recipient. The commissioner will notify the taxpayers by ordinary mail that they have twenty-one days from receipt of the notice to provide such proof. The proof must include a calculation of the portion of the refund due each taxpayer. In making the calculation, the taxpayers shall utilize information shown on their joint income tax return and the attachments thereto, and they shall be guided by the principles set forth in appropriate federal revenue rulings. If no such proof is submitted within the twenty-one day period, the full refund will be subject to offset under paragraph (A) of this rule.

(2) If the taxpayers have provided a calculation under paragraph (B)(1) of this rule and the commissioner concurs, the offset under paragraph (A) of this rule will be applied solely to that portion of the refund shown by the calculation as belonging to the obligor or recipient, and any remaining portion of the refund not required to be deposited into the child support intercept special account or sent to the department of job and family services in accordance with paragraph (A) of this rule will be refunded to the taxpayers. The commissioner will immediately make such payments.

(3) If the taxpayers have provided a calculation under paragraph (B)(1) of this rule and the commissioner does not concur, the commissioner will notify the taxpayers by ordinary mail of the commissioner's revised calculation. The notice will advise them that they have twenty-one days from receipt of the notice to file a complaint with the commissioner concerning the revision, and that they may include in their complaint a request for a hearing. If the taxpayers do not file such complaint within the twenty-one day period, the commissioner's revised calculation will be substituted for that of the taxpayers, and the commissioner will proceed in the same manner as under paragraph (B)(2) of this rule.

(4) If the taxpayers timely file a complaint under paragraph (B)(3) of this rule, the commissioner will review the complaint. If a hearing has been requested, the commissioner will schedule one and notify the taxpayers of the date, time, and location. The hearing is solely to present evidence on whether the commissioner's revised calculation is correct. Subsequent to the hearing, the commissioner will make any further correction as the commissioner deems proper and issue a final determination. A copy of the final determination will be served on the taxpayers personally or by certified mail. The taxpayers may appeal the commissioner's final determination as provided in section 5717.02 of the Revised Code. The commissioner will not make any offset or payment on the refund until sixty days after all administrative and judicial remedies provided by law have been exhausted. At that time, the revised calculation, as finally determined, will be substituted for that of the taxpayers, and the commissioner will proceed in the same manner as under paragraph (B)(2) 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.

(former TX-47-13); Eff 1-10-87; Replaces: former 5703-7-13 and 5703-7-14, eff. 11-11-04
Rule promulgated under: RC 5703.14
Rule authorized by: RC 5703.05
Rule amplifies: RC 5747.121
R.C. 119.032 review dates: Exempt

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) As used in this rule and in division (F) of section 5747.07 of the Revised Code:

(1) "Officer" or "corporate officer" means the president, vice-president, treasurer, secretary, chief executive officer of a corporation, or any person holding a similar title or position in a corporation or business trust. Any person who holds an ownership interest in a corporation or beneficial interest in a business trust and performs any of the functions specified in paragraphs (C) through (H) of this rule shall be deemed an officer. In the case of an affiliated group of corporations, as that term is defined in paragraph (A)(10) of rule 5703-9-46 of the Administrative Code, any officer of one corporation in that group that performs any of the functions listed in paragraphs (C) through (H) of this rule for another corporation in the group shall be deemed an officer of that corporation.

(2) "Employee" means a person who works for a corporation or business trust, whether for pay or not. An employee may also be an officer of a corporation or business trust.

(3) "Trustee" means any person responsible for the management, administration or control of a business trust.

(4) "Business trust" has the same meaning as in division (A) of section 1746.01 of the Revised Code.

(B) The officers, employees, or trustees of a corporation or business trust that fails to file returns or reports or pay taxes required to be filed and paid under section 5747.07 of the Revised Code, are liable for the unpaid liability of the corporation or trust under the conditions defined in paragraphs (C) through (H) of this rule. Personal liability may be assessed as provided in section 5747.13 of the Revised Code.

(C) An officer or trustee is personally liable for the withholding tax liability, including tax, penalty, and interest, of a corporation or business trust as provided in division (F) of section 5747.07 of the Revised Code if the officer or trustee was responsible for the execution of the corporation's or trust's fiscal responsibilities on the date on which the return or report for the period is filed or is required to be filed, whichever is earlier. A person has demonstrated responsibility for the execution of the corporation's or trust's fiscal responsibilities if any of the following apply:

(1) The officer or trustee signs any return or report required by section 5747.07 of the Revised Code or prepares and submits without signing any return or report required by that section;

(2) The officer or trustee signs or prepares and submits without signing any other tax returns required by the laws of this state or any of its subdivisions or the Internal Revenue Code of the United States unless the officer or trustee can provide sufficient evidence to establish that the corporation or trust divided the responsibility for filing of tax returns in such a manner that the responsibility for filing reports required by section 5747.07 of the Revised Code was assigned explicitly to another officer or trustee;

(3) The officer or trustee exercises management control or authority over employees whose duties include the preparation, signing, or filing of returns or reports described in paragraph (C)(1) or (C)(2) of this rule;

(4) The officer or trustee retains, directs or otherwise exercises control over outside accountants, bookkeepers, or other persons who are charged with filing returns or reports required under section 5747.07 of the Revised Code on behalf of the corporation or business trust;

(5) The officer or trustee exercises authority to sign checks or authorizes the use of his signature stamp or facsimile to sign checks, drawn on the corporation's or trust's accounts, in payment of tax liabilities;

(6) The officer or trustee determines priorities by which the corporation's or trust's creditors are paid instead of the state. A payment to a creditor in the form of an in-kind distribution of corporate or trust assets is a payment for purposes of this paragraph;

(7) The officer or trustee uses or manages taxes withheld by the corporation or business trust as required by division (A) of section 5747.06 of the Revised Code and held by the corporation or business trust in trust for the benefit of the state;

(8) The officer or trustee instructs any employee of the corporation or business trust to use or manage taxes withheld by the corporation or business trust as required by division (A) of section 5747.06 of the Revised Code and held by the corporation or business trust in trust for the benefit of the state;

(9) The officer or trustee deducts and withholds income tax under section 5747.06 of the Revised Code from the compensation of an employee;

(10) The officer or trustee instructs anyone to use taxes withheld by the corporation or business trust under section 5747.06 of the Revised Code in a manner other than holding such taxes in trust and remitting them as required by section 5747.06 of the Revised Code;

(11) The officer or trustee participates in the payment of compensation to an employee without deducting and withholding therefrom income tax required by section 5747.06 of the Revised Code; or

(12) The officer or trustee performs any other function which would indicate control over the fiscal operations of the corporation or business trust.

(D) An employee is personally liable for the withholding tax liability of a corporation or business trust as provided in division (F) of section 5747.07 of the Revised Code if, for the benefit of the corporation or business trust, the employee performs one or more of the following activities:

(1) The employee signs or prepares and submits without signing returns or reports required under section 5747.07 of the Revised Code;

(2) The employee supervises or controls other employees who perform the activities listed in paragraph (D)(1) of this rule; or

(3) The employee exercises authority to sign checks drawn on the account of the corporation or business trust in payment of tax liabilities.

(E) An employee of a corporation or business trust who meets one or more of the conditions listed in paragraphs (D)(1) to (D)(3) of this rule will not be considered responsible if the employee can establish that his failure to comply with the requirements of section 5747.07 of the Revised Code resulted from orders from an officer, trustee, or supervisory employee of the corporation or business trust which prevented the employee from complying with the requirements of that section.

(F) If the officers of a corporation own directly or indirectly, either collectively or individually, more than fifty per cent of the ownership interest in the corporation, the owner/officers are responsible for the execution of the fiscal responsibility of the corporation and personally liable under division (F) of section 5747.07 of the Revised Code, regardless of any attempt to delegate such responsibility, if one or more of the following apply:

(1) The corporation filed returns or reports required under section 5747.07 of the Revised Code showing the liability without submitting payment;

(2) The corporation failed to file returns or reports required under section 5747.07 of the Revised Code;

(3) The records of the corporation or other evidence indicates that the corporation withheld the tax required by section 5747.06 of the Revised Code; or

(4) The owner/officer of the corporation actually controlled or supervised the preparation and submission of returns or reports required under section 5747.07 of the Revised Code.

(G) If the trustees of a business trust own directly or indirectly, either collectively or individually, more than fifty per cent of the beneficial interest in the business trust, the owner/trustees are responsible for the execution of the fiscal responsibility of the business trust and liable under division (F) of section 5747.07 of the Revised Code, regardless of any attempt to delegate such responsibility, if one or more of the following apply:

(1) The business trust filed returns or reports required under section 5747.07 of the Revised Code showing the liability without submitting payment;

(2) The business trust failed to file returns or reports required under section 5747.07 of the Revised Code;

(3) The records of the business trust or other evidence indicates that the business trust withheld the tax required under section 5747.06 of the Revised Code; or

(4) The owner/trustee of the business trust actually controlled or supervised the preparation and submission of returns or reports required under section 5747.07 of the Revised Code.

(H) If more than one person is personally liable under division (F) of section 5747.07 of the Revised Code for the unpaid liability of a corporation or business trust, their liability shall be joint and several.

(I) The provisions of paragraphs (C) to (H) of this rule are not exclusive and the commissioner may use any available evidence to establish the liability of an officer, trustee, or employee for the unpaid withholding tax liability of the corporation or business trust.

(J) No officer or trustee shall have any liability under section 5747.07 of the Revised Code or under this rule if the corporation or business trust did not actually withhold any tax pursuant to section 5747.06 of the Revised Code and reported the amounts as payments to independent contractors and not to employees for federal income tax and FICA purposes on information returns furnished to the Internal Revenue Service.

(former TX-47-15); Eff 9-20-92
Rule promulgated under: RC 5703.14
Rule authorized by: RC 5703.05
Rule amplifies: RC 5747.07

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 (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 (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 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 or disconnect statements or telephone 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.

Eff 12-31-93
Rule promulgated under: RC 5703.14
Rule authorized by: RC 5703.05 , section 3 of S.B. 123 (120th G.A.)
Rule amplifies: RC 5747.01 , 5747.24 , 5747.25 , 5748.01

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

(A) Section 5747.056 of the Revised Code provides that for taxable years beginning in 2005 or thereafter, a credit shall be allowed against the tax imposed by section 5747.02 of the Revised Code for an individual whose Ohio adjusted gross income less exemptions is ten thousand dollars or less. The amount of the credit varies from year to year, and section 5747.056 of the Revised Code sets forth the amount of the credit for each taxable year.

(B) Spouses required by division (E) of section 5747.08 of the Revised Code to file jointly shall be allowed the credit under section 5747.056 of the Revised Code if their joint Ohio adjusted gross income less exemptions is ten thousand dollars or less.

Effective: 03/21/2006
R.C. 119.032 review dates: Exempt
Promulgated Under: 5703.14
Statutory Authority: 5703.05
Rule Amplifies: 5747.056

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.

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.

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