On June 17, 2014 Ohio Governor John Kasich signed into law Am. Sub. S.B. 263 giving the Ohio Department of Taxation the authority to quickly refund known tax overpayments without the taxpayer having to notifying the Department. The legislation requires the Ohio Department of Taxation to proactively refund businesses all taxes they are owed.
Prior to this change a taxpayer had to discover the overpayments themselves and then file a refund claim within the statute of limitations. Once the statute of limitations passed the money would remain in the State’s treasury. Tax Commissioner Testa stated that since the new law was enacted the Ohio Department of Taxation has identified almost $34 million in overpaid business taxes. The Department has made returning the money a priority and has already given back almost $29 million including interest. Ohio feels that they are the first state in the country to take this proactive approach for business taxes.
While it is commendable that Ohio has taken this step to treat Ohio businesses more fairly, taxpayer’s in Ohio should still be diligent with the preparation of their business tax returns. The bulk of the identified overpayments were easily identified computational errors and not a thorough review of the returns filed. As an example, the Department of Taxation will refund Ohio use tax if a taxpayer paid tax at the wrong rate. However they will not have the information necessary to review whether or not the underlying purchases on which tax was paid are taxable. In addition, Ohio’s statute of limitations will still apply to all overpayments not identified by the Ohio Department of Taxation.
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