As part of his ongoing effort to streamline the state’s development efforts, Ohio Gov. John Kasich recently signed a bill that alters three tax credit programs that have been popular among Barnes Dennig’s clients.
On June 26, Kasich signed Amended Substitute Senate Bill 314 into law. It will expand eligibility for the Historic Building Rehabilitation Tax Credit, speed up the process for utilizing the Jobs Creation Tax Credit, and tighten restrictions on the InvestOhio tax credit.
The law also reshapes the Department of Development and renames it the Development Services Agency, and it increases the reporting requirements on applicants, in order to increase the amount of information that is publicly reported.
3 Altered Ohio Tax Credits
Historic Building Rehabilitation Tax Credit – The credit is now available to qualified lessees who are eligible for the pass-through of the federal rehabilitation tax credit. Expenditures paid or incurred by the owner after April 4, 2007, are attributed to the qualified lessee if the federal pass-through election is made.
Jobs Creation Tax Credit (JCTC) – It is easier for companies to utilize the JCTC without having a project stalled by bureaucratic red tape. If a company chooses to begin a project before its JCTC application is approved, the company can request to have its “baseline income tax revenue” determined by the date it applied for the credit, rather than the date its application was approved. Under the old law, some companies hired temporary agency help while their application was under review, so their baseline income tax revenue was not impacted by the jobs the project created.
InvestOhio – There are more restrictions on which investors and small businesses qualify for the 10% InvestOhio tax credit, the small business faces increased reporting requirements, and there is a hefty application fee. The investor and the small business must be “in good standing” with the state, and the investment in the small business cannot receive any additional tax credit incentive under Ohio law. Also, the definition of a “small business enterprise” was changed to include the assets or sales of the business and all affiliated or related entities – so the business and its affiliated or related entities must have a combined $50 million or less in assets or $10 million or less in annual sales. (Because the law does not take effect until 90 days after June 26, it appears it is possible to register within the next few months and take advantage of the old law, when affiliated and related entities were not included.) The application process includes a fee of 0.1% of the investment.