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Tax-related, public records bills pass at end of legislative session.

In the final week of 2006, former Gov. Bob Taft signed numerous bills into law, including legislation containing tax-related provisions, standalone tax bills and clarification of public records laws:

* Comprehensive public records legislation

While House Bill 9 was not of key importance to Ohio Society members in its final form, the Society was successful in removing a provision that would have made independent accounting firm work papers associated with public entity audits public records. The Society-proposed amendment to the bill marks a major legislative victory for Ohio CPAs. The bill takes effect 90 days after the bill signing, which occurred on Dec. 29, 2006.

* Modifications to the Job Creation and Job Retention Tax Credits

Among the provisions contained in the state capital appropriations budget (HB 699) were changes allowing employers to retain the credit for employees who are shifted within the corporate entity, or to a subsidiary, so long as the positions are substantially equivalent. The bill also preserves the exception for active-duty military called to service. However, the bill does contain a new provision allowing the state to reduce the tax credits if the employer fails to meet their obligations under the state-established provisions of the tax credits.

* Job Training Tax Credit

The state capital budget (HB 699) also included a Society supported one-year extension of the Job Training Tax Credit which provides Ohio employers with up to $100,000 annually to help offset the costs of training existing employees.

Residency requirements changed in late session bill

The Ohio Society of CPAs scored a major victory when the Ohio General Assembly passed legislation late last year revising Ohio income tax residency standards and expanding state income relief to Ohio's active-duty military.

Sub. HB 73 increases the number of contact periods from the current 120 with a bright-line standard of 182 contact periods. The legislation eliminates the additional 30 contact periods currently allowed for medical and philanthropic purposes.

The Ohio Society successfully fought against eleventh-hour efforts to remove the contact periods language and replace it with "days." In 1993, the Society led the effort to change Ohio law to use contact periods when determining residency so as to avoid incidental contact from counting against the amount of time non-residents can spend in Ohio.

The bill also contains a provision mandating that non-residents wanting an irrefutable presumption of non-residency file an affidavit with the Ohio Department of Taxation by April 15 of each year. The statement must verify that they were not domiciled in Ohio for the tax year and they had at least one residence outside of Ohio, citing specific locations of each out-of-state residence.

In addition, the bill incorporates language excluding active-duty military pay from state income tax regardless of whether deployment is in a combat zone. However, active-duty military pay received while deployed in Ohio is still subject to Ohio income tax. The Ohio Society was successful in also eliminating active duty pay from school district income tax.

Legislature limits contributions by some government contractors--including CPA firms

Legislation to limit campaign contributions from individuals and entities who receive government contracts was passed by the Ohio General Assembly late last year (HB 694).

Schottenstein, Zox & Dunn Co., L.P.A., reports that the bill is designed to curb the perceived "culture of corruption" in state government and make the following changes to campaign finance law:

* Establish contractor contribution limits of $1,000 for individuals and $2,000 for affiliated political action committees (PACs), and combine contributions from various partners/owners and their spouses, as well as the affiliated PAC, where the $2,000 limit is considered.

* Apply the contractor contribution limits to both unbid and competitively bid contracts

* Apply the contractor limitations to boards, commissions, committees, councils, municipal legislative authorities, boards of education, county commissioners, township trustees and other boards and commissions created by law, in addition to statewide officeholders

* Require public contractors to certify that their organization is in compliance with the contractor contribution limits

Any contributions made on or after Jan. 1 are counted in the total. This new law applies to the following who are awarded state contracts:

* Partners or owners of a partnership or unincorporated business

* Shareholders of a professional association organized under Chapter 1785

* Estate administrators or executors

* Trustees of a trust

* Any owner of more than 20 percent of a corporation or a business trust, except a professional association organized under Chapter 1785

The bill also includes a controversial provision that specifies that collective bargaining agreements with labor organizations are subject to the contractor contribution limits. In response, organized labor is expected to file a lawsuit.

Lawsuit abuse reforms being attacked in the courts

Several pending lawsuits are jeopardizing hard-fought reforms to Ohio's civil justice system and the improved legal climate in the state.

A lawsuit filed in August of last year challenges caps on punitive damages, limitations on non-economic awards and the introduction of collateral sources of recovery in civil cases. The Ohio Academy of Trial Lawyers, among others, has filed amicus briefs in Abrino v. Johnson & Johnson urging the U.S. District Court to find the provisions unconstitutional. The Ohio Alliance for Civil Justice, of which The Ohio Society of CPAs is a leader, has filed briefs countering opponents' attacks on the common sense lawsuit abuse reforms.

Separately, The Ohio Supreme Court is entertaining a challenge of the legislation (SB 80), which enacted the lawsuit abuse provisions. Opponents of the law are arguing that the bill violated the single-subject rule and that preventing parties from filing lawsuits 10 years after a product has been on the market is unconstitutional. The plaintiff's brief in this case was due Feb. 26. The Ohio business community will file an answer to the challenge within 30 days of the date on which the plaintiff's brief was filed.

A third lawsuit would have a substantial impact on asbestos litigation reform designed to dismiss claims of individuals who are not presently ill due to asbestos exposure. The question before the court is whether to grant an appeal in Ackison v. Anchor Packing Co. based on the claim that applying medical criteria established under the bill to the more than 39,000 cases pending at the time the legislation was enacted is unconstitutional.

The lawsuits illustrate how the battle to enact reasonable limits on civil litigation, and establish predictability in the legal system, are far from over. The Ohio Society of CPAs will remain a leader of the Ohio Alliance for Civil Justice, which will defend the recently enacted lawsuit abuse measures and fight for additional reforms.
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Title Annotation:Capitol Access
Publication:Catalyst (Dublin, Ohio)
Date:Mar 1, 2007
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