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Ohio: House revised biennial budget bill eliminates most of governor's tax proposals

The Ohio House of Representatives' revised budget bill (Sub. H.B. 59) rejects nearly every major tax change proposed by Ohio Governor Kasich in his original budget bill. Among the major changes from Governor Kasich’s proposed budget bill are the following:

  • Eliminates the much-debated expansion of sales tax to myriad services previously not subject to sales tax.
  • Eliminates the 20 percent rollback in personal income tax and replaces it with a seven percent across the board cut that would take effect retroactively on January 1, 2013.
  • Eliminates the rollback in Ohio sales tax from five-and-a-half percent to five percent.
  • Eliminates the increase in severance tax on shale oil and gas extraction.
  • Eliminates the reduction by half in income tax imposed on small businesses.

Ongoing severance tax discussions

State Tax Commissioner, Joe Testa, has publicly addressed his concerns over the change in severance taxes from Governor Kasich’s proposal. Commissioner Testa finds the stance taken by the House perplexing because he believes Ohio should fairly share in the exploitation of its natural resources (noted to be valued in the billions of dollars). Even with Governor Kasich’s changes, Commissioner Testa notes that the rise in severance taxes would simply change Ohio from the lowest taxing state to among the lowest.

Ohio’s current severance tax rates have remained unchanged for decades. Lawmakers and administrators have been showing increasing interest in the severance tax. Proponents of change contend that current severance tax laws no longer address the activity occurring in the state and believe they are out of date.

Ohio’s budget bill was also covered in several of our previous publications:

  • The most recent revisions to Ohio's budget bill were also covered in the April 12, 2013 edition of the Ohio Statehouse Update
  • Governor Kasich's proposed state budget was previously covered in the March 14, 2013 and February 14, 2013 editions of the Multistate Tax Update

Click here to read the text of Sub. H.B. 59.

Utah: Incentivizes remote sellers to collect and remit sales and use tax

Recently, Governor Herbert of Utah signed unique legislation (H.B. 300) aimed at addressing the remote seller issue. This legislation, which is effective January 1, 2014, allows remote sellers that voluntarily collect and remit Utah’s sales and use tax to retain 18 percent of the amounts collected that would otherwise be remitted to the State Tax Commission, provided that such remote sellers obtain a Utah sales and use tax license for the first time on or after January 1, 2014.

A seller who is already required to collect and remit Utah sales and use tax is not eligible to retain 18 percent of the amount collected. Instead, under current law, such seller may only retain 1.31 percent of the amount required to be collected and remitted. Once a remote seller establishes nexus with Utah and is required by Utah to collect and remit sales and use tax, such seller will no longer be eligible to retain the 18 percent of the amount of sales and use tax collected.

Arkansas: New machinery and equipment sales tax exemption now effective

Effective April 1, 2013 (H.B. 1281), Arkansas exempts from sales tax the sale of certain tangible machinery and equipment required by state or federal law or regulations to be installed and utilized by manufacturing and processing plants or facilities to prevent or reduce air or water pollution or contamination. For purposes of the exemption, “machinery and equipment” includes:

  1. Machinery and equipment required by state or federal law or regulations to be used in the refining of petroleum-based products to remove sulfur pollutants from the refined product.
  2. Any repair parts and repair labor for machinery or equipment required by state or federal law or regulations to be used in the refining of petroleum-based products to remove sulfur pollutants from the refined product.

Click here to read the text of H.B. 1281.

Arkansas: New bill would implement flat corporate tax and combined income tax reporting

Arkansas legislators are currently working on a new bill (H.B. 1845) that would make some fairly significant changes to the state’s corporate income tax structure. The bill implements a new flat corporate income tax of six percent as opposed to the state’s current progressive tax structure. The effect of this change would be most significant for a corporation expecting a low net income by effectively increasing its net tax burden. However, for a corporation reporting high net income, this change could result in a reduction in its overall income tax liability.

Additionally, H.B. 1845 would implement combined reporting and lay out related rules. Note that H.B. 1845 would not take effect until tax years beginning on or after January 1, 2014.

Click here to read the text of H.B. 1845.

For additional information regarding these subjects or any other multistate tax issues, please contact:

David M. Kall

Susan Millradt McGlone

Jeremy J. Schirra

Businesses must be vigilant and careful in managing their state and local tax liabilities and exposures. We understand this can be a daunting task. McDonald Hopkins Multistate Tax Services provides a broad range of state and local tax services including tax controversy, tax evaluation, tax planning, and tax policy. With professionals who have worked both inside and outside government agencies, our multistate tax team leverages its knowledge and experience to help clients control their complex multistate taxes.