As Introduced

126th General Assembly Regular Session 2005-2006

H. B. No. 160

Representatives Mason, S. Smith, Yuko, Sykes, Brown, Skindell, Chandler, Hood, S. Patton, Key, Allen, Barrett 

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A BILL

To amend sections 5733.98 and 5747.98 and to enact

1

sections 5733.421 and 5747.391 of the Revised Code

2

to create a tax credit for wages paid by employers

3

to employees who have been convicted of felonies.

4

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 5733.98 and 5747.98 be amended and	5
sections 5733.421 and 5747.391 of the Revised Code be enacted to	6
read as follows:	7

Sec. 5733.421.  (A) As used in this section:

8

(1) "Qualified reforming felon" means an individual who:

9

(a) Has been convicted of a felony under any statute of the	10
United States or any state;	11

(b) Was hired by a taxpayer within one year of the conviction	12
or, if sentenced to a term of incarceration, was hired within one	13
year of being released from incarceration; and	14

(c) Is a member of a family that, in the six months	15
immediately preceding the date of hiring, had an income that, on	16
an annual basis, would be seventy per cent or less of the most	17
recent lower living standard calculated by the federal bureau of	18
labor statistics.	19

(2) "Family" means an individual, an individual's spouse, and	20
children.	21

(3) "Wages" has the same meaning as in section 3306 of the	22
Internal Revenue Code.	23

(B)(1) Beginning in tax year 2006, a nonrefundable credit is	24
allowed against the tax imposed by section 5733.06 of the Revised	25
Code for the wages paid by a taxpayer to a qualified reforming	26
felon who works at least one hundred twenty hours for the taxpayer	27
during the taxpayer's taxable year. The amount of the credit shall	28
be calculated as follows:	29

(a) For each qualified reforming felon who works at least	30
four hundred hours during the taxable year, the credit equals	31
forty per cent of the wages paid to the qualified reforming felon,	32
but shall not exceed two thousand four hundred dollars per	33
qualified reforming felon.	34

(b) For each qualified reforming felon who works less than	35
four hundred hours but at least one hundred twenty hours during	36
the taxable year, the credit equals twenty-five per cent of the	37
wages paid to the qualified reforming felon, but shall not exceed	38
one thousand five hundred dollars per qualified reforming felon.	39

The credit shall be claimed in the order required under	40
section 5733.98 of the Revised Code. The credit, to the extent it	41
exceeds the taxpayer's tax liability for the tax year after	42
allowance for any other credits that precede the credit under that	43
section in that order, may be carried forward for the next five	44
succeeding tax years, but the amount of any excess credit allowed	45
in any such year shall be deducted from the balance carried	46
forward to the succeeding year.	47

(2) A taxpayer who received federally funded payments for	48
on-the-job training of a qualified reforming felon may not claim	49
the credit allowed under this section for any portion of the wages	50
paid to that qualified reforming felon.	51

(3) A taxpayer may not claim the credit allowed under this	52
section for any portion of the wages paid to a qualified reforming	53
felon for services that were the same as, or substantially similar	54
to, services that, but for a strike or lockout, would have been	55
performed by another employee.	56

(4) If a qualified reforming felon's employment is terminated	57
during the taxable year and the qualified reforming felon was	58
employed by the taxpayer for less than twelve months, the taxpayer	59
may not claim the full amount of the credit allowed under this	60
section unless the qualified reforming felon voluntarily	61
terminated employment; was unable to continue employment due to a	62
disability or death; or was terminated for cause. If a qualified	63
reforming felon's employment is terminated for any other reason,	64
the amount of the credit to which the taxpayer is entitled under	65
this section is reduced by a percentage equal to the percentage of	66
the taxable year that the qualified reforming felon was not	67
employed by the taxpayer.	68

(C)(1) The tax commissioner may require a taxpayer to furnish	69
such information as is necessary to support a claim for a credit	70
under this section, and no credit shall be allowed unless the	71
information is provided.	72

(2) All files, statements, returns, reports, papers, or	73
documents of any kind relating to qualified reforming felons or	74
their families are not public records under section 149.43 of the	75
Revised Code.	76

Sec. 5733.98.  (A) To provide a uniform procedure for	77
calculating the amount of tax imposed by section 5733.06 of the	78
Revised Code that is due under this chapter, a taxpayer shall	79
claim any credits to which it is entitled in the following order,	80
except as otherwise provided in section 5733.058 of the Revised	81
Code:	82

(1) The credit for taxes paid by a qualifying pass-through	83
entity allowed under section 5733.0611 of the Revised Code;	84

(2) The credit allowed for financial institutions under	85
section 5733.45 of the Revised Code;	86

(3) The credit for qualifying affiliated groups under section	87
5733.068 of the Revised Code;	88

(4) The subsidiary corporation credit under section 5733.067	89
of the Revised Code;	90

(5) The savings and loan assessment credit under section	91
5733.063 of the Revised Code;	92

(6) The credit for recycling and litter prevention donations	93
under section 5733.064 of the Revised Code;	94

(7) The credit for employers that enter into agreements with	95
child day-care centers under section 5733.36 of the Revised Code;	96

(8) The credit for employers that reimburse employee child	97
care expenses under section 5733.38 of the Revised Code;	98

(9) The credit for maintaining railroad active grade crossing	99
warning devices under section 5733.43 of the Revised Code;	100

(10) The credit for purchases of lights and reflectors under	101
section 5733.44 of the Revised Code;	102

(11) The job retention credit under division (B) of section	103
5733.0610 of the Revised Code;	104

(12) The credit for losses on loans made under the Ohio	105
venture capital program under sections 150.01 to 150.10 of the	106
Revised Code if the taxpayer elected a nonrefundable credit under	107
section 150.07 of the Revised Code;	108

(13) The credit for purchases of new manufacturing machinery	109
and equipment under section 5733.31 or section 5733.311 of the	110
Revised Code;	111

(14) The second credit for purchases of new manufacturing	112
machinery and equipment under section 5733.33 of the Revised Code;	113

(15) The job training credit under section 5733.42 of the	114
Revised Code;	115

(16) The credit for qualified research expenses under section	116
5733.351 of the Revised Code;	117

(17) The enterprise zone credit under section 5709.66 of the	118
Revised Code;	119

(18) The credit for the eligible costs associated with a	120
voluntary action under section 5733.34 of the Revised Code;	121

(19) The credit for employers that establish on-site child	122
day-care centers under section 5733.37 of the Revised Code;	123

(20) The credit for employers that employ qualified reforming	124
felons under section 5733.421 of the Revised Code;	125

(21) The ethanol plant investment credit under section	126
5733.46 of the Revised Code;	127

(21)(22) The credit for purchases of qualifying grape	128
production property under section 5733.32 of the Revised Code;	129

(22)(23) The export sales credit under section 5733.069 of	130
the Revised Code;	131

(23)(24) The credit for research and development and	132
technology transfer investors under section 5733.35 of the Revised	133
Code;	134

(24)(25) The enterprise zone credits under section 5709.65 of	135
the Revised Code;	136

(25)(26) The credit for using Ohio coal under section 5733.39	137
of the Revised Code;	138

(26)(27) The research and development credit under section	139
5733.352 of the Revised Code;	140

(27)(28) The credit for small telephone companies under	141
section 5733.57 of the Revised Code;	142

(28)(29) The credit for eligible nonrecurring 9-1-1 charges	143
under section 5733.55 of the Revised Code;	144

(29)(30) The credit for providing programs to aid the	145
communicatively impaired under section 5733.56 of the Revised	146
Code;	147

(30)(31) The refundable jobs creation credit under division	148
(A) of section 5733.0610 of the Revised Code;	149

(31)(32) The refundable credit for tax withheld under	150
division (B)(2) of section 5747.062 of the Revised Code;	151

(32)(33) The credit for losses on loans made to the Ohio	152
venture capital program under sections 150.01 to 150.10 of the	153
Revised Code if the taxpayer elected a refundable credit under	154
section 150.07 of the Revised Code.	155

(B) For any credit except the credits enumerated in divisions	156
(A)(30), (31), and (32), and (33) of this section, the amount of	157
the credit for a tax year shall not exceed the tax due after	158
allowing for any other credit that precedes it in the order	159
required under this section. Any excess amount of a particular	160
credit may be carried forward if authorized under the section	161
creating that credit.	162

Sec. 5747.391.  (A) As used in this section:

163

(1) "Pass-through entity" has the same meaning as in section	164
5733.04 of the Revised Code and includes a sole proprietorship.	165

(2) "Qualified reforming felon" means an individual who:

166

(a) Has been convicted of a felony under any statute of the	167
United States or any state;	168

(b) Was hired by a pass-through entity within one year of the	169
conviction or, if sentenced to a term of incarceration, was hired	170
within one year of being released from incarceration; and	171

(c) Is a member of a family that, in the six months	172
immediately preceding the date of hiring, had an income that, on	173
an annual basis, would be seventy per cent or less of the most	174
recent lower living standard calculated by the federal bureau of	175
labor statistics.	176

(3) "Family" means an individual, an individual's spouse, and	177
children.	178

(4) "Wages" has the same meaning as in section 3306 of the	179
Internal Revenue Code.	180

(B)(1) For taxable years beginning in 2005 or thereafter, a	181
nonrefundable credit is allowed against the tax imposed by section	182
5747.02 of the Revised Code for the wages paid by a pass-through	183
entity to a qualified reforming felon who works at least one	184
hundred twenty hours for the pass-through entity during the	185
taxable year. The amount of the credit shall be calculated as	186
follows:	187

(a) For each qualified reforming felon who works at least	188
four hundred hours during the taxable year, the credit equals	189
forty per cent of the wages paid to the qualified reforming felon,	190
but shall not exceed two thousand four hundred dollars per	191
qualified reforming felon.	192

(b) For each qualified reforming felon who works less than	193
four hundred hours but at least one hundred twenty hours during	194
the taxable year, the credit equals twenty-five per cent of the	195
wages paid to the qualified reforming felon, but shall not exceed	196
one thousand five hundred dollars per qualified reforming felon.	197

The amount of a taxpayer's credit is the taxpayer's	198
proportionate share of the credit distributed by the pass-through	199
entity. The credit shall be claimed in the order required under	200
section 5747.98 of the Revised Code. The credit, to the extent it	201
exceeds the taxpayer's tax liability for the taxable year after	202
allowance for any other credits that precede the credit under that	203
section in that order, may be carried forward for the next five	204
succeeding taxable years, but the amount of any excess credit	205
allowed in any such year shall be deducted from the balance	206
carried forward to the succeeding year.	207

(2) A taxpayer may not claim the credit allowed under this	208
section for any portion of the wages paid to a qualified reforming	209
felon for whom the pass-through entity received federally funded	210
payments for on-the-job training.	211

(3) A taxpayer may not claim the credit allowed under this	212
section for any portion of the wages paid to a qualified reforming	213
felon for services that were the same as, or substantially similar	214
to, services that, but for a strike or lockout, would have been	215
performed by another employee.	216

(4) If a qualified reforming felon's employment is terminated	217
during the taxable year and the qualified reforming felon was	218
employed by the pass-through entity for less than twelve months, a	219
taxpayer may not claim the full amount of the credit allowed under	220
this section unless the qualified reforming felon voluntarily	221
terminated employment; was unable to continue employment due to a	222
disability or death; or was terminated for cause. If a qualified	223
reforming felon's employment is terminated for any other reason,	224
the amount of the credit to which the taxpayer is entitled under	225
this section is reduced by a percentage equal to the percentage of	226
the taxable year that the qualified reforming felon was not	227
employed by the pass-through entity.	228

(C)(1) The tax commissioner may require a taxpayer to furnish	229
such information as is necessary to support a claim for a credit	230
under this section, and no credit shall be allowed unless the	231
information is provided.	232

(2) All files, statements, returns, reports, papers, or	233
documents of any kind relating to qualified reforming felons or	234
their families are not public records under section 149.43 of the	235
Revised Code.	236

Sec. 5747.98.  (A) To provide a uniform procedure for	237
calculating the amount of tax due under section 5747.02 of the	238
Revised Code, a taxpayer shall claim any credits to which the	239
taxpayer is entitled in the following order:	240

(1) The retirement income credit under division (B) of	241
section 5747.055 of the Revised Code;	242

(2) The senior citizen credit under division (C) of section	243
5747.05 of the Revised Code;	244

(3) The lump sum distribution credit under division (D) of	245
section 5747.05 of the Revised Code;	246

(4) The dependent care credit under section 5747.054 of the	247
Revised Code;	248

(5) The lump sum retirement income credit under division (C)	249
of section 5747.055 of the Revised Code;	250

(6) The lump sum retirement income credit under division (D)	251
of section 5747.055 of the Revised Code;	252

(7) The lump sum retirement income credit under division (E)	253
of section 5747.055 of the Revised Code;	254

(8) The credit for displaced workers who pay for job training	255
under section 5747.27 of the Revised Code;	256

(9) The campaign contribution credit under section 5747.29 of	257
the Revised Code;	258

(10) The twenty-dollar personal exemption credit under	259
section 5747.022 of the Revised Code;	260

(11) The joint filing credit under division (G) of section	261
5747.05 of the Revised Code;	262

(12) The nonresident credit under division (A) of section	263
5747.05 of the Revised Code;	264

(13) The credit for a resident's out-of-state income under	265
division (B) of section 5747.05 of the Revised Code;	266

(14) The credit for employers that enter into agreements with	267
child day-care centers under section 5747.34 of the Revised Code;	268

(15) The credit for employers that reimburse employee child	269
care expenses under section 5747.36 of the Revised Code;	270

(16) The credit for adoption of a minor child under section	271
5747.37 of the Revised Code;	272

(17) The credit for purchases of lights and reflectors under	273
section 5747.38 of the Revised Code;	274

(18) The job retention credit under division (B) of section	275
5747.058 of the Revised Code;	276

(19) The credit for losses on loans made under the Ohio	277
venture capital program under sections 150.01 to 150.10 of the	278
Revised Code if the taxpayer elected a nonrefundable credit under	279
section 150.07 of the Revised Code;	280

(20) The credit for purchases of new manufacturing machinery	281
and equipment under section 5747.26 or section 5747.261 of the	282
Revised Code;	283

(21) The second credit for purchases of new manufacturing	284
machinery and equipment and the credit for using Ohio coal under	285
section 5747.31 of the Revised Code;	286

(22) The job training credit under section 5747.39 of the	287
Revised Code;	288

(23) The enterprise zone credit under section 5709.66 of the	289
Revised Code;	290

(24) The credit for the eligible costs associated with a	291
voluntary action under section 5747.32 of the Revised Code;	292

(25) The credit for employers that establish on-site child	293
day-care centers under section 5747.35 of the Revised Code;	294

(26) The credit for employers that employ qualified reforming	295
felons under section 5747.391 of the Revised Code;	296

(27) The ethanol plant investment credit under section	297
5747.75 of the Revised Code;	298

(27)(28) The credit for purchases of qualifying grape	299
production property under section 5747.28 of the Revised Code;	300

(28)(29) The export sales credit under section 5747.057 of	301
the Revised Code;	302

(29)(30) The credit for research and development and	303
technology transfer investors under section 5747.33 of the Revised	304
Code;	305

(30)(31) The enterprise zone credits under section 5709.65 of	306
the Revised Code;	307

(31)(32) The research and development credit under section	308
5747.331 of the Revised Code;	309

(32)(33) The refundable jobs creation credit under division	310
(A) of section 5747.058 of the Revised Code;	311

(33)(34) The refundable credit for taxes paid by a qualifying	312
entity granted under section 5747.059 of the Revised Code;	313

(34)(35) The refundable credits for taxes paid by a	314
qualifying pass-through entity granted under division (J) of	315
section 5747.08 of the Revised Code;	316

(35)(36) The refundable credit for tax withheld under	317
division (B)(1) of section 5747.062 of the Revised Code;	318

(36)(37) The credit for losses on loans made to the Ohio	319
venture capital program under sections 150.01 to 150.10 of the	320
Revised Code if the taxpayer elected a refundable credit under	321
section 150.07 of the Revised Code.	322

(B) For any credit, except the credits enumerated in	323
divisions (A)(32)(33) to (36)(37) of this section and the credit	324
granted under division (I) of section 5747.08 of the Revised Code,	325
the amount of the credit for a taxable year shall not exceed the	326
tax due after allowing for any other credit that precedes it in	327
the order required under this section. Any excess amount of a	328
particular credit may be carried forward if authorized under the	329
section creating that credit. Nothing in this chapter shall be	330
construed to allow a taxpayer to claim, directly or indirectly, a	331
credit more than once for a taxable year.	332

Section 2. That existing sections 5733.98 and 5747.98 of the	333
Revised Code are hereby repealed.	334