As Introduced

126th General Assembly Regular Session 2005-2006

H. B. No. 40

Representatives Schaffer, McGregor, Latta, Faber, Hoops, Taylor, Hartnett, Willamowski, Gilb, Allen, Buehrer 

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A BILL

To amend sections 5747.08 and 5747.98 and to enact

1

section 5747.71 of the Revised Code to allow a

2

credit against the personal income tax for amounts

3

spent by teachers for instructional materials.

4

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

Section 1. That sections 5747.08 and 5747.98 be amended and	5
section 5747.71 of the Revised Code be enacted to read as follows:	6

Sec. 5747.08.  An annual return with respect to the tax	7
imposed by section 5747.02 of the Revised Code and each tax	8
imposed under Chapter 5748. of the Revised Code shall be made by	9
every taxpayer for any taxable year for which the taxpayer is	10
liable for the tax imposed by that section or under that chapter,	11
unless the total credits allowed under divisions (E), (F), and (G)	12
of section 5747.05 of the Revised Code for the year are equal to	13
or exceed the tax imposed by section 5747.02 of the Revised Code,	14
in which case no return shall be required unless the taxpayer is	15
liable for a tax imposed pursuant to Chapter 5748. of the Revised	16
Code.	17

(A) If an individual is deceased, any return or notice	18
required of that individual under this chapter shall be made and	19
filed by that decedent's executor, administrator, or other person	20
charged with the property of that decedent.	21

(B) If an individual is unable to make a return or notice	22
required by this chapter, the return or notice required of that	23
individual shall be made and filed by the individual's duly	24
authorized agent, guardian, conservator, fiduciary, or other	25
person charged with the care of the person or property of that	26
individual.	27

(C) Returns or notices required of an estate or a trust shall	28
be made and filed by the fiduciary of the estate or trust.	29

(D)(1)(a) Except as otherwise provided in division (D)(1)(b)	30
of this section, any pass-through entity may file a single return	31
on behalf of one or more of the entity's investors other than an	32
investor that is a person subject to the tax imposed under section	33
5733.06 of the Revised Code. The single return shall set forth the	34
name, address, and social security number or other identifying	35
number of each of those pass-through entity investors and shall	36
indicate the distributive share of each of those pass-through	37
entity investor's income taxable in this state in accordance with	38
sections 5747.20 to 5747.231 of the Revised Code. Such	39
pass-through entity investors for whom the pass-through entity	40
elects to file a single return are not entitled to the exemption	41
or credit provided for by sections 5747.02 and 5747.022 of the	42
Revised Code; shall calculate the tax before business credits at	43
the highest rate of tax set forth in section 5747.02 of the	44
Revised Code for the taxable year for which the return is filed;	45
and are entitled to only their distributive share of the business	46
credits as defined in division (D)(2) of this section. A single	47
check drawn by the pass-through entity shall accompany the return	48
in full payment of the tax due, as shown on the single return, for	49
such investors, other than investors who are persons subject to	50
the tax imposed under section 5733.06 of the Revised Code.	51

(b)(i) A pass-through entity shall not include in such a	52
single return any investor that is a trust to the extent that any	53
direct or indirect current, future, or contingent beneficiary of	54
the trust is a person subject to the tax imposed under section	55
5733.06 of the Revised Code.	56

(ii) A pass-through entity shall not include in such a single	57
return any investor that is itself a pass-through entity to the	58
extent that any direct or indirect investor in the second	59
pass-through entity is a person subject to the tax imposed under	60
section 5733.06 of the Revised Code.	61

(c) Nothing in division (D) of this section precludes the tax	62
commissioner from requiring such investors to file the return and	63
make the payment of taxes and related interest, penalty, and	64
interest penalty required by this section or section 5747.02,	65
5747.09, or 5747.15 of the Revised Code. Nothing in division (D)	66
of this section shall be construed to provide to such an investor	67
or pass-through entity any additional deduction or credit, other	68
than the credit provided by division (J) of this section, solely	69
on account of the entity's filing a return in accordance with this	70
section. Such a pass-through entity also shall make the filing and	71
payment of estimated taxes on behalf of the pass-through entity	72
investors other than an investor that is a person subject to the	73
tax imposed under section 5733.06 of the Revised Code.	74

(2) For the purposes of this section, "business credits"	75
means the credits listed in section 5747.98 of the Revised Code	76
excluding the following credits:	77

(a) The retirement credit under division (B) of section	78
5747.055 of the Revised Code;	79

(b) The senior citizen credit under division (C) of section	80
5747.05 of the Revised Code;	81

(c) The lump sum distribution credit under division (D) of	82
section 5747.05 of the Revised Code;	83

(d) The dependent care credit under section 5747.054 of the	84
Revised Code;	85

(e) The lump sum retirement income credit under division (C)	86
of section 5747.055 of the Revised Code;	87

(f) The lump sum retirement income credit under division (D)	88
of section 5747.055 of the Revised Code;	89

(g) The lump sum retirement income credit under division (E)	90
of section 5747.055 of the Revised Code;	91

(h) The credit for displaced workers who pay for job training	92
under section 5747.27 of the Revised Code;	93

(i) The twenty-dollar personal exemption credit under section	94
5747.022 of the Revised Code;	95

(j) The joint filing credit under division (G) of section	96
5747.05 of the Revised Code;	97

(k) The nonresident credit under division (A) of section	98
5747.05 of the Revised Code;	99

(l) The credit for a resident's out-of-state income under	100
division (B) of section 5747.05 of the Revised Code;	101

(m) The credit for instructional material under section	102
5747.71 of the Revised Code.	103

(3) The election provided for under division (D) of this	104
section applies only to the taxable year for which the election is	105
made by the pass-through entity. Unless the tax commissioner	106
provides otherwise, this election, once made, is binding and	107
irrevocable for the taxable year for which the election is made.	108
Nothing in this division shall be construed to provide for any	109
deduction or credit that would not be allowable if a nonresident	110
pass-through entity investor were to file an annual return.	111

(4) If a pass-through entity makes the election provided for	112
under division (D) of this section, the pass-through entity shall	113
be liable for any additional taxes, interest, interest penalty, or	114
penalties imposed by this chapter if the commissioner finds that	115
the single return does not reflect the correct tax due by the	116
pass-through entity investors covered by that return. Nothing in	117
this division shall be construed to limit or alter the liability,	118
if any, imposed on pass-through entity investors for unpaid or	119
underpaid taxes, interest, interest penalty, or penalties as a	120
result of the pass-through entity's making the election provided	121
for under division (D) of this section. For the purposes of	122
division (D) of this section, "correct tax due" means the tax that	123
would have been paid by the pass-through entity had the single	124
return been filed in a manner reflecting the commissioner's	125
findings. Nothing in division (D) of this section shall be	126
construed to make or hold a pass-through entity liable for tax	127
attributable to a pass-through entity investor's income from a	128
source other than the pass-through entity electing to file the	129
single return.	130

(E) If a husband and wife file a joint federal income tax	131
return for a taxable year, they shall file a joint return under	132
this section for that taxable year, and their liabilities are	133
joint and several, but, if the federal income tax liability of	134
either spouse is determined on a separate federal income tax	135
return, they shall file separate returns under this section.	136

If either spouse is not required to file a federal income tax	137
return and either or both are required to file a return pursuant	138
to this chapter, they may elect to file separate or joint returns,	139
and, pursuant to that election, their liabilities are separate or	140
joint and several. If a husband and wife file separate returns	141
pursuant to this chapter, each must claim the taxpayer's own	142
exemption, but not both, as authorized under section 5747.02 of	143
the Revised Code on the taxpayer's own return.	144

(F) Each return or notice required to be filed under this	145
section shall contain the signature of the taxpayer or the	146
taxpayer's duly authorized agent and of the person who prepared	147
the return for the taxpayer, and shall include the taxpayer's	148
social security number. Each return shall be verified by a	149
declaration under the penalties of perjury. The tax commissioner	150
shall prescribe the form that the signature and declaration shall	151
take.	152

(G) Each return or notice required to be filed under this	153
section shall be made and filed as required by section 5747.04 of	154
the Revised Code, on or before the fifteenth day of April of each	155
year, on forms that the tax commissioner shall prescribe, together	156
with remittance made payable to the treasurer of state in the	157
combined amount of the state and all school district income taxes	158
shown to be due on the form, unless the combined amount shown to	159
be due is one dollar or less, in which case that amount need not	160
be remitted.	161

Upon good cause shown, the commissioner may extend the period	162
for filing any notice or return required to be filed under this	163
section and may adopt rules relating to extensions. If the	164
extension results in an extension of time for the payment of any	165
state or school district income tax liability with respect to	166
which the return is filed, the taxpayer shall pay at the time the	167
tax liability is paid an amount of interest computed at the rate	168
per annum prescribed by section 5703.47 of the Revised Code on	169
that liability from the time that payment is due without extension	170
to the time of actual payment. Except as provided in section	171
5747.132 of the Revised Code, in addition to all other interest	172
charges and penalties, all taxes imposed under this chapter or	173
Chapter 5748. of the Revised Code and remaining unpaid after they	174
become due, except combined amounts due of one dollar or less,	175
bear interest at the rate per annum prescribed by section 5703.47	176
of the Revised Code until paid or until the day an assessment is	177
issued under section 5747.13 of the Revised Code, whichever occurs	178
first.	179

If the commissioner considers it necessary in order to ensure	180
the payment of the tax imposed by section 5747.02 of the Revised	181
Code or any tax imposed under Chapter 5748. of the Revised Code,	182
the commissioner may require returns and payments to be made	183
otherwise than as provided in this section.	184

(H) If any report, claim, statement, or other document	185
required to be filed, or any payment required to be made, within a	186
prescribed period or on or before a prescribed date under this	187
chapter is delivered after that period or that date by United	188
States mail to the agency, officer, or office with which the	189
report, claim, statement, or other document is required to be	190
filed, or to which the payment is required to be made, the date of	191
the postmark stamped on the cover in which the report, claim,	192
statement, or other document, or payment is mailed shall be deemed	193
to be the date of delivery or the date of payment.	194

If a payment is required to be made by electronic funds	195
transfer pursuant to section 5747.072 of the Revised Code, the	196
payment is considered to be made when the payment is received by	197
the treasurer of state or credited to an account designated by the	198
treasurer of state for the receipt of tax payments.	199

"The date of the postmark" means, in the event there is more	200
than one date on the cover, the earliest date imprinted on the	201
cover by the United States postal service.	202

(I) The amounts withheld by the employer pursuant to section	203
5747.06 of the Revised Code shall be allowed to the recipient of	204
the compensation as credits against payment of the appropriate	205
taxes imposed on the recipient by section 5747.02 and under	206
Chapter 5748. of the Revised Code.	207

(J) If, in accordance with division (D) of this section, a	208
pass-through entity elects to file a single return and if any	209
investor is required to file the return and make the payment of	210
taxes required by this chapter on account of the investor's other	211
income that is not included in a single return filed by a	212
pass-through entity, the investor is entitled to a refundable	213
credit equal to the investor's proportionate share of the tax paid	214
by the pass-through entity on behalf of the investor. The investor	215
shall claim the credit for the investor's taxable year in which or	216
with which ends the taxable year of the pass-through entity.	217
Nothing in this chapter shall be construed to allow any credit	218
provided in this chapter to be claimed more than once. For the	219
purposes of computing any interest, penalty, or interest penalty,	220
the investor shall be deemed to have paid the refundable credit	221
provided by this division on the day that the pass-through entity	222
paid the estimated tax or the tax giving rise to the credit.	223

Sec. 5747.71. (A) As used in this section:

224

(1) "Instructional material" means material used by a teacher	225
for general classroom instruction, even though the material may be	226
used from time to time by individual students or groups of	227
students. "Instructional material" does not include items given to	228
or used only by an individual student, unless the student receives	229
instruction at home pursuant to an excuse from school attendance	230
under division (A)(2) of section 3321.04 of the Revised Code and	231
rules prescribed by the state board of education, and the student	232
is the only student in the classroom receiving such instruction by	233
the teacher.	234

(2) "Teacher" means a classroom teacher in grades	235
kindergarten through twelve who holds an educator license under	236
Chapter 3319. of the Revised Code, or a person who instructs a	237
child at home and who is qualified to do so for the purposes of	238
division (A)(2) of section 3321.04 of the Revised Code and rules	239
prescribed by the state board of education.	240

(3) "Classroom" includes the place in which a child receives	241
instruction at home pursuant to an excuse from school attendance	242
under division (A)(2) of section 3321.04 of the Revised Code and	243
rules prescribed by the state board of education.	244

(B) There is hereby allowed a nonrefundable credit against	245
the tax imposed by section 5747.02 of the Revised Code for amounts	246
spent by a teacher during the taxable year on instructional	247
material used in the teacher's classroom. The amount of the credit	248
shall not exceed one hundred dollars. The credit shall be claimed	249
in the order required under section 5747.98 of the Revised Code.	250

Sec. 5747.98.  (A) To provide a uniform procedure for	251
calculating the amount of tax due under section 5747.02 of the	252
Revised Code, a taxpayer shall claim any credits to which the	253
taxpayer is entitled in the following order:	254

(1) The retirement income credit under division (B) of	255
section 5747.055 of the Revised Code;	256

(2) The senior citizen credit under division (C) of section	257
5747.05 of the Revised Code;	258

(3) The lump sum distribution credit under division (D) of	259
section 5747.05 of the Revised Code;	260

(4) The dependent care credit under section 5747.054 of the	261
Revised Code;	262

(5) The lump sum retirement income credit under division (C)	263
of section 5747.055 of the Revised Code;	264

(6) The lump sum retirement income credit under division (D)	265
of section 5747.055 of the Revised Code;	266

(7) The lump sum retirement income credit under division (E)	267
of section 5747.055 of the Revised Code;	268

(8) The credit for displaced workers who pay for job training	269
under section 5747.27 of the Revised Code;	270

(9) The campaign contribution credit under section 5747.29 of	271
the Revised Code;	272

(10) The twenty-dollar personal exemption credit under	273
section 5747.022 of the Revised Code;	274

(11) The joint filing credit under division (G) of section	275
5747.05 of the Revised Code;	276

(12) The nonresident credit under division (A) of section	277
5747.05 of the Revised Code;	278

(13) The credit for a resident's out-of-state income under	279
division (B) of section 5747.05 of the Revised Code;	280

(14) The credit for employers that enter into agreements with	281
child day-care centers under section 5747.34 of the Revised Code;	282

(15) The credit for employers that reimburse employee child	283
day-care expenses under section 5747.36 of the Revised Code;	284

(16) The credit for adoption of a minor child under section	285
5747.37 of the Revised Code;	286

(17) The credit for purchases of lights and reflectors under	287
section 5747.38 of the Revised Code;	288

(18) The credit for instructional material under section	289
5747.71 of the Revised Code;	290

(19) The job retention credit under division (B) of section	291
5747.058 of the Revised Code;	292

(19)(20) The credit for losses on loans made under the Ohio	293
venture capital program under sections 150.01 to 150.10 of the	294
Revised Code if the taxpayer elected a nonrefundable credit under	295
section 150.07 of the Revised Code;	296

(20)(21) The credit for purchases of new manufacturing	297
machinery and equipment under section 5747.26 or section 5747.261	298
of the Revised Code;	299

(21)(22) The second credit for purchases of new manufacturing	300
machinery and equipment and the credit for using Ohio coal under	301
section 5747.31 of the Revised Code;	302

(22)(23) The job training credit under section 5747.39 of the	303
Revised Code;	304

(23)(24) The enterprise zone credit under section 5709.66 of	305
the Revised Code;	306

(24)(25) The credit for the eligible costs associated with a	307
voluntary action under section 5747.32 of the Revised Code;	308

(25)(26) The credit for employers that establish on-site	309
child day-care centers under section 5747.35 of the Revised Code;	310

(26)(27) The ethanol plant investment credit under section	311
5747.75 of the Revised Code;	312

(27)(28) The credit for purchases of qualifying grape	313
production property under section 5747.28 of the Revised Code;	314

(28)(29) The export sales credit under section 5747.057 of	315
the Revised Code;	316

(29)(30) The credit for research and development and	317
technology transfer investors under section 5747.33 of the Revised	318
Code;	319

(30)(31) The enterprise zone credits under section 5709.65 of	320
the Revised Code;	321

(31)(32) The research and development credit under section	322
5747.331 of the Revised Code;	323

(32)(33) The refundable jobs creation credit under division	324
(A) of section 5747.058 of the Revised Code;	325

(33)(34) The refundable credit for taxes paid by a qualifying	326
entity granted under section 5747.059 of the Revised Code;	327

(34)(35) The refundable credits for taxes paid by a	328
qualifying pass-through entity granted under division (J) of	329
section 5747.08 of the Revised Code;	330

(35)(36) The refundable credit for tax withheld under	331
division (B)(1) of section 5747.062 of the Revised Code;	332

(36)(37) The credit for losses on loans made to the Ohio	333
venture capital program under sections 150.01 to 150.10 of the	334
Revised Code if the taxpayer elected a refundable credit under	335
section 150.07 of the Revised Code.	336

(B) For any credit, except the credits enumerated in	337
divisions (A)(32)(33) to (36)(37) of this section and the credit	338
granted under division (I) of section 5747.08 of the Revised Code,	339
the amount of the credit for a taxable year shall not exceed the	340
tax due after allowing for any other credit that precedes it in	341
the order required under this section. Any excess amount of a	342
particular credit may be carried forward if authorized under the	343
section creating that credit. Nothing in this chapter shall be	344
construed to allow a taxpayer to claim, directly or indirectly, a	345
credit more than once for a taxable year.	346

Section 2. That existing sections 5747.08 and 5747.98 of the	347
Revised Code are hereby repealed.	348

Section 3. Section 5747.71 of the Revised Code, as enacted by	349
this act, applies to taxable years beginning on or after January	350
1, 2005.	351