As Introduced

128th General Assembly
Regular Session
2009-2010
S. B. No. 21


Senator Turner 

Cosponsor: Senator Grendell 

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 the employment of 3
individuals who have previously been convicted of 4
felonies. 5


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

       Section 1. That sections 5733.98 and 5747.98 be amended and 6
sections 5733.421 and 5747.391 of the Revised Code be enacted to 7
read as follows:8

       Sec. 5733.421.  (A) As used in this section:9

       (1) "Qualified reforming felon" means an individual who:10

       (a) Has been convicted of a felony under any statute of the 11
United States or any state;12

       (b) Was hired by a taxpayer within one year after the 13
conviction or, if sentenced to a term of incarceration, was hired 14
within one year after being released from incarceration; and15

       (c) Is a member of a family that, in the six months 16
immediately preceding the date of hiring, had an income that, on 17
an annual basis, is seventy per cent or less of the most recent 18
lower living standard income level calculated by the United States 19
department of labor.20

       (2) "Family" means an individual and an individual's spouse 21
and children. 22

       (3) "Wages" has the same meaning as in section 3306 of the 23
Internal Revenue Code. 24

       (B)(1) For tax years 2010 and 2011, a nonrefundable credit is 25
allowed against the tax imposed by section 5733.06 of the Revised 26
Code for a taxpayer that employees a qualified reforming felon 27
for at least one hundred twenty hours during the taxpayer's 28
taxable year. The amount of the credit shall be calculated as 29
follows:30

       (a) For each qualified reforming felon whom the taxpayer 31
employees for at least four hundred hours during the taxable 32
year, the credit equals forty per cent of the wages paid to the 33
qualified reforming felon, but shall not exceed two thousand four 34
hundred dollars for each qualified reforming felon.35

       (b) For each qualified reforming felon whom the taxpayer 36
employs for less than four hundred hours but at least one hundred 37
twenty hours during the taxable year, the credit equals 38
twenty-five per cent of the wages paid to the qualified reforming 39
felon, but shall not exceed one thousand five hundred dollars for 40
each qualified reforming felon. 41

       The credit shall be claimed in the order required under 42
section 5733.98 of the Revised Code. The credit, to the extent it 43
exceeds the taxpayer's tax liability for the first tax year the 44
taxpayer claims it, after allowance for any other credits that 45
precede the credit under that section in that order, may be 46
carried forward to the next tax year, but no tax year thereafter.47

       (2) A taxpayer that 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. 50

       (3) A taxpayer may not claim the credit allowed under this 51
section on the basis of wages paid to a qualified reforming felon 52
for services that were the same as, or substantially similar to, 53
services that, but for a strike or lockout, would have been 54
performed by another employee. 55

       (4) If a qualified reforming felon's employment is terminated 56
during the taxable year and the qualified reforming felon was 57
employed by the taxpayer for less than twelve months, the taxpayer 58
may not claim the full amount of the credit allowed under this 59
section unless the qualified reforming felon voluntarily 60
terminated employment; was unable to continue employment due to a 61
disability or death; or was terminated for cause. If a qualified 62
reforming felon's employment is terminated for any other reason, 63
the amount of the credit to which the taxpayer is entitled under 64
this section is reduced by a percentage equal to the percentage of 65
the taxable year that the qualified reforming felon was not 66
employed by the taxpayer. 67

       (C) All files, statements, returns, reports, papers, or 68
documents of any kind relating to qualified reforming felons or 69
their families are not public records under section 149.43 of the 70
Revised Code. 71

       Sec. 5733.98.  (A) To provide a uniform procedure for72
calculating the amount of tax imposed by section 5733.06 of the73
Revised Code that is due under this chapter, a taxpayer shall74
claim any credits to which it is entitled in the following order,75
except as otherwise provided in section 5733.058 of the Revised76
Code:77

       (1) For tax year 2005, the credit for taxes paid by a 78
qualifying pass-through entity allowed under section 5733.0611 of 79
the Revised Code;80

       (2) The credit allowed for financial institutions under81
section 5733.45 of the Revised Code;82

       (3) The credit for qualifying affiliated groups under section83
5733.068 of the Revised Code;84

       (4) The subsidiary corporation credit under section 5733.06785
of the Revised Code;86

       (5) The savings and loan assessment credit under section87
5733.063 of the Revised Code;88

       (6) The credit for recycling and litter prevention donations89
under section 5733.064 of the Revised Code;90

       (7) The credit for employers that enter into agreements with91
child day-care centers under section 5733.36 of the Revised Code;92

       (8) The credit for employers that reimburse employee child 93
care expenses under section 5733.38 of the Revised Code;94

       (9) The credit for maintaining railroad active grade crossing95
warning devices under section 5733.43 of the Revised Code;96

       (10) The credit for purchases of lights and reflectors under97
section 5733.44 of the Revised Code;98

       (11) The credit for employers that employ qualified reforming 99
felons under section 5733.421 of the Revised Code;100

       (12) The job retention credit under division (B) of section101
5733.0610 of the Revised Code;102

       (12)(13) The credit for tax years 2008 and 2009 for selling 103
alternative fuel under section 5733.48 of the Revised Code;104

       (13)(14) The second credit for purchases of new manufacturing105
machinery and equipment under section 5733.33 of the Revised Code;106

       (14)(15) The job training credit under section 5733.42 of the107
Revised Code;108

       (15)(16) The credit for qualified research expenses under109
section 5733.351 of the Revised Code;110

       (16)(17) The enterprise zone credit under section 5709.66 of111
the Revised Code;112

       (17)(18) The credit for the eligible costs associated with a113
voluntary action under section 5733.34 of the Revised Code;114

       (18)(19) The credit for employers that establish on-site115
child day-care centers under section 5733.37 of the Revised Code;116

       (19)(20) The ethanol plant investment credit under section117
5733.46 of the Revised Code;118

       (20)(21) The credit for purchases of qualifying grape119
production property under section 5733.32 of the Revised Code;120

       (21)(22) The export sales credit under section 5733.069 of121
the Revised Code;122

       (22)(23) The credit for research and development and123
technology transfer investors under section 5733.35 of the Revised124
Code;125

       (23)(24) The enterprise zone credits under section 5709.65 of126
the Revised Code;127

       (24)(25) The credit for using Ohio coal under section 5733.39128
of the Revised Code;129

       (25)(26) The credit for small telephone companies under 130
section 5733.57 of the Revised Code;131

       (26)(27) The credit for eligible nonrecurring 9-1-1 charges 132
under section 5733.55 of the Revised Code;133

       (27)(28) For tax year 2005, the credit for providing programs 134
to aid the communicatively impaired under division (A) of section 135
5733.56 of the Revised Code;136

       (28)(29) The research and development credit under section 137
5733.352 of the Revised Code;138

       (29)(30) For tax years 2006 and subsequent tax years, the 139
credit for taxes paid by a qualifying pass-through entity allowed 140
under section 5733.0611 of the Revised Code;141

       (30)(31) The refundable credit for rehabilitating a historic 142
building under section 5733.47 of the Revised Code;143

       (31)(32) The refundable jobs creation credit under division144
(A) of section 5733.0610 of the Revised Code;145

       (32)(33) The refundable credit for tax withheld under146
division (B)(2) of section 5747.062 of the Revised Code;147

       (33)(34) The refundable credit under section 5733.49 of the 148
Revised Code for losses on loans made to the Ohio venture capital 149
program under sections 150.01 to 150.10 of the Revised Code;150

       (34)(35) For tax years 2006, 2007, and 2008, the refundable 151
credit allowable under division (B) of section 5733.56 of the 152
Revised Code.153

       (B) For any credit except the refundable credits enumerated154
in divisions (A)(30) to (34) of this section, the amount of the155
credit for a tax year shall not exceed the tax due after allowing156
for any other credit that precedes it in the order required under157
this section. Any excess amount of a particular credit may be158
carried forward if authorized under the section creating that159
credit.160

       Sec. 5747.391.  (A) As used in this section:161

       (1) "Pass-through entity" has the same meaning as in section 162
5733.04 of the Revised Code and includes a sole proprietorship. 163

       (2) "Qualified reforming felon" means an individual who:164

       (a) Has been convicted of a felony under any statute of the 165
United States or any state;166

       (b) Was hired by a pass-through entity within one year after 167
the conviction or, if sentenced to a term of incarceration, was 168
hired within one year after being released from incarceration; 169
and170

       (c) Is a member of a family that, in the six months 171
immediately preceding the date of hiring, had an income that, on 172
an annual basis, is seventy per cent or less of the most recent 173
lower living standard income level calculated by the United States 174
department of labor.175

       (3) "Family" means an individual and an individual's spouse 176
and children.177

       (4) "Wages" has the same meaning as in section 3306 of the 178
Internal Revenue Code. 179

       (B)(1) For a taxpayer's taxable year beginning in 2009 or 180
thereafter, a nonrefundable credit is allowed against the tax 181
imposed by section 5747.02 of the Revised Code for taxpayers that 182
are equity owners of a pass-through entity that employs a 183
qualified reforming felon for at least one hundred twenty hours 184
during the entity's taxable year. The amount of the credit shall 185
be calculated as follows:186

       (a) For each qualified reforming felon whom the entity 187
employs for at least four hundred hours during the entity's 188
taxable year, the credit equals forty per cent of the wages paid 189
to the qualified reforming felon, but shall not exceed two 190
thousand four hundred dollars for each qualified reforming felon.191

       (b) For each qualified reforming felon whom the entity 192
employs for less than four hundred hours but at least one hundred 193
twenty hours during the entity's taxable year, the credit equals 194
twenty-five per cent of the wages paid to the qualified reforming 195
felon, but shall not exceed one thousand five hundred dollars for 196
each qualified reforming felon.197

       The amount of a taxpayer's credit is the taxpayer's 198
distributive or proportionate share of the credit amount so 199
calculated. The credit shall be claimed for the taxpayer's taxable 200
year that includes the last day of the pass-through entity's 201
taxable year for which the credit is calculated. The credit shall 202
be claimed in the order required under section 5747.98 of the 203
Revised Code. The credit, to the extent it exceeds the taxpayer's 204
tax liability for the taxable year after allowance for any other 205
credits that precede the credit under that section in that order, 206
may be carried forward for the next five succeeding taxable 207
years, but the amount of any excess credit allowed in any such 208
year shall be deducted from the balance carried forward to the 209
succeeding year.210

       (2) A taxpayer may not claim the credit allowed under this 211
section on the basis of wages paid to a qualified reforming felon 212
for whom the pass-through entity received federally funded 213
payments for on-the-job training.214

       (3) A taxpayer may not claim the credit allowed under this 215
section on the basis of wages paid to a qualified reforming felon 216
for services that were the same as, or substantially similar to, 217
services that, but for a strike or lockout, would have been 218
performed by another employee.219

       (4) If a qualified reforming felon's employment is terminated 220
during the pass-through entity's taxable year and the qualified 221
reforming felon was employed by the entity for less than twelve 222
months, a taxpayer may not claim the full amount of the credit 223
allowed under this section unless the qualified reforming felon 224
voluntarily terminated employment; was unable to continue 225
employment due to a disability or death; or was terminated for 226
cause. If a qualified reforming felon's employment is terminated 227
for any other reason, the amount of the credit to which the 228
taxpayer is entitled under this section is reduced by a 229
percentage equal to the percentage of the entity's taxable year 230
that the qualified reforming felon was not employed by the 231
entity.232

       (C) 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 for237
calculating the amount of tax due under section 5747.02 of the238
Revised Code, a taxpayer shall claim any credits to which the239
taxpayer is entitled in the following order:240

       (1) The retirement income credit under division (B) of241
section 5747.055 of the Revised Code;242

       (2) The senior citizen credit under division (C) of section243
5747.05 of the Revised Code;244

       (3) The lump sum distribution credit under division (D) of245
section 5747.05 of the Revised Code;246

       (4) The dependent care credit under section 5747.054 of the247
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 low-income credit under section 5747.056 of the 255
Revised Code;256

       (9) The credit for displaced workers who pay for job training 257
under section 5747.27 of the Revised Code;258

       (10) The campaign contribution credit under section 5747.29259
of the Revised Code;260

       (11) The twenty-dollar personal exemption credit under261
section 5747.022 of the Revised Code;262

       (12) The joint filing credit under division (G) of section263
5747.05 of the Revised Code;264

       (13) The nonresident credit under division (A) of section265
5747.05 of the Revised Code;266

       (14) The credit for a resident's out-of-state income under267
division (B) of section 5747.05 of the Revised Code;268

       (15) The credit for employers that enter into agreements with 269
child day-care centers under section 5747.34 of the Revised Code;270

       (16) The credit for employers that reimburse employee child 271
care expenses under section 5747.36 of the Revised Code;272

       (17) The credit for adoption of a minor child under section273
5747.37 of the Revised Code;274

       (18) The credit for purchases of lights and reflectors under275
section 5747.38 of the Revised Code;276

       (19) The job retention credit under division (B) of section277
5747.058 of the Revised Code;278

       (20) The credit for selling alternative fuel under section 279
5747.77 of the Revised Code;280

       (21) The second credit for purchases of new manufacturing281
machinery and equipment and the credit for using Ohio coal under282
section 5747.31 of the Revised Code;283

       (22) The job training credit under section 5747.39 of the284
Revised Code;285

       (23) The enterprise zone credit under section 5709.66 of the286
Revised Code;287

       (24) The credit for the eligible costs associated with a288
voluntary action under section 5747.32 of the Revised Code;289

       (25) The credit for employers that establish on-site child290
day-care centers under section 5747.35 of the Revised Code;291

       (26) The ethanol plant investment credit under section292
5747.75 of the Revised Code;293

       (27) The credit for employers that employ qualified reforming 294
felons under section 5747.391 of the Revised Code;295

       (28) The credit for purchases of qualifying grape production296
property under section 5747.28 of the Revised Code;297

       (28)(29) The export sales credit under section 5747.057 of298
the Revised Code;299

       (29)(30) The credit for research and development and300
technology transfer investors under section 5747.33 of the Revised301
Code;302

       (30)(31) The enterprise zone credits under section 5709.65 of303
the Revised Code;304

       (31)(32) The research and development credit under section 305
5747.331 of the Revised Code;306

       (32)(33) The credit for rehabilitating a historic building 307
under section 5747.76 of the Revised Code;308

       (33)(34) The refundable credit for rehabilitating a historic 309
building under section 5747.76 of the Revised Code;310

       (34)(35) The refundable jobs creation credit under division311
(A) of section 5747.058 of the Revised Code;312

       (35)(36) The refundable credit for taxes paid by a qualifying313
entity granted under section 5747.059 of the Revised Code;314

       (36)(37) The refundable credits for taxes paid by a315
qualifying pass-through entity granted under division (J) of316
section 5747.08 of the Revised Code;317

       (37)(38) The refundable credit for tax withheld under318
division (B)(1) of section 5747.062 of the Revised Code;319

       (38)(39) The refundable credit under section 5747.80 of the 320
Revised Code for losses on loans made to the Ohio venture capital 321
program under sections 150.01 to 150.10 of the Revised Code.322

       (B) For any credit, except the refundable credits enumerated323
in divisions (A)(33) to (38) of this section and the credit 324
granted under division (I) of section 5747.08 of the Revised 325
Code, the amount of the credit for a taxable year shall not326
exceed the tax due after allowing for any other credit that327
precedes it in the order required under this section. Any excess328
amount of a particular credit may be carried forward if329
authorized under the section creating that credit. Nothing in 330
this chapter shall be construed to allow a taxpayer to claim, 331
directly or indirectly, a credit more than once for a taxable 332
year.333

       Section 2. That existing sections 5733.98 and 5747.98 of the 334
Revised Code are hereby repealed.335