OHIO HOUSE, SENATE Bill: Notify businesses and refund their tax overpayments

By Marc Kovac

news@vindy.com

COLUMBUS

State tax officials would be required to notify and refund overpayments made by businesses, under legislation introduced in the Ohio House and Senate.

“If you overpaid your taxes, why should the government keep your money...?” said state Rep. Al Landis of Dover, R-98th, one of the co-sponsors of the proposed law changes. “The short answer is, they shouldn’t hold onto the money.”

Unlike personal income tax forms, which include a space for residents to request a refund, business filings do not include prompts to return overpayments, and the state won’t issue a business refund unless one is sought.

For years, the tax department made no effort to contact businesses about potential refunds. After four years, such payments are transferred to the state’s general revenue fund to pay for other expenses, rather than being returned to taxpayers.

“For way too long — for decades — the Department of Taxation just kept silent, and overpayments that were made by business taxpayers were retained,” said state tax Commissioner Joe Testa. “When we found this out, I was in fact shocked [and] very angry. This was an outrageous practice that had been going on in the tax department for a long time.”

The situation came to light two years ago, when Testa and Gov. John Kasich announced that about 3,500 businesses would receive $13 million-plus in refunds, with continuing efforts to identify other businesses owed money. Late last year, the state inspector general’s office identified other overpayments as part of a review prompted by a separate investigation of employee theft. The total included more than $30 million in refunds that were properly requested by businesses but not returned by the state.

The tax department has since been contacting businesses to inform them of overpayments, but lawmakers want to change state law to ensure that future overpayments are refunded quickly.

House Bill 402 and Senate Bill 263 attempt to address the issue by requiring the state tax commissioner to notify businesses of overpayments and automatically issue refund checks or tax credits whether businesses formally request them or not.

“It’s a much more comprehensive approach to not just notify the taxpayer but to reconcile the accounts, to return the monies to them and to set procedures in place so that in the future these [overpayments] won’t build back up again,” Testa said.

Businesses that think they may be owed a refund can contact the tax department at 800-304-3211 or online at www.tax.ohio.gov.