ODT suspends PEO audits, monitors legislation

Written on Sep 08, 2017

OSCPA staff report

Last week we told you that legislation has been introduced in the Ohio House to provide that wages and guaranteed payments paid by a Professional Employer Organization to the owner of a contracted pass-through entity may be considered business income for purposes of the Small Business Deduction and Business Income Deduction.

The Ohio Department of Taxation on Thursday announced that, pending the outcome of that bill and similar legislation in the Senate – SB 186 – it “has suspended audit activities related to individuals who received compensation from a PEO that they do not own, and who claimed a small business/business income deduction.”

Both House Bill 334 and SB 186 would amend section 5733.40 of the Ohio Revised Code. OSCPA has been busy over the summer working to resolve this retroactive change in tax treatment.

“All existing audit cases that have not reached an assessed status will be placed on hold and thus not progress to any further stages of the billing cycle,” ODT wrote in its alert. “If the legislation passes, the Department will work with taxpayers to resolve the existing audits and billings related to the issue under current law. If the legislation fails to pass, the Audit Division will continue to apply the current law.”

Contact OSCPA Tax Policy Director Greg Saul, Esq., CAE, if you have questions.

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