Ohio’s tax amnesty: Time for a clean slate

Written on Dec 21, 2017

John_TrippierBy John Trippier, CPA, director of multistate tax, Zaino Hall & Farrin, LLC

As we approach 2018, I am sure we all will be considering resolutions to lose weight, spend more time with family or just to be a better person. There is one more potential resolution you can consider this year: Ohio's Tax Amnesty (OTA). OTA can help you or your business get a clean slate on most of your Ohio taxes.

What is OTA?

OTA provides an opportunity for eligible individuals or businesses that have qualifying unreported Ohio taxes to remit such tax with no penalty and 50% of the statutory interest. If the taxpayer is required to pay such tax under audit, taxpayers may have to pay full penalty (varies depending on the tax) and 100% of the statutory interest.

How does OTA work?

An eligible taxpayer must file an application along with the appropriate tax returns and make full payment of the tax liability between Jan. 1 and Feb. 15, 2018. Partial payments or credit card payments are not accepted.

The taxes that can be resolved through amnesty include:




Employer Withholding

School District Income

Employer Withholding School District Income

Pass-Through Entity



Commercial Activity

Financial Institutions

Cigarette or Other Tobacco Products

Alcoholic Beverage

Based on discussions with the Ohio Department of Taxation, to participate in OTA a taxpayer must report and pay the tax liability for all periods that are due and unpaid as of May 1, 2017, regardless of any statute of limitation. ODT said there is an exception for consumer’s use tax – taxpayers do not have to report any tax due and unpaid before Jan. 1, 2008. (Pursuant to R.C. 5703.58(B), use tax due prior to January 2008 was not allowed to be assessed by ODT.) As mentioned above, the Ohio Revised Code (ORC) provides a statute of limitations which bars ODT from assessing any unpaid tax after the limitation period has run. (There is no statute of limitations for tax collected and not remitted, e.g. sales tax, seller’s use tax and employer withholding tax.) The statute of limitations varies by tax type and whether the taxpayer has filed a return. If the taxpayer has been filing a return, the normal statute of limitations found in the chapter of the ORC for that tax would be applicable (generally three or four years). If the taxpayer has never filed, the statute provides a seven-year or 10-year statute of limitations, depending on the type of tax.

To be eligible, the taxpayer cannot have been contacted by the department of taxation about the tax liability. Based on discussions with the department, contact includes receiving a bill or being contacted for audit. Such contact precludes a taxpayer from participating in OTA for that tax for the period addressed in the bill or in the audit. Taxpayers can still participate in OTA for periods not addressed by the bill or the audit for the same tax and for all other taxes covered by OTA.

Is there another option?

The Ohio Department of Taxation offers a voluntary disclosure agreement program (VDA) for the following taxes: individual income, commercial activity, corporation franchise, employer withholding, pass-through entity, sales and use. VDA will remain open during the OTA. Voluntary disclosure agreements provide the following benefits:

  • No penalty (a penalty reduction for tax collected and not remitted);
  • Limited look-back period (varies by type of tax and taxpayer facts – all tax collected and not remitted must be remitted as part of VDA);
  • Confidential - not shared unless required by law; and
  • File anonymously until ultimate completion.

Note that interest is applied at 100% for voluntary disclosures and, like OTA, you cannot have been contacted by ODT.

Which option is best for you?

Taxpayers should analyze the benefits of either OTA or VDA to see which option is the best to get into compliance:




All Open Years

Limited Look-Back (All tax collected and not remitted must be remitted with VDA.)



None (Penalty is reduced for tax collected and not remitted.)







Depending on the number of open years (remember, the ODT’s position is that all prior year’s unpaid taxes must be remitted), the OTA may be better due to the 50% interest. However, if the number of open years goes beyond the VDA limited look-back period, it may be more beneficial to use VDA.

Other States

If Ohio is not your only resolution state, other states also are offering tax amnesty. Rhode Island has an amnesty program running from Dec. 1, 2017 to Feb. 15, 2018. South Carolina has enacted legislation that authorizes an amnesty, but the South Carolina Department of Revenue has not started the amnesty as of the writing of this article.

If your state isn't having amnesty, don't worry. Like Ohio, most other states offer voluntary disclosure agreements. The terms of the voluntary disclosure agreements (i.e. types of taxes, look-back periods, penalty relief and interest relief) vary by state. The facts related to your activity in each state may also have an impact on the terms of the voluntary disclosure agreement that can be negotiated with each state.

If your resolution is to get into tax compliance, amnesty or voluntary disclosures offer an excellent method to minimize your tax liability. Understanding which method works best for your situation will help maximize your benefits.

Good luck with your tax compliance resolution and all your New Years' resolutions!

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