Governor signs PEO fix into law

Written on Dec 22, 2017

OSCPA staff report

Gov. Kasich on Friday signed 15 bills into law, including one that addresses a legislative priority for CPAs.

Senate Bill 8, the budget corrections bill, will allow business owners using a professional employer organization (PEO) to be eligible for the business income deduction (BID).  The new law, which will take effect in 90 days, also applies retroactively to Jan. 1, 2013 when the Small Business Deduction (which later became the Business Income Deduction) was first created.

The conference committee report was amended before passage to incorporate the PEO fix that was originally contained in SB 186 and House Bill 334 – both of which were driven by The Ohio Society of CPAs.

The legislative change clarifies existing law and came out of interested party meetings between OSCPA, business owners, and the Ohio Department of Taxation (ODT). The legislation became necessary because during audits, ODT began rejecting the tax deduction for numerous pass-through-entity business owners because they used the services of a PEO.  Thankfully, ODT had already suspended the audits as of Sept. 7, pending the outcome of the legislation.  Any impacted taxpayers who, after being audited, had already paid an assessment should be hearing from ODT with information on how to claim a refund. Contact OSCPA Director of Tax Policy Greg Saul if you have questions.

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