The Ohio corporation franchise tax is an excise tax imposed on corporations (other than nonprofit corporations) for the privilege of exercising their corporation franchise in Ohio. The tax applies to both domestic corporations (those incorporated in Ohio) and foreign corporations (those incorporated outside of Ohio) for the privilege of doing business in Ohio, owning capital or property in Ohio, holding a charter or certificate of compliance authorizing the corporation to do business in Ohio, or otherwise having a presence (nexus) in Ohio during a calendar year. Unless an exemption applies, a corporation that has nexus in or with Ohio under the Constitution of the United States is subject to the corporation franchise tax.

Note: For most taxpayers, the corporation franchise tax will ratably phase out over the five franchise tax years 2006 through 2010 (taxable years ending in 2005 through 2009).  During this same period Ohio’s new commercial activity tax (CAT) will phase in.  Please refer to the question regarding the franchise tax phase-out.

(Rev 03.30.2006)

Unless an exemption applies, a corporation organized for profit is subject to the corporation franchise tax for each calendar year (tax year) that on the first day of January of that calendar year the corporation:

• Does business in Ohio, or

• Owns or uses property or capital in Ohio, or

• Holds an Ohio charter, or

• Holds a certificate of compliance (license) authorizing the corporation to do business in Ohio (applies to foreign corporation), or

• Otherwise has nexus with Ohio.

To download Ohio corporation franchise tax forms, visit our Tax Forms home page, select the Tax Type "Corporate Franchise Tax," select a Tax Year, then click on Search.

(Rev 03.30.2006)

Taxpayers generally must compute the tax on both the net income base and the net worth base and pay the tax on the base that produces the greater tax.  The maximum net worth base tax liability is $150,000.  However, different rules apply to financial institutions and qualifying holding companies.  Financial institutions are not subject to the tax on the net income base, but financial institutions are subject to the net worth base tax at a higher rate than other corporations, and the $150,000 net worth tax limit does not apply to financial institutions.  Qualifying holding companies are not subject to the tax on the net worth base, but are subject to the tax on the net income base.

For those taxpayers subject to the franchise tax phase-out, the tax is multiplied by the phase-out factor.  Please refer to the question regarding the franchise tax phase-out.

To download Ohio corporation franchise tax forms, visit our Tax Forms home page, select the Tax Type "Corporate Franchise Tax," select a Tax Year, then click on Search.

(Rev 03.30.2006)

An exiting corporation is subject to an income-based exit tax on the corporation’s unreported Ohio net income that was earned in the two calendar years prior to the tax year to the extent that such income was not included on a previous corporation franchise tax report. An exiting corporation is a corporation which previously had nexus with Ohio, but as of January 1st of the tax year no longer has nexus (because, for example, prior to January 1st of the tax year the corporation merged out of existence, dissolved its Ohio charter or surrendered its license to conduct business in Ohio).  The exit tax does not apply to an exiting financial institution.  The same deduction, apportionment, allocation and credit provisions that apply to the corporation franchise tax also apply to the exit tax. However, an exiting corporation is not subject to tax on the net worth base and is not subject to the minimum fee. See the Ohio Revised Code section 5733.06(H).

(Rev 03.30.2006)

Tax year is the calendar year for which the tax is paid. The tax year is also referred to as the "report year."

Taxable year is the taxpayer's accounting period on which the corporation franchise tax is based. The Ohio corporation franchise tax report (form FT 1120) is based on the taxpayer's accounting period ending prior to January 1 of the tax year. Exception: A corporation having a 52/53 week calendar year end would file the 2008 franchise tax report. (Example: taxable year ending 01/03/2008 is filed on the 2008 franchise tax report.)

A corporation's franchise tax taxable year is generally the same as its federal taxable year. However, a corporation's franchise tax taxable year may consist of an aggregation of two or more federal taxable years and can exceed one year in length.

The franchise tax for tax year 2008 is paid in 2008 for the privilege of doing business in Ohio during the calendar year 2008. The 2008 franchise tax report (form FT 1120) is based on the corporation's taxable year ending in 2007. Thus, if a corporation has a calendar year end, its 2008 franchise tax report will be based on the corporation's income and activity during the calendar year 2007 and the corporation's net worth as of December 31, 2007. If the corporation has a fiscal year end, its 2008 franchise tax report will be based on the corporation's income and activity during the fiscal year beginning in 2006 and ending in 2007.

Unlike the federal income tax return year (federal form 1120), which is based on the beginning of the taxpayer's accounting period, the Ohio corporation franchise tax report year is the privilege year for which the tax is paid. For example, income earned during a taxpayer's fiscal year beginning July 1, 2006 and ending June 30, 2007 will be reported on the taxpayer's 2006 federal income tax return. However, the taxpayer's income for that same period will be reported on the taxpayer's 2008 Ohio corporation franchise tax report.

(Rev. 01.04.2008)

Mail the corporation franchise tax report to:

Ohio Department of Taxation

PO Box 27

Columbus, OH 43216-0027

Mail an amended report that reflects a balance due or no change in liability to:

Ohio Department of Taxation

Corporation Franchise Tax Unit

PO Box 2476

Columbus, OH 43216-2476

Mail an amended report that reflects an overpayment to:

Ohio Department of Taxation

Corporation Franchise Tax Unit

PO Box 530

Columbus, OH 43216-0530

(Rev 03.30.2006)

A taxpayer must pay by EFT for the current tax year if the taxpayer's total corporation franchise tax liability after reduction for non-refundable credits exceeded $50,000 for the second preceding tax year.  Each transmission can only include information for one taxpayer, one tax type and one period.

If the EFT payment relates to either the FT 1120E, FT 1120ER or FT 1120EX report, you do not have to file the paper document.  You must properly complete the addenda record.  See “Important EFT Notice” dated December 2, 2002 on the department’s Web site.

For further EFT information see the department's July 31, 1994 Franchise Tax Information Release entitled "Recently Enacted Legislation Revises the Requirements for Corporations Paying Corporate Franchise Tax by Electronic Funds Transfer (EFT)." The information release is available from the department's Web site at tax.ohio.gov.

Please direct questions regarding the EFT payment program to the Treasurer of State's office at 30 East Broad Street, 9th floor, Columbus, OH 43266-0421 or telephone that office toll free at 1-877-EFT-Ohio (338-6446).

(Rev 03.30.2006)

• The first $50,000 of Ohio net income is taxed at a rate of 5.1%. However, corporations that meet the greater than 50% ownership requirements for filing a combined franchise tax report must share the $0 to $50,000 tax bracket to which the 5.1% rate applies regardless of whether or not they actually file combined. Related taxpayers must prorate the $0 to $50,000 bracket on form FT-OTAS. Related taxpayers may prorate the $0 to $50,000 bracket amount in any amount they choose, but any one taxpayer's prorata amount may not be less than zero. The proration, however made, applies to both the franchise tax and the litter tax.

• Ohio net income in excess of $50,000 is taxed at a rate of 8.5%.

• The net worth rate for corporations other than financial institutions is 4 mills. In addition, the maximum net worth tax for corporations other than financial institutions is $150,000 per taxpayer. The $150,000 limit applies separately to each member of a combined report; there is not an overall net worth limit for a combined group of taxpayers.

• The net worth rate for financial institutions is 13 mills and the $150,000 net worth tax limit does not apply to financial institutions. Financial institutions are exempt from the net income base.

•  For all franchise taxpayers the minimum fee is $1,000 if the taxpayer’s taxable year ended on or after June 26, 2003 and (i) the sum of the taxpayer’s gross receipts from its activities within and without Ohio during the taxable year equals or exceeds $5 million, or (ii) the total number of the taxpayer’s employees within and without Ohio at any time during the taxable year equals or exceeds 300. In determining whether or not the taxpayer’s gross receipts and number of employees equal or exceed those thresholds, the taxpayer must include its proportionate share of the gross receipts of any pass-through entity in which the taxpayer has a direct or indirect ownership interest and its proportionate share of the number of employees of the pass-through entity. Furthermore, the term, gross receipts, as used here, includes receipts that generate nonbusiness income and receipts from the sale of capital assets and IRC section 1231 assets whether those sales generate business income or nonbusiness income.

• The minimum fee is $50 for taxpayers whose taxable year ended before June 26, 2003 and for taxpayers whose taxable year ended on or after June 26, 2003 but whose gross receipts or whose number of employees did not equal or exceed the thresholds discussed above. See O.R.C. section 5733.06(E) as amended by Amended House Bill 95, 125th General Assembly.

The interest rate on underpayments and overpayments is the same. During calendar year 2008 interest will accrue at the rate of 8 percent per annum

Tax Year	Interest Rate
2008	8%
2007	8%
2006	6%
2005	5%

For a detailed schedule of the interest rate for all tax years please click here.

(Rev. 01.04.2008)

Interest on Underpayments and Overpayments:

If a corporation fails to pay the tax due by the due date, interest accrues on the unpaid tax.  The period of the underpayment runs from the date the payment was due to the date the payment is made.  There is no safe-harbor from interest on the underpayment of the estimated tax.

Interest on franchise tax overpayments runs from whichever of the following dates is the latest until the date the refund is paid:

• the date of payment,

• the ninetieth day after the date the franchise tax report was required to be filed, or

• the ninetieth day after the date the franchise tax report was filed.

Interest on an overpayment resulting from a net capital loss carryback is payable from the due date plus extensions for the report in which the loss arises (rather than from the report year to which the loss is carried back).

Penalties for Late Payment, Failure to File or Late Filing:

• Penalty may be imposed for failure to timely pay the tax (including estimated tax). The penalty imposed may not exceed 15 percent of the delinquent payment.

• Penalty may be imposed for failure to file or to timely file a report. The penalty imposed may not exceed the greater of (i) $50 per month up to $500, or (ii) 5 percent per month of the tax due shown on the report up to 50 percent.

• Additional penalties may be imposed for filing a fraudulent report and/or for filing a fraudulent refund claim.

Penalty Safe-Harbor for Estimated Payments:

The following safe-harbor applies to penalty (but not interest) on underpayment of estimated tax.

• With respect to estimated payments, the Ohio Revised Code section (R.C.) 5733.28(A)(2) failure to pay penalty applies to two periods: (1) “any period of delinquency ending prior to the first day of June of the tax year” and (2) “any period of delinquency commencing the first day of June of the tax year and concluding on the extended due date.”  See R.C. 5733.021.

• For purposes of determining the R.C. 5733.28(A)(2) failure to pay penalty for any period of delinquency ending prior to the first day of June of the tax year, the commissioner may charge penalty on the delinquent portion of the estimated tax.  “Estimated tax” for this purpose means the lesser of 100% of last year’s tax or 90% of this year’s tax.  See R.C. 5733.021(C)(1).

• For purposes of determining the R.C. 5733.28(A)(2) failure to pay penalty for a period of delinquency commencing the first day of June of the tax year and concluding on the extended due date, the commissioner may charge penalty on the delinquent portion of the estimated tax.  “Estimated tax” for this purpose means 90% of this year’s tax.  See R.C. 5733.021(C)(2).

 

(Rev 03.30.2006)

The money items on form FT 1120 and accompanying schedules must be shown as whole dollar amounts by eliminating amounts less than 50 cents and increasing amounts from 50 cents to 99 cents to the next highest dollar.

Every corporation must maintain books and records that substantiate the information reported on its Ohio corporation franchise tax report. These books and records must be available for inspection by agents of the Ohio Department of Taxation for a period of four years from the later of the following:

• the date the taxpayer filed the franchise report, or

• the date the taxpayer was required to file the report.

See the line instructions for schedule A, line 12 in the instruction booklet for maintaining records pertaining to the net operating loss carryforward amount.

Taxpayers must file an amended corporation franchise tax report if the taxpayer or the Internal Revenue Service recomputes the taxpayer’s federal taxable income or the taxpayer’s federal income tax liability. An amended corporation franchise tax report (check the amended return box at the top of page 1 of form FT 1120) must be filed by the earliest of the following dates:

• One year after final determination of the adjustment for federal income tax purposes; or

• One year after the taxpayer paid the additional federal income tax as a result of the adjustment (whether or not the adjustment was agreed to); or

• One year after the taxpayer received a federal income tax refund as a result of the adjustment.

The above provision applies even if the three-year statute of limitations has passed and applies to amended reports which reflect overpayments as well as amended reports which reflect underpayments. If the amended report reflects an underpayment, the amended report must be accompanied by payment of any additional tax and interest. If the amended report reflects an overpayment, the amended report must be accompanied by form FT-REF, Application for Refund or a letter that requests the refund and explains the adjustments.

Upon completing an amended report, please check the amended report box on the front of the report.  Please do not send an amended report to PO Box 27 (the address on the form). Rather, an amended report for a prior tax year that reflects a balance due or no change in liability should be mailed to:

Ohio Department of Taxation

Corporation Franchise Tax Unit

PO Box 2476

Columbus, OH 43216-2476

An amended report that reflects an overpayment should be mailed to:

Ohio Department of Taxation

Corporation Franchise Tax Unit

PO Box 530

Columbus, OH 43216-0530

Amounts reported on federal form 1120 or 1120A, as well as Ohio adjustments and allocations, are subject to verification and audit by the Ohio Department of Taxation.

(Rev 03.30.2006)

To request a refund in connection with an amended Ohio corporation franchise tax report, corporations should file an amended report along with an Application for Corporation Franchise Tax Refund (prescribed form FT REF) (the preferred method).

However, a letter accompanying the amended report detailing the reasons for the overpayment may be accepted in lieu of form FT REF if the letter contains a statement which sets forth the full and complete reason for the overpayment.  See Abitibi-Price Corporation and Subsidiaries v Tracy, BTA No. 98-N-401(3-12-01).  The filing of an amended report without an application for refund or without a letter detailing the reason for the claim is not sufficient and does not constitute an application for refund.

An application for refund is not required when the claimed overpayment is indicated on the originally filed corporation franchise tax report.

Form FT REF applies to claimed overpayments by a taxpayer, whether payment was made voluntarily or as the result of an assessment issued by the Ohio Department of Taxation. If the claimed overpayment is not the result of an IRS adjustment and the statute of limitations has not been extended by form FT WAIVER (the prescribed form by which the Department of Taxation and the taxpayer agree to extend the statute of limitations for the period of time set forth in the FT WAIVER agreement), then the department must receive the application for refund within three years of the date of the illegal, erroneous, or excessive payment.

If the claimed overpayment is the result of a change in federal taxable income, then the department must receive the application for refund within the later of the following: (a) the three-year time period set forth above or (b) the one-year period described under "When should federal changes be reported to Ohio?" However, if the refund claim is filed after the three year refund statute of limitations has expired and the statute of limitations has not been extended by form FT WAIVER, then the refund claim can include only the effects of the federal adjustments.

A franchise tax refund claim that is based on a capital loss carryback is timely filed if the refund claim is filed within three years from the due date of the franchise tax report (including extensions thereof) for the taxable year in which the capital loss arose.

To download Ohio corporation franchise tax forms, visit our Tax Forms home page, select the Tax Type "Corporate Franchise Tax," select a Tax Year, then click on Search.

(Rev 03.30.2006)

The tax commissioner may issue an assessment against the taxpayer for any deficiency within three years after the later of the following dates:

• The final date the report subject to assessment was required to be filed, or

• The date the report was filed.

Both the assessment statute of limitations and the refund statute of limitations may be extended for an agreed upon period if both the taxpayer and the tax commissioner consent in writing to the extension by signing form FT WAIVER.

(Rev 03.30.2006)

Corporations should use form FT PR, Petition for Reassessment, to initiate review of a franchise tax assessment issued by the Department of Taxation. Form FT PR applies only to assessments issued by the Ohio Department of Taxation (form FT PR does not apply to proposed assessments issued as a correction notice). A taxpayer must file its petition within sixty days of receipt of the assessment. If the taxpayer sends the petition by certified mail, the date of postmark is considered the date filed. If the taxpayer sends the petition by regular mail, the date the Department of Taxation receives the petition is considered the date filed. The petition must specify the items of the assessment objected to and the reasons for those objections. However, a taxpayer that has timely filed a petition for reassessment may raise additional written objections to the assessment at any time prior to the date of the Tax Commissioner's final determination. If a taxpayer fails to file the petition for reassessment within the sixty-day period, the petition will be dismissed, as the Tax Commissioner has no jurisdiction to consider a late-filed petition.

All franchise tax reports must be signed by one of the following: the president, vice-president, secretary, treasurer, general manager, superintendent, or managing agent of the corporation in Ohio. If a domestic corporation has not completed its organization, one of its incorporators must sign the report. Each taxpayer must list on its corporation franchise tax report the names of its president, secretary and treasurer along with the name and address of its statutory agent.

The filing and payment of the Ohio corporation franchise tax is due between January 1st and March 31st of the tax year.  However, if by January 31st the taxpayer did not file the Ohio corporation franchise tax report and did not make full payment of the tax, then by January 31st the taxpayer must file form FT 1120E, Declaration of Estimated Corporation Franchise Tax and must pay 1/3 of the estimated tax, but not less than the minimum fee.

• Extension (form FT 1120ER) The tax commissioner will grant an extension of time for filing the report until May 31st if by March 31st the taxpayer submits form FT 1120ER together with payment of the second 1/3 of the estimated tax due.

• Additional Extension (form FT 1120EX) The tax commissioner will grant an additional extension of time for filing the report beyond May 31st if the corporation has been granted an extension by the Internal Revenue Service and by May 31st the taxpayer submits form FT 1120EX together with the balance of the tax due. The second extension extends the filing date to the 15th day of the month following the month for which the Internal Revenue Service has granted an extension for filing the corporation's federal income tax return. The taxpayer must attach a copy of the federal extension to the corporation franchise report, form FT 1120, when filed. Please note that the additional extension applies only to those taxpayers whose taxable year ends after July 31st (see the table below).

If the due date of the report or the due date of an extension or payment falls on a Saturday, Sunday or legal holiday, then the report, extension or payment may be made on the next succeeding day which is not a Saturday, Sunday or legal holiday. If a franchise tax estimated payment or the franchise tax report is mailed on or before the due date but delivered after the due date, as extended, the postmark date is deemed the date of delivery. Certain large taxpayers must pay by electronic funds transfer.

 

The table below lists the latest possible due dates for filing the corporation franchise tax report for the various taxable year ends. The table assumes the following:

 

• If the taxpayer's taxable year ended on or after August 31st, the taxpayer has the maximum allowable federal extension,
• The taxpayer timely filed franchise tax forms FT 1120E, FT 1120ER, and where applicable, FT 1120EX and
• The taxpayer has timely made all estimated franchise tax payments.

 

Taxable Year Ending in 2007	Latest Possible Due Date for Filing the 2008 Franchise Tax Report
01/31/07 through 07/31/07	05/31/2008
08/31/2007	06/15/2008
09/30/2007	07/15/2008
10/31/2007	08/15/2008
11/30/2007	09/15/2008
12/31/2007	10/15/2008

Note: Each member of a combined franchise tax report must file its own separate forms FT 1120E, FT 1120ER, and FT 1120EX. Payment of all franchise tax is due by May 31st, even if the taxpayer has an extension to file after that date.

 

(Rev. 01.04.2008)

For taxable years ending on or after June 26, 2003, the minimum franchise tax fee is $1,000 if (i) the sum of the taxpayer’s gross receipts from its activities within and without Ohio during the taxable year equals or exceeds $5 million, or (ii) the total number of the taxpayer’s employees within and without Ohio at any time during the taxable year equals or exceeds 300.  In determining whether or not the taxpayer’s gross receipts and number of employees equal or exceed those thresholds, the taxpayer must include its proportionate share of the gross receipts of any pass-through entity in which the taxpayer has a direct or indirect ownership interest and its proportionate share of the number of employees of the pass-through entity.

Furthermore, the term “gross receipts” as used here, includes receipts that generate nonbusiness income and receipts from the sale of capital assets and IRC section 1231 assets whether those sales generate business income or nonbusiness income.

The minimum fee is $50 for taxable years ending before June 26, 2003 and for taxpayers whose taxable year ended on or after June 26, 2003, but whose gross receipts and number of employees are less than the thresholds discussed above. See Ohio Revised Code section 5733.06(E) as amended by H.B. 95.

The minimum fee is not subject to the franchise tax phase-out factor. Please refer to the question regarding the franchise tax phase-out.

(Rev 03.30.2006)

For taxable years ending on or after June 26, 2003, Ohio franchise tax law distinguishes business income from nonbusiness income and defines those terms as follows:

• “Business income means income arising from transactions, activities, and sources in the regular course of a trade or business and includes income from real property, tangible personal property, and intangible personal property if the acquisition, rental, management, and disposition of the property constitute integral parts of the regular course of a trade or business operation. “Business income” includes income, including gain or loss, from a partial or complete liquidation of a business, including, but not limited to, gain or loss from the sale or other disposition of goodwill.”  See the Ohio Revised Code section 5733.041(Q) as enacted by the new law.

• “Nonbusiness income means all income other than business income.”  See the Ohio Revised Code section 5733.04(R) as enacted by the new law.

As a result of the amendment to the franchise tax rule 5703-5-04, if the taxpayer’s franchise tax taxable year is greater than one year in length, the taxpayer may no longer “annualize” its income (and is no longer required to annualize its net operating losses) for the taxable year to effectively reduce the annual accounting period to one year in length.  

This rule is effective for taxable years ending on or after the January 1, 2004 effective date. Therefore, this portion of the rule will first apply to the 2005 Ohio report and the subsequent tax years.

You will need to register your corporation with the Ohio Secretary of State's office in order to obtain your charter/license to conduct business in Ohio.

You may download the registration forms from their web site at: http://www.sos.state.oh.us/SOSApps/SOS/FormRefbs.aspx.  Under "Business Forms", select "obtain forms". Then scroll down to the appropriate corporation type and select "Initial Articles of Incorporation”. If you need to speak to someone in that office, the phone number is 1-877-767-6446 or 614-466-3910.

Once you register with the Ohio Secretary of State's office that information is provided to the Ohio Department of Taxation so that a corporation franchise tax account can be added to our system.

A corporation may be required to register for the commercial activity tax (CAT).  For more detailed information, please refer to the section for commercial activity tax and its FAQ’s on the department’s Web site.

(Rev 03.30.2006)

You obtain that information from the Ohio Secretary of State’s office. The following link will take you to that topic on their web site: http://www.sos.state.oh.us/SOSApps/SOS/FormRefbs.aspx.

If you need to speak to someone in that office, the phone number is 1-877-767-6446 or 614-466-3910.

Yes, if you have an active charter/license with the Ohio Secretary of State’s office you are required to file and/or pay Ohio corporation franchise taxes until that charter or license has been dissolved through that agency. Section 5733.17 of the Ohio Revised Code states that the mere retirement from business or voluntary dissolution of a domestic or foreign corporation without filing the certificate provided for in Section 1701.86 of the Ohio Revised Code shall not exempt it from the requirements to make reports and pay excise or franchise taxes in accordance with Ohio law until this certificate is filed with the Ohio Secretary of State.  

In addition, any corporation that exits Ohio by dissolution or withdrawal in 1998 or thereafter, may be required to file an income-based exit tax on its unreported net income for the taxable year through the effective date in which the dissolution/withdrawal is recorded with the Ohio Secretary of State.  The report and payment is due by May 31 of the year following the calendar year in which the dissolution or withdrawal takes place.

The address and telephone number for the Ohio Secretary of State is:

http://www.sos.state.oh.us/SOSApps/SOS/FormRefbs.aspx

Ohio Secretary of State

180 E Broad St 16th Floor

Columbus, Ohio 43215

Phone: (614) 466-3910 or 1-877-767-6446.

You should contact the Taxpayer Services Division at (614) 995-4422.

Please be prepared to provide the following information:

1. Corporation name & address

2. You will need the following identification numbers for the corporation:

   • Federal employer identification number (FEIN),

   • Ohio corporation charter or license number,

   • Ohio corporation franchise tax identification number

3. You will need to provide the contact name, address and phone number of the person making the request and receiving the certificate. You may be required to submit form TBOR-1, Declaration of Tax Representative.

In order to issue the certificate, all corporation franchise taxes must be filed and paid up to date. These requests are handled on a first come, first served basis and for that reason may require several days to research. Once you have provided the above information, we ask that you allow 5-7 business days to receive either the certificate (if all taxes are found to be current) or correspondence with request for further information.

You should obtain a dissolution packet from the Ohio Secretary of State's office.  That office handles the dissolution process.

You can download the packet from their web site at: http://www.sos.state.oh.us/SOSApps/SOS/FormRefbs.aspx.  Under "Business Forms", select "obtain forms". Then scroll down to the appropriate corporation type and select "Certificate of Dissolution by...". If you need to speak to someone in that office, the phone number is 1-877-767-6446 or 614-466-3910.

In addition, it is necessary for all corporations that are dissolving or surrendering their license (Non-Profit included) to complete form D5 Notification of Dissolution or Surrender. The D5 should be mailed to the address on that form. The form is available on our web site at:

http://dw.ohio.gov/tax/dynamicforms/

You will need to submit a properly completed D5 - Notification of Dissolution or Surrender to the Dissolution Unit of the Ohio Department of Taxation. In order to obtain the tax clearance, Part 1 & Part 2 of the D5 must be completed.

This form is available on our web site at:

http://dw.ohio.gov/tax/dynamicforms/

Dissolution Unit/Taxpayer Services Division

Ohio Dept of Taxation

PO Box 182382

Columbus OH 43218-2382

(614) 995-4422

In addition you will need to obtain the dissolution/surrender packet from the Ohio Secretary of State’s web site. The actual dissolution is handled by that office. You can download the packet from their web site at: http://www.sos.state.oh.us/SOSApps/SOS/FormRefbs.aspx.  Under "Business Forms", select "obtain forms". Then scroll down to the appropriate corporation type and select "Certificate of Dissolution by...". If you need to speak to someone in that office, the phone number is 1-877-767-6446 or 614-466-3910.

You should contact the Taxpayer Services Division at (614) 995-4422.

Please be prepared to provide the following information:

1. Corporation name & address

2. You will need the following identification numbers for the corporation:

   • Federal employer identification number (FEIN),

   • Ohio corporation charter or license number,

   • Ohio corporation franchise tax identification number

3. You will need to provide the contact name, address and phone number of the person making the request and receiving the certificate. You may be required to submit form TBOR-1, Declaration of Tax Representative.

In order to issue the certificate, all corporation franchise taxes must be filed and paid up to date. These requests are handled on a first come, first served basis and for that reason may require several days to research. Once you have provided the above information, we ask that you allow 5-7 business days to receive either the certificate (if all taxes are found to be current) or correspondence with request for further information.

You should contact the Taxpayer Services Division at (614) 995-4422.

Please be prepared to provide the following information:

1. Corporation name & address

2. You will need the following identification numbers for the corporation:

   • Federal employer identification number (FEIN),

   • Ohio corporation charter or license number,

   • Ohio corporation franchise tax identification number

3. You will need to provide the contact name, address and phone number of the person making the request and receiving the certificate. You may be required to submit form TBOR-1, Declaration of Tax Representative.

In order to issue the certificate, all corporation franchise taxes must be filed and paid up to date. These requests are handled on a first come, first served basis and for that reason may require several days to research. Once you have provided the above information, we ask that you allow 5-7 business days to receive either the certificate (if all taxes are found to be current) or correspondence with request for further information.

For most taxpayer’s the franchise tax will ratably phase out over the five franchise tax years 2006 through 2010 (taxable years ending 2005 through 2009).  During this same period Ohio’s new commercial activity tax (CAT) will ratably phase in for most franchise taxpayers.  For those taxpayers subject to the franchise tax phase-out, the phase-out applies to the 2006 report even if the taxpayer’s taxable year ended prior to the June 30, 2005 effective date of the new law.

For report years 2006, 2007, 2008, 2009 and 2010 franchise taxpayers subject to the phase-out must pay 80%, 60%, 40%, 20% and 0%, respectively, of the franchise tax after nonrefundable credits that they would otherwise pay were it not for the phase-out.  However, the Ohio Revised Code section 5733.0611 credit for taxes paid by a qualifying pass-through entity is not subject to the phase-out factor.  Please refer to the question regarding how the phase-out affects the nonrefundable credit for taxes paid by a qualifying pass-through entity.

The phase-out factor has no effect on the franchise tax minimum fee.  So, if a taxpayer’s franchise tax minimum fee is either $50 or $1,000, the phase-out factor percentage does not reduce the minimum fee.

The franchise tax phase-out and CAT phase-in do not apply to the following entities: (i) financial institutions, (ii) financial holding companies, (iii) bank holding companies, (iv) savings and loan holding companies, (v) affiliates of entities described in (i) through (iv) above when engaged in financial institution-type activities, (vi) certain affiliates of insurance companies when engaged in insurance-type activities and (vii) “securitization” companies described in R.C. 5751.01(E)(10).

(03.30.2006)

For taxable years ending on or after July 1, 2005, Amended Substitute House Bill 66 converts the Ohio Revised Code section (R.C.) 5733.33 manufacturer’s credit to a nonrefundable grant administered by the Ohio Department of Development.

 

• For taxable years ending on or after July 1, 2005, the R.C. 5733.33 M&E credit converts to a grant which is administered by the Department of Development.
• Neither the credit nor the grant is available for new M&E purchased after June 30, 2005.  Under prior law the qualifying purchase period would have ended December 31, 2015.
• New M&E on which the taxpayer claims the credit or the grant must be installed by June 30, 2006 (rather than December 31, 2016).
• The purchaser of qualifying equipment must file the Notice of Intent for credit/grant with the Department of Development as a prerequisite to the taxpayers claiming the credit or grant on the franchise tax report.  The law requires that taxpayers (or a pass-through entity for corporate investors) must file the notice of intent by the filing date (plus extensions) for the taxpayer’s taxable year that includes September 30, 2005.
• Failure to file a “grant request” form with the franchise tax report may result in the taxpayer being denied the grant.  This form is available on the department’s Web site.  The grant request form should not be confused with the notice of intent which has different filing requirements.
• For taxable years ending on or after July 1, 2005, taxpayers must claim a grant (even on remaining 1/7 credit amounts from earlier years).
• The same eligibility requirements applicable to the former credit also apply to the grant.

 

If the taxpayer requesting the grant is subject to the franchise tax phase-out, then for each year of the phase-out, the grant is subject to the same phase-out factor as the tax after nonrefundable credits.

 

For more detailed information, please refer to the 2008 corporation franchise tax instruction booklet on our website.

(Rev. 01.04.2008)

Beginning with the 2006 report year, franchise taxpayers subject to the phase-out must multiply their franchise tax after nonrefundable credits (other than the nonrefundable credit for tax paid by a qualifying pass-through entity) by the phase-out factor.  The nonrefundable credit for taxes paid by a qualifying pass-through entity is not subject to the phase-out factor.  Rather than applying the phase-out factor to this credit, the new law phases out the tax that a pass-through entity must pay on its Ohio income passing through to qualifying investors that are subject to the franchise tax phase-out.  See table below.

Pass-Through Entity’s Taxable Year Ending in:	Pass-Through Entity’s Tax Rate on its Ohio Income Passing Through to Qualifying Investors Subject to the Franchise Tax Phase-Out
2005	6.8% (80% x 8.5%)
2006	5.1% (60% x 8.5%)
2007	3.4% (40% x 8.5%)
2008	1.7% (20% x 8.5%)
2009 and thereafter	0% (0% x 8.5%)

(03.30.2006)

Most nonrefundable franchise tax credits are not recoverable against the CAT and therefore taxpayers cannot claim their unused nonrefundable franchise tax credit carryforward as a credit against the CAT. However, the following three nonrefundable credits will convert to nonrefundable CAT credits following the 2008 franchise tax report, which is the last report year that these three credits can be claimed against the franchise tax (for those taxpayer’s subject to the franchise tax phase-out):

• Job Retention Credit – Following the last franchise report for which the Ohio Revised Code section (R.C.) 5733.0610(B) nonrefundable credit is claimed (2008 FT 1120) this credit converts to a nonrefundable credit against the taxpayer’s CAT liability for tax periods beginning on or after January 1, 2008, but may not be applied against the taxpayer’s CAT liability for CAT periods beginning before July 1, 2008. Taxpayers may apply any unused franchise tax job retention credit carryforward amounts against the taxpayer’s CAT liability providing the carryforward years under franchise tax and the CAT do not exceed three. See R.C. 5751(B) and 122.171 as enacted by House Bill 66.

• Credit for Qualified Research Expense – Following the last franchise report for which the R.C. 5733.351 nonrefundable credit is claimed (2008 FT 1120) this credit converts to a nonrefundable credit against the taxpayer’s CAT liability for tax periods beginning on or after January 1, 2008, but may not be applied against the taxpayer’s CAT liability for CAT periods beginning before July 1, 2008. Taxpayers may apply any unused R.C. 5733.351 franchise tax credit carryforward amounts against the taxpayer’s CAT liability providing the carryforward years under franchise tax and the CAT do not exceed seven. See R.C. 5733.351 and 5751.51 as enacted by House Bill 66.

• Research and Development Loan Repayment Credit – Following the last franchise report for which the R.C. 5733.352 nonrefundable credit is claimed (2008 FT 1120) this credit converts to a nonrefundable credit against the taxpayer’s CAT liability for tax periods beginning on or after January 1, 2008. Taxpayers may apply its unused R.C. 5733.352 franchise tax credit carryforward amounts against the taxpayer’s CAT liability for CAT periods beginning on or after July 1, 2008 as provided in R.C. 5751.52

For those taxpayers not subject to the franchise tax phase-out and the CAT phase-in, these credits continue under the franchise tax.

Please refer to the 2008 corporation franchise tax instruction booklet on our website for more detailed information.

(Rev. 01.04.2008)