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COVID-19 Tax Relief

COVID-19 Tax Relief

Ohio taxes unemployment benefits to the extent they are included in federal adjusted gross income (AGI). Due to the Federal American Rescue Plan Act of 2021, signed into law on March 11, 2021, the IRS is allowing certain taxpayers to deduct up to $10,200 in unemployment benefits for tax year 2020. Certain married taxpayers who both received unemployment benefits can each deduct up to $10,200.

This deduction is factored into the calculation of your federal AGI, which is the starting point for the Ohio income tax return (Ohio IT 1040, line 1). Ohio has conformed to this unemployment benefits deduction for tax year 2020. However, while some taxpayers will file their 2020 federal and Ohio income tax returns and claim the unemployment benefits deduction, the Department of Taxation is aware that many taxpayers filed and reported their unemployment benefits prior to the enactment of this deduction.

As such, the Department offers the following guidance related to the unemployment benefits deduction for tax year 2020:

  • Ohio does not have its own deduction for unemployment benefits. Thus, if the taxpayer does not qualify for the federal deduction, then all unemployment benefits included in federal AGI are taxable to Ohio.
  • Taxpayers who claim the unemployment benefits deduction on their federal return and report that federal AGI on line 1 of their Ohio IT 1040 do not need to take any additional action.
  • Taxpayers who previously filed their federal and Ohio returns prior to the enactment of this federal deduction and whose Ohio IT 1040, line 10 amount was $0 do not need to take any additional action. Such taxpayers are not entitled to any additional Ohio refund.
  • Taxpayers who file an amended federal return should wait to file their amended Ohio IT 1040 (and an SD 100 for those who reside in a traditional tax base school district) until the IRS has approved the requested changes. Taxpayers must include the following with their amended Ohio return(s):
    1. A copy of their federal amended return;
    2. A copy of their federal refund check(s) or proof of direct deposit(s);
    3. A “Reasons and Explanation of Corrections” (Ohio form IT RE or SD RE); AND
    4. Any other supporting documentation needed to substantiate the changes reported.

    In place of items 1 and 2, taxpayers may provide their IRS Tax Account Transcript if the transcript reflects a reduction in their federal AGI based on the unemployment benefit deduction.

  • Taxpayers who filed their federal and Ohio returns prior to the enactment of the federal unemployment benefits deduction and are waiting for the IRS to issue a refund (or have already received the refund) must do all of the following after the IRS issues the refund:

    1. File an amended Ohio IT 1040 (and an amended SD 100 for those who reside in a traditional tax base school district) to report your new federal adjusted gross income (AGI);
    2. Include a copy of your IRS Tax Account Transcript showing your new federal AGI, which are available at irs.gov/individuals/get-transcript or by calling 800-908-9946; AND
    3. Complete the Ohio Reasons and Explanation of Corrections (Ohio form IT RE or SD RE).

    When completing the “Reasons and Explanation of Corrections” form, check the “Federal adjusted gross income decreased” box and list “Federal unemployment deduction refund” in the “Detailed explanation” section.

The IRS’s current guidance on the federal taxation of unemployment benefits can be found here. Additionally, taxpayers who filed their federal return prior to the enactment of the unemployment benefits deduction should see IR-2021-71 for federal refund information.

Section 5 of Ohio Sub. S.B. 18 allows the Department of Taxation to waive interest, penalty and/or interest penalty (IT/SD 2210) related to unemployment income reported on the IT 1040 and/or the SD 100.  To qualify for the waiver, all of the following must be true:

  • The taxpayer received unemployment benefits in 2020;
  • The benefit is included in the taxpayer’s Ohio adjusted gross income* and/or the taxpayer’s traditional school district income tax base;
  • The taxpayer timely filed the Ohio IT 1040 (and SD 100 if applicable). For most taxpayers, the due date for both forms is May 17, 2021;
  • The taxpayer accrued interest, penalty and/or interest penalty as a result of nonpayment or underpayment of the 2020 tax liability related to the taxpayer’s unemployment income; AND
  • The taxpayer has paid the tax due for 2020 in full when requesting the waiver.

*Taxpayers who deduct all of their unemployment benefits when filing their federal income tax return do not qualify for this waiver.
After paying any tax due for 2020, taxpayers who qualify for this waiver should request the waiver by responding to the billing/ assessment/ collection notice with the following information:

  • A request for a waiver, including an explanation of why the liability exists and referencing the “unemployment billing waiver program”;
  • A copy of their federal return (including schedule 1) or IRS Tax Account Transcript;
  • A copy of the notice; AND
  • Proof of payment, such as a copy of a cancelled check or electronic confirmation.

Taxpayers who qualify for the waiver and self-imposed interest, penalty and/or interest penalty on their 2020 IT 1040 or SD 100, or paid the amounts in response to a bill or assessment may request a refund of the amounts paid relating to unemployment income.  The refund should be requested using form IT-AR.

Note: This waiver does not delay the Department’s billing or certification processes, nor does it delay the Ohio Attorney General’s collection process for such unpaid liabilities of tax, interest and/or penalty. Amounts certified to the Ohio Attorney General will continue to incur collection fees that the Department of Taxation cannot waive.

 

No. EIDL advance grants of up to $10,000 authorized by the CARES Act are not excluded from gross receipts under uncodified section 36 of Am. Sub. H.B. 481. That exclusion only applies to amounts excluded from gross income under section 1106(i) of the CARES Act, which only excludes loans extended and forgiven under the Paycheck Protection Program. No provision in R.C. 5751.01(F)(2) excludes the EIDL advance grants from gross receipts.

Yes. The employee retention tax credits authorized by the CARES Act are excluded from gross receipts under R.C. 5751.01(F)(2)(m), which excludes tax refunds and other tax benefit recoveries. CAT information release 2005-17 describes this exclusion further and indicates that “other tax benefit recoveries” includes refundable tax credits available to the taxpayer.

The CARES Act established the Coronavirus Relief Fund which some local governments and state agencies have used to establish grant programs to support businesses.  The receipt of such a grant by a business is not excluded from gross receipts for the CAT. Examples of such grants include, but are not limited to, county-issued grants, Small Business Relief Grants, and grants from the Bar and Restaurant Assistance Fund.

If, instead of a grant, the local government or state agency extends a loan to a business using these funds (and the loan was not forgiven), the amount of the loan is excluded from gross receipts for the CAT under R.C. 5751.01(F)(2)(e).

No. Provider Relief Fund payments are not excluded from a taxpayer’s gross receipts for purposes of the CAT. However, if the health care provider is a nonprofit organization as that term is defined in Ohio Administrative Code 5703-29-10, that nonprofit organization is an excluded person under R.C. 5751.01(E)(8) and therefore not subject to CAT.

  • In accordance with H.B. 404, liquor permits that normally expired on June 1, 2020, October 1, 2020, or February 1, 2021 now expire on July 1, 2021.
  • For more information on the issuance of your liquor permit, please visit the Division of Liquor Control’s  FAQ’s for liquor permit holders amid COVID-19.
  • Please continue to work with the Department of Taxation to remedy any tax delinquencies that may have been identified to you as outstanding, thus, impeding the renewal of your liquor permit.

Pursuant to Am. Sub. H.B. 197 of the 133rd Ohio General Assembly, Ohio is in conformity with federal income tax law as it existed on March 27, 2020. This includes the CARES Act (H.R. 748) and its applicability to Ohio’s income taxes.

For more information on Ohio conformity, please see the Department’s Conformity Updates page.

Pursuant to Sub. H.B. 404 of the 133rd GA, current licenses issued by the Department of Taxation that were set to expire between March 9, 2020 and April 1, 2021 remain valid until July 1, 2021. If an old license expired before March 9, 2020 or a new license is required to conduct an activity, a taxpayer should take the necessary steps to obtain a valid license.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress provides federal assistance to small businesses, including forgivable Paycheck Protection Program (PPP) loans. A second round of PPP loans were authorized under the Consolidated Appropriations Act, 2021 (CAA). The amount of a PPP loan and any amount of the loan that is forgiven under the CARES Act or under the CAA is excluded from a taxpayer’s gross receipts for purposes of the CAT.

The principal amount received by a person on account of any transaction properly characterized as a loan to a person is excluded from gross receipts under R.C. 5751.01(F)(2)(e). Additionally, forgiven debt is generally included in gross receipts for CAT. However, uncodified section 36 of Am. Sub. H.B. 481 of the 133rd General Assembly excludes from gross receipts amounts of forgiven indebtedness excluded from a taxpayer’s gross income for federal income tax purposes pursuant to section 1106(i) of the CARES Act or section 276 of the CAA.

Yes. the Department is processing individual and school district income tax returns resulting in refunds. The Department strongly urges taxpayers to file returns electronically. Most taxpayers who file their returns electronically and request direct deposit will receive their refund in approximately fifteen (15) business days. For taxpayers that file returns by paper, because of the COVID-19 pandemic, it may take several months for those returns and corresponding refunds to be processed. If you have already filed your return by paper but would like to expedite your refund, please re-submit your return electronically using the Department's free I-File service, or any commercial software product. You may check the status of your refund online or by calling 1-800-282-1784.

Yes. Cigarette stamp orders are being fulfilled.

The Department of Taxation will accept an electronic signature for the following types of documents:

  • Refund claims for any tax type;
  • Petitions for Reassessment;
  • TBOR-1s;
  • Settlement Agreements;
  • Waivers (Statute of Limitation Extensions)
  • Consents to Accept Electronic Delivery; and
  • Voluntary Disclosure Agreements.

The Department will temporarily accept an electronic signature in either of the following formats:

  • Images of signatures (scanned or photographed) in one of the following file types: .tif, .jpg, .jpeg, or .pdf.
  • Digital Signatures that use encryption techniques to provide proof of original and unmodified documentation on one of the following file types: tiff, jpg, jpeg, or pdf.

Additionally, the taxpayer or representative must include a statement, either in an attached cover letter or within the body of the email transmitting the document that states: "The attached [name of document] includes [name of taxpayer]'s valid signature and the taxpayer intends to transmit the attached document to the Department of Taxation."

Yes. Pursuant to uncodified section 22 of Am. Sub. H.B. 197, the statute of limitations for a refund claim set to expire between March 9, 2020 and the end of the Governor's COVID-19 emergency declaration (or July 30, 2020, whichever is earlier) is tolled during that time. The Department encourages taxpayers to make their best efforts to file their refund claim within the original required timeframe.

These amounts are gross receipts and generally would be subject to the CAT. However, Substitute Senate Bill 18 passed into law by the 134th General Assembly includes a temporary exclusion of such amounts from the definition of gross receipts. For purposes of the CAT, “gross receipts” excludes any amount of excess surplus of the state insurance fund received by a taxpayer from the BWC during calendar years 2020 and 2021. This includes dividends and refunds from the BWC. If you are a taxpayer that reported such amounts on a CAT return that has already been filed, you may amend your return and request a refund of the tax paid on such amounts.

Additional Resources

Additional Resources