Ohio Corporation Franchise Tax Report Instructions For Financial Institutions

15. RECORDS RETENTION

• Penalty may be imposed for failure to file a report or failure

Every corporation must maintain books and records which sub-

to file a report timely. The penalty imposed may not exceed

stantiate the information reported on its Ohio franchise tax

the greater of (i) $50 per month up to $500 or (ii) 5 percent

report. These books and records must be available for inspec-

per month of the tax due shown on the report up to 50 per-

tion by agents of the Ohio Department of Taxation for a period

cent.

of four years from the later of the date the taxpayer filed the

• Additional penalties may be imposed for filing a fraudulent

franchise report or the date the report was required to be filed.

report and for filing a fraudulent refund claim.

16. ENTERPRISE ZONE TAX BENEFITS

11. PENALTY SAFE HARBORS FOR ESTIMATED PAYMENTS

Amended Substitute House Bill 95, 125

General Assem-

Substitute Senate Bill 200 (Taxpayer Services II), 124

Gen-

bly (Budget Bill) extends through October 15, 2009 the au-

eral Assembly, effective September 6, 2002 enacted the fol-

thority for local governments to enter into enterprise zone

lowing safe harbor applicable to penalty on underpayment of

agreements. See O.R.C. section 5709.62 as amended by the

estimated tax.

bill.

• With respect to estimated payments, the O.R.C. section

5733.28(A)(2) failure to pay penalty applies to two periods:

Businesses that establish, expand, renovate or occupy a fa-

(1) “any period of delinquency ending prior to the first day of

cility pursuant to an enterprise zone agreement and that cre-

June of the tax year” and (2) “any period of delinquency

ate new jobs in a certified enterprise zone without reducing

commencing the first day of June of the tax year and con-

employment elsewhere in Ohio may be entitled to a series of

cluding on the extended due date.” See O.R.C. section

tax benefits on their Ohio corporation franchise tax report.

5733.021 as amended by Senate Bill 200.

Among these benefits are an employee training credit, a

• For purposes of determining the O.R.C. section

daycare credit, and treatment of the qualifying property as an

5733.28(A)(2) failure to pay penalty for any period of delin-

exempted asset under the net worth base.

quency ending prior to the first day of June of the tax year,

the commissioner may charge penalty on the delinquent

To qualify, businesses must hold a Tax Incentive Qualification

portion of the estimated tax and estimated tax means the

Certificate (issued by the Department of Development) and

lesser of 100 percent of last year’s tax or 90 percent of this

must hire new employees to fill nonretail positions at the facil-

year’s tax. See O.R.C. section 5733.021(C)(1)(c).

ity. Also, at the time of employment at least 25 percent of the

• For purposes of determining the O.R.C. section

new employees must have been at least one of the following:

5733.28(A)(2) failure to pay penalty for any period of delin-

• Unemployed persons who had resided at least six months

quency commencing the first day of June of the tax year

in the county in which the enterprise’s project site is locat-

and concluding on the extended due date, the commission-

ed;

er may charge penalty on the delinquent portion of the esti-

• Job Training Partnership Act eligible employees who had

mated tax and estimated tax means 90 percent of this year’s

resided at least six months in the county in which the enter-

tax. See O.R.C. section 5733.021(C)(2)(c).

prise’s project site is located;

12. OFFICERS, STATUTORY AGENT AND SIGNATURE

• Recipients of aid to dependent children, general relief or

The president, vice-president, secretary, treasurer, general

unemployment compensation benefits who had resided at

manager, superintendent or managing agent of the corpora-

least six months in the county in which the enterprise’s

tion in Ohio must sign the report. If a domestic corporation

project site is located;

has not completed its organization, one of its incorporators

• Handicapped persons, as defined under O.R.C. section

must sign the report. In addition, each taxpayer must list its

3304.11(A), who had resided at least six months in the county

president, secretary and treasurer along with the name and

in which the enterprise’s project site is located;

address of its statutory agent.

• Residents for at least one year of a zone located in the county

in which the enterprise’s project site is located. See O.R.C.

13. METHODS OF ACCOUNTING

sections 5709.64 and 5709.65.

The value of issued and outstanding shares of stock must be

determined from the books of the corporation. The taxpayer

In addition to the enterprise zone franchise tax benefits de-

must keep its books in accordance with a generally recog-

scribed above, a taxpayer may apply to the Director of Devel-

nized and approved accounting system. The tax-basis meth-

opment for an “employee tax credit certificate” for each eligi-

od of accounting is a generally recognized and approved ac-

ble new employee the enterprise hires after June 30, 1994 at

counting system. See Gray Horse Inc. v. Limbach (1993), 66

the facility to which the enterprise zone agreement applies

Ohio St. 3d 631. If a taxpayer keeps its books both in accor-

provided that the taxpayer is complying with an enterprise zone

dance with regulatory accounting principles and in accordance

agreement and has not closed or reduced employment at any

with generally accepted accounting principals, the value of the

place of business in Ohio within the 12 months preceding the

taxpayer’s issued and outstanding shares of stock must be

application. A taxpayer that is issued a tax credit certificate for

based upon those books kept in accordance with generally

an eligible employee may claim a $1,000 nonrefundable cred-

accepted accounting principles. See Tax Commissioner’s Rule

it for each taxable year covered under the enterprise zone

5703-5-08.

agreement during which the eligible employee is employed by

the taxpayer. An “eligible employee” is a new employee who

14. ROUNDING OFF TO WHOLE DOLLAR AMOUNTS

at the time the employee was hired to work at the facility was

The money items on the franchise tax report and accompany-

a recipient of aid to dependent children or general assistance

ing schedules must be shown as whole dollar amounts by elim-

and resided for at least one year in the county in which the

inating amounts less than 50 cents and increasing amounts

facility is located. See O.R.C. section 5709.66. Credit applica-

from 50 cents to 99 cents to the next highest dollar.

tions are available from the Office of Tax Incentives, Ohio De-

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Ohio Corporation Franchise Tax Report Instructions For Financial Institutions - 2004 Page 7

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