Instructions For Ohio Form Ft 1120fi - Ohio Corporation Franchise Tax Report

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For purposes of determining the R.C. 5733.28(A)(2) failure to pay

To qualify for franchise tax enterprise zone beneﬁ ts, businesses

penalty for any period of delinquency commencing the ﬁ rst day of

must (i) hold a Tax Incentive Qualiﬁ cation Certiﬁ cate (issued by the

June of the tax year and concluding on the extended due date,

ODOD) and (ii) hire new employees to ﬁ ll nonretail positions at the

the commissioner may charge penalty on the delinquent portion

facility. At the time hired at least 25% of the new employees must

of the estimated tax. “Estimated tax” for this purpose means 90%

have been at least one of the following:

of this year’s tax. See R.C. 5733.021(C)(2).

• Unemployed persons who had resided at least six months in the

13. Ofﬁ cers, Statutory Agent and Signature

county in which the enterprise's project site is located;

The president, vice president, secretary, treasurer, general manager,

• Job Training Partnership Act eligible employees who had resided

superintendent or managing agent of the corporation in Ohio must

at least six months in the county in which the enterprise's project

sign the report. If a domestic corporation has not completed its or-

site is located;

ganization, one of its incorporators must sign the report. In addition,

• Recipients of aid to dependent children, general relief or

each taxpayer must list its president, secretary and treasurer along

unemployment compensation beneﬁ ts who had resided at least

with the name and address of its statutory agent.

six months in the county in which the enterprise's project site is

located;

14. Paid Practitioner’s Signature

• Handicapped persons, as defined under R.C. 3304.11(A),

The Ohio Department of Taxation follows IRS Notice 2004-54.

who had resided at least six months in the county in which the

IRS Notice 2004-54 provides for alternative preparer-signature

enterprise's project site is located;

procedures for federal income tax paper returns that paid

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

practitioners prepare on behalf of their clients. Paid preparers can

which the enterprise's project site is located. See R.C. 5709.64

follow those same procedures with respect to the following Ohio

and 5709.65.

paper returns: individual income tax, school district income tax,

withholding tax (employer and pass-through entity) and corporation

In addition to the enterprise zone franchise tax beneﬁ ts described

franchise tax. See R.C. 5703.262(B) and 5747.08(F).

above, a taxpayer may apply to the director of the ODOD for an

“employee tax credit certiﬁ cate” for each eligible new employee

15. Methods of Accounting

the enterprise hires after June 30, 1994 at the facility to which the

The value of issued and outstanding shares of stock must be

enterprise zone agreement applies provided that the taxpayer is

determined from the books of the corporation. The taxpayer must

complying with the enterprise zone agreement and has not closed

keep its books in accordance with a generally recognized and

or reduced employment at any place of business in Ohio within

approved accounting system. The tax-basis method of accounting

the 12 months preceding the application. For more information on

is a generally recognized and approved accounting system. See

the Credit for Eligible New Employees in an Enterprise Zone see

Gray Horse Inc. v. Limbach (1993), 66 Ohio St. 3d 631. If a taxpayer

Schedule A-1, credit #7 in the instructions booklet for corporations

keeps its books both in accordance with regulatory accounting

that are not ﬁ nancial institutions.

principles and in accordance with generally accepted accounting

principals, the value of the taxpayer’s issued and outstanding shares

19. Assessments

of stock must be based upon those books kept in accordance with

The tax commissioner may issue an assessment against the

generally accepted accounting principles. See Tax Commissioner

taxpayer for any deﬁ ciency within three years after the later of the

Rule 5703-5-08.

following dates:

16. Rounding Off to Whole Dollar Amounts

• The ﬁ nal date the report subject to assessment was required to

The money items on the franchise tax report and accompanying

be ﬁ led, or

schedules must be rounded to the nearest whole dollar by eliminat-

• The date the report was ﬁ led.

ing amounts less than 50 cents and increasing amounts from 50

However, both the assessment statute of limitations and the refund

cents to 99 cents to the next highest dollar.

statute of limitations may be extended for an agreed-upon period

17. Records Retention

if both the taxpayer and the tax commissioner consent in writing to

Every corporation must maintain books and records that substantiate

the extension by signing Ohio form FT WAIVER before the statute

the information reported on its Ohio franchise tax report. These

of limitations period would otherwise expire. Furthermore, if the tax

books and records must be available for inspection by agents of

commissioner disregards a sham transaction, the assessment

the Ohio Department of Taxation for a period of four years from the

statute of limitations period is doubled. See general instruction

later of (a) the date the taxpayer ﬁ led the franchise report or (b) the

#22 and R.C. 5703.56.

date the taxpayer was required to ﬁ le the report.

An amended franchise tax report ﬁ led as a result of an adjustment

18. Enterprise Zone Tax Beneﬁ ts

to the corporation’s federal income tax return is deemed a report

Note: House Bill 1 (Budget Bill), 128

General Assembly

subject to assessment. However, the amended report does not

extended through Oct. 15, 2010 the authority for local

reopen those facts, ﬁ gures, computations or attachments from a

governments to enter into enterprise zone agreements. See

previously ﬁ led report no longer subject to assessment or refund

R.C. 5709.62 as amended by HB 1.

that are not affected, either directly or indirectly, by the adjustment

to the corporation’s federal income tax return. Furthermore,

Businesses that establish, expand, renovate or occupy a facility

once the three-year refund statute of limitations has passed, the

pursuant to an enterprise zone agreement and that create new

taxpayer may not offset the additional franchise tax resulting from

jobs in a certiﬁ ed enterprise zone without reducing employment

IRS audit adjustments against franchise tax that the taxpayer

elsewhere in Ohio may be entitled to a series of franchise tax

erroneously overpaid due to errors or mistakes unrelated to the

beneﬁ ts. See R.C. 5709.64 and 5709.65. Among these beneﬁ ts

federal adjustments. See Gen. Motors Corp. v. Limbach (1993),

are an employee training credit, a daycare credit, and treatment

67 Ohio St. 3d 90.

of the qualifying property as an exempted asset under the net

worth base.

The statute of limitations does not preclude either the tax

commissioner or the taxpayer from adjusting the net operating loss

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Instructions For Ohio Form Ft 1120fi - Ohio Corporation Franchise Tax Report - 2012 Page 8

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