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Ohio Corporation Franchise Tax Instructions for

corporation franchise tax applicable to ﬁ nancial institutions. Under

Financial Institutions

this legislation, tax year 2013 will be the last year that taxpayers

Tax Year (Report Year) 2013

ﬁ le the Ohio corporation franchise tax for ﬁ nancial institutions.

Taxable Year Ending in 2012

• Am. Sub. Senate Bill 314, 129th General Assembly, effective Sept.

Ohio Form FT 1120FI

28, 2012. This bill extends eligibility for the historic preservation

The 2013 franchise tax instructions that follow apply only to

tax credit for certain qualiﬁ ed lessees. Regarding the job creation

ﬁ nancial institutions (deﬁ ned below). With the completion of

tax credit, the bill permits employers, in some circumstances, to

the franchise tax phase-out in 2009, most corporations are not

use an earlier payroll period as the base from which the increase

subject to the franchise tax for tax years (report years) 2010 and

in payroll withholding is measured.

thereafter. However, ﬁ nancial institutions along with certain other

Decisions

corporations described in R.C. 5733.01(G) and 5751.01(E) are

an exception. Financial institutions must ﬁ le Ohio form FT 1120FI.

Ohio Supreme Court

Other corporations remaining subject to the franchise tax must ﬁ le

Ohio form FT 1120, the instructions for which are in a separate ﬁ le

During calendar year 2012 neither the Board of Tax Appeals nor

on our Web site.

the courts issued any decisions that signiﬁ cantly affect the Ohio

corporation franchise tax.

In our continuing effort to serve Ohio taxpayers in a cost-effective

manner the Department of Taxation did not mail the 2013

General Instructions and Information

franchise tax instruction booklet or the 2013 franchise tax

forms. Instead, the franchise tax instructions and forms are

The Ohio corporation franchise tax is an excise tax imposed on

available on the Department of Taxation’s Web site. In addition to

certain domestic and foreign corporations for the privilege of doing

forms and instructions, our Web site has links to the Ohio Revised

business in Ohio, owning capital or property in Ohio, holding a

Code, Administrative Code (tax commissioner rules), Department of

charter or certiﬁ cate of compliance authorizing the corporation to

Taxation information releases, and other information. We encourage

do business in Ohio, or otherwise having nexus with Ohio during

you to become familiar with our Web site:

a calendar year. Unless otherwise exempt, those corporations to

which the franchise tax phase-out does not apply are subject to

tax.ohio.gov

the franchise tax for each calendar year (tax year) for which on

the ﬁ rst day of January of that calendar year the corporation holds

Taxpayers not having Internet access can obtain forms and

an Ohio charter, does business in Ohio, owns or uses a part or all

printed instructions by calling us toll free at 1-800-282-1782.

of its capital or property in Ohio, holds a certiﬁ cate of compliance

A ﬁ nancial institution is any of the following:

authorizing the corporation to do business in Ohio, or otherwise

• A national bank organized and existing as a national bank

has nexus with Ohio under the Constitution of the United States.

association pursuant to the “National Bank Act,” 12 U.S.C. 21;

The franchise tax is levied on the value of a corporation’s issued and

• A federal savings association or federal savings bank that is

outstanding shares of stock. The value of issued and outstanding

chartered under 12 U.S.C. 1464;

shares of stock is determined from the books of the taxpayer

• A bank, banking association, trust company, savings and loan

as of the beginning of the taxpayer’s annual accounting period

association, savings bank or other banking institution that is

that includes the ﬁ rst day of January of the tax year. See R.C.

incorporated or organized under the laws of any state;

5733.056(B). Corporations remaining subject to the franchise tax

• Any corporation organized under 12 U.S.C. 611 to 631;

after the phase-out, other than ﬁ nancial institutions, must determine

• Any agency or branch of a foreign depository as deﬁ ned in 12

the value of their issued and outstanding shares of stock under both

U.S.C. 3101;

the net income base and the net worth base and pay the tax on the

• A company licensed as a small business investment company

base that produces the greater tax. Financial institutions are not

under the “Small Business Investment Act of 1958,” 72 Stat. 689,

subject to the tax on the net income base but are subject to the tax

15 U.S.C. 661, as amended; or

on the net worth base at a higher rate than other taxpayers. Financial

• A company chartered under the “Farm Credit Act of 1933,” 48

institutions must ﬁ le Ohio form FT 1120FI. Other corporations

Stat. 257, 12 U.S.C. 1131(d), as amended.

remaining subject to the franchise tax must ﬁ le Ohio form FT 1120.

Speciﬁ cally excluded from the deﬁ nition of a "ﬁ nancial institution"

Tax year. The calendar year in and for which the tax is paid is

(and from the deﬁ nition of a "dealer in intangibles") are insurance

called the “tax year.” The tax year is also referred to as the “report

companies, credit unions and corporations or institutions organized

year.” The franchise tax for tax year 2013 is paid for the privilege of

under the “Federal Farm Loan Act” and amendments thereto. In

doing business in Ohio during the calendar year 2013.

addition, for franchise tax purposes a production credit association

is not a ﬁ nancial institution.

Taxable year. The accounting period on which the tax is based

is called the “taxable year” and is deﬁ ned as “. . . a period ending

Recent Legislation

on the date immediately preceding the date of commencement of

• Am. Sub. House Bill 508, 129th General Assembly. This bill allows

the corporation’s annual accounting period that includes the ﬁ rst day

“qualiﬁ ed ﬁ nancial institutions” to elect to calculate the base upon

of January of the tax year.” Generally, a corporation’s taxable year

which the tax is imposed by using a single sales apportionment

for franchise tax purposes is the same as the corporation’s taxable

factor. See R.C. 5733.056(A)(21),(C) and (I). This bill expands

year for federal income tax purposes. However, a corporation’s

the motion picture production tax credit from $20 million per ﬁ scal

franchise tax taxable year may consist of an aggregation of

biennium to $40 per ﬁ scal biennium, and not more than $20 million

more than one federal taxable year and can exceed one year in

in the ﬁ rst year of a ﬁ scal biennium.

length. The franchise tax for tax year 2013 is based upon the

taxpayer’s activity during its taxable year ending in 2012. See

• House Bill 510, 129th General Assembly. This bill is effective for

R.C. 5733.031(A), 5733.04(E) and general instruction #7. Unless

the tax year that commences on Jan. 1, 2014. This bill passes a

otherwise stated, all references are to the Ohio Revised Code (R.C).

new ﬁ nancial institutions tax (“FIT”) that replaces the current Ohio

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Form Ft 1120fi - Ohio Corporation Franchise Tax Instructions For Financial Institutions - 2013 Page 2

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