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4. If the applicant requests a hearing within the 60-day period

subject to the franchise tax), the assessed corporation is not

described in #2, the commissioner must assign a time and place

required to pay any portion of the assessment.

for hearing. After the hearing, the commissioner may make such

However, any unpaid portion of the assessment that upon ﬁ nal deter-

adjustments to the refund as the commissioner ﬁ nds proper and

mination is found to be correct bears interest at the rate prescribed

must issue a ﬁ nal determination. The taxpayer may appeal the

in R.C. 5703.47 from the date the Department of Taxation issues

commissioner’s ﬁ nal determination to the Board of Tax Appeals

the assessment until the date the taxpayer pays the assessment.

pursuant to R.C. 5717.02.

See R.C. 5733.11. If the taxpayer decides to pay the assessment in

5. If the applicant does not request a hearing within the 60-day day

full, such payment is not acknowledgment of agreement and will not

period described in #2 but does provide additional information

prejudice the ﬁ nal determination of the petition, and the taxpayer will

within that period, then the commissioner (a) must review the

receive interest on any refund found due. See general instruction

information, (b) may make such adjustments to the refund as the

#10 for interest on underpayments and overpayments.

commissioner ﬁ nds proper and (c) must issue a ﬁ nal determination.

The taxpayer may appeal the commissioner’s ﬁ nal determination

Uniform petition for reassessment procedure. R.C. 5703.60

to the Board of Tax Appeals pursuant to R.C. 5717.02.

establishes a uniform petition for reassessment procedure and a

uniform assessment correction procedure applicable to franchise

Petition for Reassessment. Franchise taxpayers may initiate

tax, individual income tax, pass-through entity tax, withholding tax,

review proceedings pertaining to a franchise tax assessment issued

school district income tax and various other taxes. If the taxpayer

by the Department of Taxation by ﬁ ling Ohio form PR, Petition for

has ﬁ led a proper petition for reassessment for a tax whose statute

Reassessment. Ohio form PR applies only to assessments (not to

speciﬁ es the uniform reassessment procedure applies, this law

proposed corrections) issued by the Ohio Department of Taxation.

permits the tax commissioner, upon receipt of additional information

A taxpayer must ﬁ le its petition within 60 days of receipt of the

from the taxpayer, to correct an assessment without issuing a ﬁ nal

assessment. If the taxpayer sends the petition by certiﬁ ed mail, the

determination and without a hearing. The commissioner’s corrected

date of postmark is considered the date ﬁ led. If the taxpayer sends

assessment issued in response to the taxpayer’s petition may

the petition by regular mail, the date the Department of Taxation

increase the original assessment outside the assessment statute

receives the petition is considered the date ﬁ led. The petition must

of limitations period. In addition, this law permits the commissioner

specify the items of the assessment objected to and the reasons for

to correct an assessment even if the taxpayer did not properly ﬁ le a

those objections. However, a taxpayer who has timely ﬁ led a Petition

petition for reassessment or did not ﬁ le a petition for reassessment. A

for Reassessment may raise additional written objections to the

more in-depth summary of this law is available in general instruction

assessment at any time prior to the date of the tax commissioner’s

#26 of the franchise tax instructions for corporations that are not

ﬁ nal determination. If a taxpayer ﬁ les the petition after the 60-day

ﬁ nancial institutions. Those instructions are available in another ﬁ le

period has expired, the tax commissioner will dismiss the petition

on the Department of Taxation’s Web site.

because the tax commissioner has no jurisdiction to consider a

21. Taxpayer’s Bill of Rights; Requests for an Opinion

late-ﬁ led petition.

R.C. sections 5703.50 through 5703.54 establish certain

The portion of an assessment that must be paid upon the ﬁ ling of

administrative procedures relating to Department of Taxation audits

a Petition for Reassessment is as follows:

and assessments. At or before the commencement of an audit

the Department of Taxation must provide to the taxpayer a written

1. If the sole item objected to is the assessed penalty or interest,

description of the roles of the department and the taxpayer during

the assessed corporation must pay the entire assessment except

an audit and a statement of the taxpayer’s rights. A brochure that

for the penalty.

discusses the Department of Taxation’s interpretation of this law is

2. If prior to the date of issuance of the assessment the assessed

available on the department’s Web site.

corporation failed to ﬁ le (i) the annual report required by R.C.

5733.02, (ii) any amended report required by R.C section

In addition, this law permits the tax commissioner to issue binding

5733.031(C) for the tax year at issue, or (iii) any amended report

opinions regarding the taxation of proposed activities of the taxpayer.

required by R.C. 5733.067(D) to indicate a reduction in the amount

As set forth in Ohio Administrative Code (Tax Commissioner’s Rule)

of the credit provided under that section, the assessed corporation

5703-1-12 a request for an opinion of the tax commissioner must

must pay the entire assessment except for the penalty.

comply with the following:

3. If prior to the date of issuance of the assessment the assessed

• Be in writing;

corporation ﬁ led (i) the annual report required by R.C. 5733.02,

• Explicitly request an “Opinion of the Tax Commissioner”;

(ii) all amended reports required by R.C. 5733.031(C) for the

• Speciﬁ cally refer to R.C. 5703.53;

tax year at issue and (iii) all amended reports required by

• State all facts of the activity or transaction for which the opinion

R.C. 5733.067(D) to indicate a reduction in the amount of the

is requested;

credit provided under that section, and if a balance of the taxes

• Identify the parties involved in the activity or transaction about

shown due on the reports as computed on the reports remains

which the opinion is requested;

unpaid, the assessed corporation must pay only that portion of

• Set out the speciﬁ c legal question or questions for which the

the assessment representing any unpaid balance as shown on

opinion is requested; and

those reports together with all related interest.

• Be signed by an ofﬁ cer of the corporation authorized to act on its

4. If the assessed corporation does not dispute that it is a taxpayer,

behalf.

but claims the protections of section 101 of Public Law 86-272,

For further information see Rule 5703-1-12, Requests for an Opinion

73 Stat. 555, 15 U.S.C.A. 381, as amended, the assessed

of the Tax Commissioner, available on the Department of Taxation’s

corporation must pay only that portion of the assessment

Web site.

representing any unpaid balance of taxes shown due on the

corporation’s franchise tax report.

22. Sham Transaction, Economic Reality, Substance Over

5. If none of the conditions speciﬁ ed in (1), (2), (3) and (4) above

Form and Step Transactions

apply, or if the assessed corporation claims that it is not a

The tax commissioner has authority to apply the doctrines of “eco-

taxpayer (that is, if the assessed corporation disputes that it is

nomic reality,” “sham transaction,” “step transaction” and “substance

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Form Ft 1120fi - Ohio Corporation Franchise Tax Instructions For Financial Institutions - 2013 Page 9

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