Municipal Net Profit Tax Ohio Municipal League Annual Municipal Income Tax Seminar July 11, 2018

Agenda for Today’s Presentation Requirements for Taxpayers Requirements for Municipalities Additional Requirements for JEDDs/JEDZs Requirements for the Department “Taxable Year” Difference 2017 and After NOL Calculation

Requirements for Taxpayers Register with the Department – R.C. 718.80(B)(1) To opt-in, taxpayers must register with the Department on or before the 1st day of the 3rd month of the taxable year they intend to file with the Department. Notify Municipalities - R.C. 718.80(B)(1) Taxpayers that opt-in must notify all municipalities that the taxpayer conducted business in during the previous year. New businesses need only register with the Department.

Taxpayers’ Requirement to Notify Municipalities Methods of Notification to Municipalities Municipal Net Profit Tax – Municipality Notification (Form MNP MN) Municipal Net Profit Tax – Municipality Notification for Tax Preparers (Form MNP MNTP) Provide a copy of the registration filed with the Department Provide a copy of the registration confirmation letter the taxpayer received from the Department. * The notification forms are available on the Department’s website at https://www.tax.ohio.gov/Forms.aspx

Additional Methods to Notify Municipalities The Department will also provide opt-in notification to the municipalities. Quarterly Opt-in Report Taxpayer list on the Department’s website Taxpayers must grant the Department permission before their company’s information (name, address, and FEIN) will be listed on the Department’s website. Only taxpayers that agree to this limited waiver of confidentiality will be listed.

Requirements for Municipalities Certify Tax Rate Annually, on or before January 31st, certify the tax rate in effect as of January 1st of that year. R.C. 718.80(C)(1)(a) Tax Rate Changes after January 31st – certify the new rate not less than 60 days before the effective date of the new rate. R.C. 718(C)(1)(b)

Requirements for Municipalities Provide Contact Information - R.C. 718.84(D) Annually, on or before January 31st, provide the name and mailing address of up to two persons who will receive information from the commissioner (can be people at a 3rd party administrator)

Requirements for Municipalities Provide Tax Credit Information On or before January 31st, 2018 (or January 31st of the first year in which a taxpayer is eligible to receive a credit), provide a copy of the tax credit agreement and the ordinance/resolution authorizing the agreement

Requirements for Municipalities Provide Taxpayer Information – R.C. 718.80(C)(2) Amount of NOL the taxpayer is entitled to carry forward Amount of NOL carryforward utilized by taxpayer in prior years. Information regarding tax credits granted, including: Amount of credits Whether credits can be carried forward to future tax years and Duration of such carryforward Amount of any overpayments the taxpayer elected to carry forward Other information the municipality deems relevant in order to effectuate the efficient administration of the tax (i.e., a revenue sharing agreement or approved alternative apportionment method)

Requirements for Municipalities Form MNP-TTI, Municipal Net Profit Tax Transfer of Taxpayer Information Form. Available at http://tax.ohio.gov/Forms.aspx

Requirements for Municipalities Timing of Submission – Submit within 90 days of being notified of the taxpayer’s opt-in. Taxpayers that have already filed a final return– submit the MNP-TTI and include information outlined in R.C. 718.80 Taxpayers that have not yet filed a final return – submit the MNP-TTI and indicate that the taxpayer has not yet filed their final return. Once the taxpayer files their final return - submit an additional MNP-TTI within 45 days, but not later than the first day of the last month of the taxpayer’s fiscal year.

Requirements for Municipalities Submitting Information to the Department Mail Secure FTP - step-by-step instructions are available in the Information Booklet for Municipalities Allows municipalities to securely share taxpayer information with the Department. Multiple documents can be securely uploaded one at a time Municipality Portal – Planned for Fall 2018

Requirements for JEDDs/JEDZs Same reporting requirements as all other municipal corporations. Additional requirements outlined in O.A.C. 5703-41-02 Provide a signed copy of the contract and a map of the JEDD or JEDZ with a list of the parcels Provide a signed copy of any amendment to the contract Notify the commissioner if a contract is renewed, terminated, or canceled or if any change is made to the parcels in the JEDD or JEDZ

Requirements for JEDDs/JEDZs Notify the commissioner which municipal corporation is charged with administering, collecting, and enforcing the municipal net profit tax on behalf of the JEDD/JEDZ and provide a copy of the agreement and any amendments Timing of Submission All items are required to be provided within 30 days of the effective date of the rule, or within 30 days of the effective date of any contract, agreement, amendment, renewal, termination, cancelation or change, whichever comes later.

Requirements for the Department Distribute Funds On or before the last day of each month, commissioner must certify amount to be paid to each municipal corporation for the calendar month preceding the month of certification. By the 5th day of each month, electronic payment of the amount certified, less ½% administrative fee, will be made to each municipal corporation. A pro rata share of investment earnings will be distributed in March, June, August, and December A detailed report will be mailed under a separate cover each month.

Requirements for the Department Provide Estimated Payment Information Within 30 days of each distribution, the commissioner must provide the name, FEIN, and amount of payment to each municipal corporation Provide Refund Information Provide the amount refunded to the taxpayer attributable to that municipal corporation. * This information will be included on the monthly distribution report.

Requirements for the Department Provide Taxpayer Information in May and November Taxpayer’s name, address, and FEIN Taxpayer’s apportionment factor and municipal taxable income apportioned to the municipal corporation Amount of any pre-2017 NOL carryforward utilized Any overpayment the taxpayer requested to be carried forward Amount of any tax credit claimed under R.C. 718.94

Requirements for the Department Audit Identify Leads/Conduct Audits Municipalities may refer a taxpayer for audit. The commissioner will review the referral and may conduct an audit.

“Taxable Year” Difference The IRS and municipalities base “taxable year” on the beginning of the fiscal year The Department of Taxation defines “taxable year” by the end of the fiscal year Same period of time for both entities; the label/year only differs for fiscal-year filers Example: Taxpayer’s taxable year begins February 1, 2018 and ends January 31, 2019 IRS and municipalities call this taxable year 2018 ODT calls this taxable year 2019

“Taxable Year” Difference - Distribution Report

“Taxable Year” Difference – TTI Form

For 2017 and after NOL calculation… Limited by municipal taxable income 50% limitation – the lesser of: Available NOL OR Amount necessary to take MTI to zero * Exception to 50% limitation: New taxing municipality on/after 1/1/2016 Need to be tracked municipality by municipality

Questions? Business Tax Division, Municipal Net Profit Tax Phone Number: 844 238-0403 MNPTax@tax.state.oh.us