For the first time, the Ohio Department of Taxation, which I oversee as tax commissioner, is giving back millions of dollars of taxes paid by thousands of Ohio businesses.
This department is still in the business of collecting taxes and administering Ohio’s tax laws.
What we’re changing is a long-standing department philosophy and business practice of silently hanging on to tax overpayments, not notifying the taxpayer and then keeping the money if it wasn’t claimed by the business within four years, the usual statutory time limit.
That practice, as Gov. John Kasich so aptly described it, is a “rip-off.” Ohio law doesn’t require the department to notify business taxpayers when they have overpaid their tax bill. It, in fact, requires taxpayers to “ask” for their money back.
That may be the law, but it is completely unacceptable to the governor and me to not return money that belongs to the taxpaying businesses. This old practice was unfair and anti-business. That money belongs to the taxpayer, not the government, and we have instituted policy and procedural changes to ensure that it is returned.
While there are areas of great communication and cooperation between business taxpayers and the tax department, this refund issue has been a significant weakness. It is very inconsistent with our desire to forge a better professional relationship with Ohio’s job creators.
I need to provide a little background. The situation I’m describing involves Ohio’s primary business tax, the commercial activity tax, or CAT. It does not involve the personal income tax. This department has done a good job with refunding those overpayments.
It’s a different story with the CAT. Because of the way the tax is structured and the complicated rules for filing and paying the tax, it is not uncommon for a taxpayer to make an overpayment and not be aware of it.
In some cases, taxpayers might file an amended return with a lower tax due figure than their original return; in others, they might inadvertently make a double payment; and, in many cases, they might pay the required minimum tax up front but then not generate enough revenue to be subject to tax.
In all cases, they have overlooked an excess payment and so have not asked for a refund.
To date, we have identified more than 3,500 business taxpayers who overpaid their liability by a total exceeding $13.7 million. All of that money is going back to the rightful owners.
When our administration began oversight of this department two years ago, we knew of certain areas that needed attention and also knew we’d learn a lot more as we went along. When we discovered this practice of not notifying business taxpayers, it was upsetting to me that we were treating them as revenue generators instead of customers.
No more. We are continuing our search for businesses that have a CAT refund coming. When we’re done with CAT, we will repeat the process with other business taxes where this disconnect of not alerting taxpayers to claim a refund might be occurring.
Our objective with this mission, and all our efforts at the tax department, is to do the right thing and everything possible to make Ohio a great place to do business. Obviously, that includes treating business customers fairly and returning money that is rightfully theirs.
Ohio tax commissioner