The Ohio Department of Taxation recently announced a six-week 2006 Tax Amnesty Program extending from Jan. 1 to Feb. 15, 2006. The program enables professionals to explore their clients’ potential tax delinquencies to take advantage of this limited-time opportunity to pay back taxes without penalty. Additionally, interest charges are reduced by 50 percent.

The urgency of assisting clients with potential delinquencies is heightened by the increased likelihood of discovery as a result of enhanced communication among states and the IRS. Further, the Ohio Department of Taxation has allocated significant resources to increase its effectiveness at finding and recovering delinquent taxes through its Audit and Operating Divisions and the newly formed Tax Discovery Division.

Three areas within the Ohio are applicable to businesses located outside of Ohio including the Corporate Franchise Tax, Pass-through Entity Tax and Sales & Use Tax.

With respect to the Corporate Franchise Tax, tax professionals in states outside of Ohio might want to ask their business clients the following questions:

• Do you own a business (located outside of Ohio) and have employees or representatives who routinely solicit sales to Ohio customers but have not filed a corporate franchise tax return with the State of Ohio?
• Are you a “C-corporation” partner in a partnership that does business in Ohio (meaning the partnership has property, payroll and sales in Ohio) but have not filed a corporate franchise tax return with the State of Ohio?

With respect to the Pass-through Entity Tax, the following question might apply:

• Are you a shareholder in a subchapter S Corporation or a partner in a partnership that does business in Ohio and have received a distributive share from that corporation or partnership? If yes, has the subchapter S Corporation or partnership filed a pass-through entity tax return and paid the tax due (related to the S Corporation/partnership’s profits) to the State of Ohio?

With respect to the Ohio Sales & Use Tax, the following questions might apply:

• Do you own a business that performs taxable services to customers at Ohio locations and have not charged sales tax on those services?
• Do you own a business (headquartered outside of Ohio) that has representatives or employees soliciting sales and/or making repairs in Ohio but have not charged Ohio sales tax?
• Have you purchased tangible personal property (e.g. Internet or catalog purchases) at your Ohio
  location(s) but have not paid Ohio sales tax or use tax on the purchase of that property?

Other tax delinquencies may have occurred with Personal Property Tax, Personal Income Tax and Withholding Tax. For more information about the 2006 Ohio Tax Amnesty Program, you may visit this web site or call 800.304.3211.

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