On Friday, November 16, 2012, the Cleveland Law Library is sponsoring a probate CLE captioned Practical Probate Practice for the Local Practitioner. Because changes are likely coming very soon for estate taxation, William A. Duncan plans to update attendees on the most current legislative developments in this area. Utilizing practice scenarios he commonly encounters in Cuyahoga County’s Probate Court, Bradley Hull IV will then discuss probating estates ranging from a full administration to a release of assets. Finally, Magistrate Charles T. Brown will explain all of the new changes that the Cuyahoga County Probate Court has implemented to streamline local probate practice, including Local Rule amendments and statutory changes. Those who are interested can find the registration form on our website or register in person on the 4th floor of the Law Library. The program is only $70 for members and will provide 2.5 hours of Ohio continuing legal education.
Starting today, and for the next 20 years, residents of Cuyahoga County will pay more when they go shopping. Last month 2 of the 3 Cuyahoga County Commissioners voted to raise the sales tax $.25 on every $100 from 7.5 to 7.75 percent. According to the Plain Dealer, this hike will raise $42 million a year and cost the average wage earner $50.00 per year. Opponents have been unable to amass enough signatures for a referendum to put the issue on the March 2008 ballot.
The long awaited regulations concerning Internal Revenue Code 409A have been issued. See the regulations at TD 9321. 409A restricts deferral elections, distribution elections and distribution events under nonqualified deferred compensation plans. If a plan is subject to Section 409A and does not meet the requirements, participants are taxed on their vested benefits, incur an additional 20% tax, and may incur interest charges. The new regulations further define which plans are exempt from 409A and which are not. Plans must comply by December 31, 2007. For more discussion, see 409A Regulations Are Here by Calfee, Halter and Griswold; Highlights of Recently Released Section 409A Regulations by Squires Sanders, April 2007, Treasury, IRS Issue Final Regulations on Nonqualified Deferred Compensation, US Treasury Dept News Release, Apr. 10, 2007,
The Ohio Supreme Court held that the portion of building owned by a nonprofit, which is used as a store, is entitled to exemption from property taxes. To be exempt from tax, the primary purpose of the entire property must be to fulfill a charitable function, and not to make a profit. The amount of profit is not determinative of whether the nonprofit held the property with a view to a profit. Girl Scouts-Great Trail Council v. Levin, 2007-Ohio-972: Girl Scout Store Held Exempt from Property Tax, Ohio Supreme Court Summaries, Mar. 21, 2007. Also see Nonprofits Eyeing Case in Ohio High Court by Laren Weber, Toledo Blade, Dec. 26, 2006.
The Ohio Dept. of Taxation released a final regulation, Ohio Admin. Code Section 5703-7-18. This regulation addresses the situation where a married couple files jointly for federal income tax purposes, but for Ohio income tax purposes one spouse is a nonresident. This rule is now final and effective. Ohio Dept. of Taxation Information Release IT 2006-04, "Personal Income Tax: Nonresident Married Filing Jointly".
HB 3, sponsored by Rep. Latta, and HB 4, sponsored by Rep. Wolpert, are two competing bills in the Ohio House which will cut or eliminate Ohio estate tax. A recent Plain Dealer article described the two bills as follows:
"A proposal from Rep. Bob Latta, R-Bowling Green, would eliminate the state's cut of the estate tax. Any local municipality wishing to continue receiving its share of the tax revenue would need voter approval to renew it. In addition, the proposal would exempt estates valued at or below $600,000 by 2010.
Republican Rep. Larry Wolpert of Columbus has a competing proposal. His bill would force the state to give its portion of the estate tax to local governments and also allow municipalities to decide whether they want to opt out of their defined share. He would also raise the threshold of liability to $362,000."
For a nice summary of the Tax Relief and Health Care Act of 2006, HR 6111, see Tax Relief and Health Care Act of 2006 by Thompson Hine Taxation Practice Group, Feb. 13, 2007. The act extended for two years certain deductions, credits and other provisions which were previously only in effect until the end of 2005. Tax credits regarding certain energy conservation measures have been extended from the end of 2007 to the end of 2008. The act makes other changes, including changes to health savings account provisions.
For a great article summarizing the CAT tax final rules and information releases issued since May, 2006 see Update on Ohio Commercial Activity Tax: Final Rules and Revised Information Releases by Charles M. Steines and Phyllis J. Shambough, Vol. 14, No. 1, State Tax Return, Jones Day Publications, Jan. 2007.
The Ohio Department of Taxation has issued new final rules for: Commercial Activities Tax Changes in Ownership, see Information Release CAT 2006-10 and Commercial Actitivities Tax Records Retention Requirements, see Information Release CAT 2006-09. To view all recent Ohio Dept of Taxation Information Releases, go to: ODT Information Releases.
Some snowbirds and others who stay in Ohio for less than an entire year may no longer be subject to Ohio tax. Governor Taft signed Sub. HB 73, which allows 182 contact periods before a person is subject to tax, instead of the prior 120 contact periods. A contact period means the person stayed overnight, and part of two consecutive days in Ohio. The act also requires the person claiming nonresidency file a form with the Ohio Deparment of Taxation. For insights into the purpose of this legislation see Proposed Income Tax Residency Standard Legislation Faces Uncertain Future by Amy Mignogna, Ohio Society of CPAs, 5/30/2006. Also see “It’s No Longer ‘Out of Sight, Out of Mind’ in Ohio: House Bill 73, A First Step Toward Relaxing Ohio’s Residency Requirements While Strengthening Ohio’s Nonprofits and Bolstering Ohio’s Coffers” by Pat Saccogna and Bob West, Probate Law Journal of Ohio July/August 2006.
The Act also exempts military pay and allowances from taxation, if they are received during active duty and not while the military member is stationed in this state. See Governor's News Release, Jan. 2, 2007
The act is effective for tax years beginning with Jan. 1, 2007. For a discussion of the current residency rules, see Ohio Dept of Taxation Information Release IT 2007-01.