To encourage investment in the more than 900,000 small businesses in Ohio, the State has launched InvestOhio, a program which could allow a non-refundable personal income tax credit of 10 percent to investors who acquire an ownership interest in an Ohio small business. To be eligible, the Ohio-based business in which the investor invests must have no more than $50 million in assets or no more than $10 million in annual sales. The business must also have at least 50 Ohio-based employees that are subject to Ohio personal income tax withholding OR have more than half of its employees be Ohio-based employees that are subject to Ohio personal income tax withholding. The small business must reinvest the cash that was invested (into one of five categories of allowable expenses) within six months. Furthermore, the investor must retain his or her ownership interest for two years before claiming the tax credit. (We issued an alert on this subject in September 2011, InvestOhio: New Ohio tax credit enacted to encourage investment in Ohio).
The registration/application process
Both parties — eligible companies and investors — must register for the InvestOhio program through Ohio Business Gateway starting at 8:00 a.m. on November 14, 2011. At the end of registration, each registrant will receive a User ID.
Then, beginning the first week of December 2011, only one party (eligible small business or eligible investor) needs to apply to the InvestOhioprogram through the Ohio Business Gateway. The registering party will need the User IDs of both parties to the transaction in which the investor acquired equity from the small business, along with the amount and date of the transaction. When the registration is complete, a Transaction ID will be given. The InvestOhio Transaction ID number is key because it determines the priority for being an eligible recipient of the pool of tax credits. Again, this is a first come, first served program so the sooner you apply during the first week of December, the better your chance to get a share of the up to $100 million in available tax credits.
The timing of the application in the first week of December is critical in “getting in line” to potentially be able to claim the credit. Those interested should ensure that they are ready to apply as soon as the program begins to accept applications on the Ohio Business Gateway.
Because the timing of this is so crucial, McDonald Hopkins is capable of helping you navigate through this relatively short time frame. For more information, please contact:
Stephen K. Hall
or any of our Multistate Tax attorneys by clicking on the link below:
Businesses must be vigilant and careful in managing their state and local tax liabilities and exposures. This can be a daunting task. We provide a broad range of state and local tax services to our clients, including tax planning, tax controversy, real estate tax abatement and exemption, and tax policy advocacy. With attorneys who have worked both inside and outside government agencies, our multistate tax team leverages its knowledge and experience for the benefit of our clients.
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