Ohio Announces Details of InvestOhio Program
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T A X U P D A T E |
November 17, 2011 |
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For additional information and discussion on this topic, please get in touch with your regular HW&Co. professional or one of our Tax Professionals listed below.
Donald C. May, CPA/ABV, CVA
Edward C. Lowe, CPA, MAFIS
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Ohio Announces Details of InvestOhio Program |
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InvestOhio is a new tool that Ohio will use to encourage infusions of investor cash into Ohio’s small businesses to help them create jobs. The State will award up to $100 million in tax credits during the current fiscal biennium ending on June 30, 2013. Eligible investors who invest up to $10 million in an eligible small business will receive a 10% Ohio income tax credit. To be eligible, the business must meet the following qualifications: 1. The company must be a small business. A small business is defined as a business whose assets do not exceed $50 million or its annual sales do not exceed $10 million. 2. The business employs at least fifty full-time equivalent employees in Ohio for whom the business is required to withhold income tax, or more than one-half of the business’s total number of full-time equivalent employees employed anywhere in the U.S. are employed in Ohio and are subject to that withholding requirement. 3. The small business, within six months after an eligible investor’s qualifying investment is made, invests in or incurs cost for one or more of the following in an amount at least equal to the amount of the qualifying investment: 1. Tangible personal property used in the business and located in Ohio. 2. Motor vehicles operated on public roads and used primarily for business purposes. 3. Real property located in Ohio. 4. Intangible property including patents, copyrights, trademarks service marks or licenses. 5. Compensation for new employees or retained employees. 4. The qualifying investment must be made after July 1, 2011 to acquire capital stock or other equity interest in the business. 5. An eligible investor means an individual, estate or trust subject to income tax or a pass-through entity in which such an individual, estate or trust holds a direct or indirect ownership interest.
1. Both the investor and the small business must register for InvestOhio through the Ohio Business Gateway commencing November 14, 2011 to receive their InvestOhio User ID which will be used in the application process. 2. The small business and the investors must decide who will be responsible for the InvestOhio application. 3. The small business and the investors must reach an agreement as to how much will be invested and the timing of the investment. 4. The party responsible for the application will make the application through the Ohio Business Gateway commencing the first week of December. Credits are awarded on a first come, first serve basis. Once the application is compete, you will receive an InvestOhio Transaction ID number. 5. Regardless of whether a transaction has the necessary priority to be awarded an InvestOhio tax credit at the time of the application, the investor must make the investment on or around the date described in the application. 6. Those transactions that have the necessary priority at the time of the application will be notified by email of their eligibility. The investor must provide evidence of the investment to the Director within 30 days. 7. The small business must make the allowed expenditures and provide evidence to the Director within 30 days of completing the expenditures or within 7 months of the investment, whichever occurs first. 8. Both the investor and the small business must retain ownership interest and the property for the duration of the holding period (2 years). We will provide further information concerning the credit as it becomes available. If you have questions on a particular transaction, please feel free to contact us. |
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