Ohio Department of Taxation’s Casino Training

Ohio Department of Taxation’s Casino Training

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Tuesday, April 24, 2012

10:30 a.m. to 12:30 p.m.

Agenda

Welcome and Introduction– Stacey Savarise, Administrator of Organizational Development

Employer Withholding & Winners Withholding– Richard Six, Assistant Administrator of Business Tax Division

Sales & Use Tax– Phyllis Shambaugh, Counsel for Sales & Use Tax Division– Keith Wilson, Assistant Administrator of Sales & Use Tax Division

Commercial Activity Tax (CAT)– Charles Willis, Assistant Administrator of Commercial Activity Tax

Division

Winners & Employer Withholding

Richard SixAssistant AdministratorOhio Department of Taxation

Winners Withholding – Requirements

Withhold at rate of 6% on winnings reported to IRS on Form W-2G.

$1,200 on slot winnings, $5,000 table games

Issue receipt to winner showing taxes deducted

Winner statement “default under a support order” Proposed change would send statement to ODJFS

Statutory reference: R.C. 5747.063

Winners Withholding – Responsibility

Casino operator is personally liable For amounts withheld and not remitted

Interest / Penalty Interest for late payment – statutory rate (3% for 2012)

Penalty Late filing, late payment, nonpayment Up to $1,000 per occurrence

Assessed in the same manner as income tax withholding collected by an employer.

Transfer/Sale: successor must withhold from purchase money: tax, interest and penalty due.

Statutory reference: R.C. 5747.063 (3)(a) and (b)

Winners Withholding – Filing

Monthly winners report filed electronically with Ohio Dept. of Taxation Identify winners and tax withholding

Upload report through FTP : https://ohiotax.ftptoday.com

Sample template Format = Excel (.csv) comma delimited

Report is due by the 10th banking day of the subsequent month (May 2012 due June 14, 2012) Proposed change to 10th day of subsequent month

Year-end report to reconcile – form IT-941

W-2G report at year-end

Winners Withholding – Payment

Monthly payment of taxes withheld Must be paid electronically

Due by the 10th banking day of the month Proposed change to 10th day of subsequent month

Payment made through Ohio Business Gateway or Treasurer of State (TOS) If through TOS, need to pre-register (fax in form to TOS) If OBG, register for employer withholding account and file and pay using IT-

501

File year end-report form IT-941 to reconcile account and pay any remaining tax due.

Business Filings on the Ohio Business Gateway (OBG)http://business.ohio.gov/

This is an informational page. Click next button at the bottom of page to advance.

OBG shows that the due date for a monthly return is on the 15th of the month. However, payment of the tax withheld on winners is due by the 10th banking day after the end of the month.

Click on History at the top. You can view reports that you

have filed.

Employer and School District Withholding (Employee Payroll) – Requirements

Withhold income tax on compensation that is earned or received in Ohio. Exception: residents of neighboring states, refer to ORC 5747.05 (A)(3)

The amount of Ohio income tax to withhold is “an amount substantially equivalent to the tax reasonably estimated to be due from the employee for the taxable year…” ORC 5747.06(A)

The Tax Commissioner publishes withholding tables for employers to use to determine the amount of income tax to withhold. Last revision eff. 1/1/09.

Tables: tax.ohio.gov (Employer Withholding page)

Employer and School District Withholding (Employee Payroll) – Requirements

Withhold on:

Compensation (required): Reported on form W-2. Wages, salaries, tips, bonuses, commissions, severance pay, stock options, buyouts, back pay, etc. and other types of compensation.

Pensions (voluntary): Reported on form 1099-R. Withholding is voluntary upon request of the recipient.

Note: Do not withhold on payments properly reported on IRS Form 1099-MISC, such as on payments made to Independent

Contractors.

Employer and School District Withholding (Employee Payroll) – Overview

Steps:

Register for an Ohio withholding number

Canvass employees for exemptions and school district of residence Employee Exemption Certificate (Form IT 4)

Withhold taxes

Pay taxes File payment forms: IT 501 and SD 101

Reconciliation forms at year-end File forms: IT-941 (or IT-942) & SD 141

W-2 filing (Form IT-3)

Employer and School District Withholding (Employee Payroll) – Registration

Registration:

Employers must register with ODT within 15 days from the date that liability begins.

An account number is assigned to the Ohio Withholding Agent after the registration has been completed.

The Ohio withholding account number is reported on tax return filings and forms W-2 issued to the employees.

Employer and School District Withholding (Employee Payroll) – Personal Exemptions

Canvass employees to determine: Number of Personal & Dependent Exemptions (used to

determine amount of tax to withhold) School District of Residence State of Residency

Applicable Forms (retain in employee’s personnel file):IT 4 (Employee Exemption Certificate) IT 4NR (Employee Resident of Neighboring State)IT-MIL SP (Military Spouse Nonresident)IT 4 MIL (Military employees only) Withholding Tables (Effective 1/1/2009)


Employee can claim one exemption each for:SelfSpouseDependents (same as IRS) Note: Make sure that employees do not claim an excessive number of personal exemptions.

Report to Ohio Dept. of Taxation:

More than 9 exemptions that cannot be substantiated Send us a copy of the employee’s Form IT 4 Withhold tax using zero exemptions until employee properly completes his/her Form IT 4 Source: Information Release IT 2001-01 Proper Completion of Form IT-4 (August 31, 2001)

Form IT 4 (Employee Exemption Certificate)

Employer Withholding-Personal Exemptions

Employees cannot claim to be exempt


Employees can use the "Finder” database to determine school district of residence.


“Finder” will display SD name and four digit number.

Employer and School District Withholding (Employee Payroll)

Residents of Neighboring states (IN, KY, WV, PA and MI) Owe state income tax to his/her home state

(due to reciprocal agreements) Employee completes form IT 4NR to exempt Do not withhold Ohio state income tax. Exemption does not apply to city (municipal) income tax withholding.

Statutory reference: R.C. 5747.05 (A)(3)


Form IT 4NR - Residents of Neighboring States


Spouse of military member is not subject to withholding on wages earned in Ohio if the military member is a nonresident who is stationed in Ohio.

Employer Withholding – Website

http:/tax.ohio.gov/divisions/employer_withholding/index.stm

Employer Withholding – Tax Tables

Ohio Withholding Tables for pay periods:

Employer Withholding – Filing/Payment

Look-Back Period:

The filing/payment frequency (“filing status”) for each year is determined by way of a 12 month “look-back period,” which ends on June 30th of the preceding calendar year.

For calendar year 2012, the applicable look-back period is July 2010 through June 2011.

The filing status for the calendar year (2012) is determined by the combined amount of Ohio and school district tax liability during the 2010-2011 “look-back period.”

A new business will default to a quarterly filing status because there was no withholding liability during the look-back period.

Statutory Reference: R.C. 5747.07


Partial-Weekly periods:

Two periods each week: Saturday through Tuesday Wednesday through Friday

A partial weekly period cannot extend from one calendar year into the next. For 2011, Dec 31st was a Saturday; resulting in a

one-day period.

For 2012, Dec 31st ends on a Monday; so Saturday, Sunday and Monday will constitute one period and Tuesday 1/1/2013 is a separate period.


Filing Requirements:

$100,000 or more accumulation rule. Payment is due by the end of the next banking day

Partial-weekly (EFT) filer: Look-back period liability of $84,000 or more. Payment by EFT to Treasurer of State Payment is due within 3 banking days after the end of the partial weekly period. Tues. ---> due Fri. Fri. ---> due Wed.

Reports: Quarterly IT 942 (OBG) 4th Qtr/Annual IT 942 (OBG)


Monthly. Look-back period liability of more than $2,000 but less than $84,000. Return and payment are due by the 15th day following the end of each month.

Quarterly. Look-back period liability of $2,000 or less. Return and payment are due by the end of the subsequent month following the end

of the quarter.

Reports: IT 501 (OBG or paper) Annual IT 941 (OBG or paper)

Employer Withholding – Reconciliation

Reconciliation return: Form IT 941, Annual Reconciliation or Form IT 942, 4th Quarter/Annual (EFT filers only) Due: by January 31st

Any refund should be requested on the applicable annual return or amended return.

Annual form IT 942: make sure that you show the total withholding for the year.

Form WT AR, Withholding Tax Application for Refund, should generally be used to file only for refunds of payments made or applied to an Assessment.

Reporting year is the calendar year.

Enter the Ohio gross payroll and state tax withholding amounts for each month during the calendar year.

If you select credit, be sure to reduce the tax due on your first 501 report of the subsequent year.

Enter the amount of state tax paid on previously filed

forms IT 501. If overpaid, then you can request a

refund of the overpayment on this return.

School District Withholding

Every employer, including the state and its political subdivisions, is required to withhold Ohio school district income tax from compensation paid to employees who reside in a school district that has enacted a tax.

Ballot issue approved by voters residing in the district.

Generally in effect for 5 years or CPT (continuing period of time)

Increments of 0.25%

Important: Tax is assessed based on residency of employee; employee residing in a taxing district

Statute: ORC Chapter 5748 and 5747.06


Two tax bases: Traditional & Earned Income

Traditional:Starts with Ohio Taxable Income (Line 5 of Ohio IT-1040)

Includes earned income, retirement, capital gains, etc. Excludes items deducted on line 2 of the IT-1040

e.g. Social Security benefits, Federal interest & dividends, disability benefits) Includes deduction for personal exemptions

Earned Income: Earned income only

e.g. Wages, Salaries, Tips, Self Employment income No deduction for personal exemptions


Traditional: Includes deduction for personal exemptions

Deduct $650 annually for each personal exemption, pro-rated over the full calendar year, and multiply the remaining wages by the tax rate for the district.

Example (bi-weekly payroll): deduct $25 for each personal exemption claimed ($650 divided by 26 pay periods = $25).

Earned Income: No deduction for personal exemption. Withhold at tax rate for the applicable district.


School District Withholding (use of Form IT 4)ORC 5747.06 (E) – To ensure that taxes imposed pursuant to Chapter 5748 of the Revised Code are deducted and withheld as provided in this section:

(1) Each employer shall request that each of his employees furnish the name of the employee's school district of residence;

(2) Each employee shall furnish his employer with sufficient and correct information to enable the employer to withhold the taxes imposed under Chapter 5748. of the Revised Code. The employee shall provide additional or corrected information whenever information previously provided by him to his employer becomes insufficient or incorrect.

(3) If the employer complies with the requirements of division (E)(1) of this section and if the employee fails to comply with the requirements of division (E)(2) of this section, the employer is not required to withhold and pay the taxes imposed under Chapter 5748. of the Revised Code and is not subject to any penalties and interest otherwise applicable for failing to deduct and withhold such taxes.


Filing frequency/status is based on the Ohio withholding frequency, which is either:

Monthly (Partial weekly or monthly), or

Quarterly

File/Pay with Form SD 101.Only means to file/pay electronically is through the Ohio Business Gateway.

Select the districts you want to add by clicking on the letter to display the list, then click on the SD you want to add and click on >

Wyoming #3122 now displays on “your list”

Now add Troy #5509

Troy #5509 now displays on “your list”

The districts on “your list” will be saved for future periods. If you want to add/delete districts, click on ‘Modify School District’

Enter the tax amounts and click ‘Next.’

Click on ‘back’ to change the data. Click on ‘accept data’ if correct.


SDIT Overpayments (during the year):

Q: How do I handle overpayments made during the year?

A: Apply the overpayment to your next SD 101 return. The overpayment must be applied against the tax due for the same district, but do not reduce the tax due below zero.

Example: Assume you overpaid Fairborn #2509 by $70 on the January SD 101 report. You then withhold $50 in Fairborn #2509 tax for each month February and March.

Outcome: Feb. and March’s SD 101 reports will show $0.00 and $30 due for SD #2509, respectively.


SDIT refunds: Q: How do I handle overpayments at year-end? All refunds are requested on:

Form SD141, Annual Reconciliation, or Form SD141X, Amended Reconciliation

An overpayment not used to reduce the tax due for the same district during the year can be used to offset any tax due for another district at year-end on SD 141.

Form WT AR, Withholding Tax Application for Refund, should generally be used to only file for refunds of payments made/applied to Illegal or erroneous assessments.

Enter tax withheld and previous payments only (Do not enter wages)

Employer Withholding – Forms W2

W2 filing:

Due by 2/28 of subsequent year

Send with form IT 3 - Wage & Tax Transmittal (paper form)

250 or more forms must use media (CD) with proper layout

W-2s on CD using SSA format EFW2

1099-R on CD using IRS Publication 1220 format

Important: Not required to send paper W-2 forms.

Employer Withholding – Forms W2

Box 1 (Wages, tips, other compensation) and Box 16 (state wages) should be the same amounts.

School district taxes enter in box 14 or boxes 19 and 20. Be sure to show tax withheld and identify SD by the 4 digit code: e.g. $ 250.00 #3122


Send in your completed form IT 3 even if not sending forms W-2 on CD media.

Employer Withholding – W2 filing

W2 Corrections:

Follow Federal Guidelines

Use Federal form W-2C or amend W-2 copy and type “Corrected by Employer”

Send one copy of each corrected W-2 to Taxation with the amended IT-3

Do not send corrections on media

Employer Withholding – Maintain Records

Retain for at least 4 years:

Names, addresses, school district of residence, and SSNs of all employees (forms IT-4)

Periods of Employment

Amounts and dates of compensation

Amount of compensation paid by payroll period: i.e. payroll registers, earnings cards

Annual returns filed with Taxation

Statutory Reference: R.C. 5747.17

Interest and/or Penalty

Apply to both employer withholding taxes.

Interest: Mandatory on late payments. Interest rate is 3% for 2012

Penalties: Late Payment: Two times the interest plus 10% of tax. Late Filing: Greater of: $50 per month (up to $500) or 5%

(up to 50%) of the tax due. Non-Payment: 50% of the tax due on the return. Statutory Reference: R.C. 5747.07(F)(5) and R.C. 5747.15

Employer Withholding – Assessments

Personal Liability of Responsible Party

“An employee…having control or supervision of or charged with the responsibility of filing the report and making payment…or an officer, member, manager or trustee…responsible for the execution of the…(entity’s) fiscal responsibility, shall be personally liable for failure to file the report or pay the tax due.”

Responsible party liability holds even if the business is closed, files bankruptcy or is dissolved.

Statutory Reference: R.C. 5747.07(G); Amplified by OAC 5703-7-15

Business Tax Division/Withholding Unit Contact Information

Richard Six, Assistant Administrator – Phone (614) 466-0144– Email: [email protected]

TPS Phone: 1-888-405-4039

Fax: 614-466-1588

Website: www.tax.ohio.gov

Location Address:4485 Northland Ridge Blvd. Columbus, OH 43229

Mailing Address: P.O. Box 2476 Columbus, OH 43216-2476

Questions

Sales & Use Tax Basics

Phyllis ShambaughCounsel, Sales & Use Tax DivisionOhio Department of Taxation

History of Sales & Use Tax

Sales tax enacted effective 1/1/1935

(ORC Chapter 5739) Companion use tax enacted

effective 1/1/1936 (ORC Chapter 5741) Creates a level playing field

for in-state and out-of-state vendors All states that have a sales tax

also have a use tax

What Is Taxable?

All sales of tangible personal property are taxable, unless there is a specific exemption

- Furnishing of lodging by a hotel is taxable

Only those services specifically identified in ORC 5739.01(B) are taxable

– Use tax is imposed on the storage, use or other consumption of tangible personal property and taxable services in Ohio

What Sales Are Exempt?

Purchase for resale Property used in manufacturing,

mining or agriculture Sales of some utilities

(natural gas, water and electricity) Food for consumption off-premises Prescription drugs Motor fuel Newspaper and magazine subscriptions

Who Is Liable for the Tax?

Imposed on the consumer, but Ohio vendor is required to collect it at time of sale

If tax is not collected by the vendor, then the consumer must self-assess use tax

Who Is a Vendor?

Person providing the service or transferring the tangible personal property

Required to register with Taxation

(vendor’s license) Must collect sales tax from the customer

at the time of sale Must remit sales tax to Taxation

Who Is a Consumer?

Person who purchases the taxable tangible personal property or receives the taxable service

What Is Included in Price?

Price for calculating the sales or use tax is the total consideration received, including cash, credit and property and includes:

– All of vendor’s costs including materials, labor & service charges

– Delivery charges– Installation charges– Other services necessary to complete the sale– Trade-in allowance (Note: A trade-in allowance on the

purchase of a new motor vehicle, new watercraft, or new outboard motor is not included in the price.)

Presumptions

If consumer claims purchase is exempt, vendor must obtain a fully completed exemption certificate within 90 days of the date of the sale

If vendor obtains exemption certificate, vendor is relieved of liability for sales tax on that purchase

Use Tax Basics

Some out-of-state vendors are not required to collect Ohio sales tax, making it cheaper to purchase from an out-of-state vendor

Use tax corrects this disparity Consumer who does not pay sales tax on

tangible personal property or taxable services used in Ohio must pay the use tax

Consumer’s Use Tax Amnesty

Began 10/1/2011; runs through 5/1/2013 Emphasis is on educating consumers Consumers who come forward are required

to pay consumer’s use tax due and not paid on purchases made on or after 1/1/2009. Interest and penalty is waived

All consumer’s use tax liability on purchases made prior to 1/1/2009 is forgiven

Consumer’s Use Tax Amnesty

Consumers not registered for use tax as of 6/1/2011 are eligible for a no-interest payment plan with a term of up to 7 years

Consumers are required to continue to report and remit consumer’s use tax on an ongoing basis

Questions

Commercial Activity Tax

Chuck WillisAssistant AdministratorOhio Department of Taxation

Commercial Activity Tax (CAT)

The CAT is a tax on the privilege of doing business in Ohio

The CAT is measured by gross receipts Can not deduct cost of goods sold or other

expenses All types of entities are subject to the CAT

What are Gross Receipts?

Includes sales, services, and rentals or leases – R.C. 5751.01(F)(1) lists what is included in gross receipts

R.C. 5751.01(F)(2) lists the exclusions from gross receipts

R.C. 5751.01(F)(2)(hh) is the exclusion for casinos to pay CAT only on the amounts in excess of the gross casino revenue for casino gaming. Gross casino revenue is defined in R.C. 5753.01(D)

What are Gross Receipts?

Other gross receipts would be food and drink sales, merchandise sales, etc

Items that are given (complimentary) to patrons are considered gross receipts at the fair market value of the items

Tax Rate

An annual minimum tax of $150 is paid in the 1st quarter of each year.

Taxpayers receive a $1 million dollar exclusion per calendar year, $250,000 per quarter.

Taxable gross receipts in excess of the quarterly exclusion are taxed at the rate of .26% (.0026)

Dues Dates of Returns

Quarterly returns are due as follows:– 1st quarter (Jan. 1 to Mar. 31) is due May 10– 2nd quarter (Apr. 1 to June 30) is due Aug. 10– 3rd quarter (July 1 to Sept. 30) is due Nov. 10– 4th quarter (Oct. 1 to Dec. 31) is due Feb. 10

Quarterly filers must file and pay electronically using the Ohio Business Gateway

Filing and Paying CAT Returns on the

Ohio Business Gatewaywww.business.ohio.gov

This is an informational page for the taxpayer to

read. Click next button at the bottom of the page.

Select reporting period and type of return from the dropdowns and click next button at the

bottom of the page.

Taxpayer has ability to enter an unused

exclusion, CCF, or non-refundable and refundable credits

manually by checking override.

Taxpayer must enter taxable gross receipts on

line 3 (as shown with arrow) the rest will

calculate. Note: Do NOT use commas or decimals.

Click next when complete.

How

When

How Much

This “Edit” button is used to

change the payment options

associated with the report

1

2

Enter bank information.

This page can be re-created from the history screen

Making a deferred payment on OBG

Taxpayer can enter date in field or use calendar to select date. Date can not

be past the due date.

1

2

This “Edit” button is used to

change the payment options

associated with the report

1

2

•This page can be re-created from the history area

Viewing History of Returns and Payments made on the OBG

To find a report that has already

been filed on OBG, select the

“History” link

When you have found a specific report that you want to review,

select the “View Receipt” button beside the report.

To find a specific report, you can search by “Service Area,” “Filing Date Range,”

or by OBG Confirmation Number

The Transaction Confirmation and Receipt shows what you

filed, when you filed and associated payment

information.

To view the actual report, select the “View” button.

You may navigate from this page using the links on top or by using the “Home” button on the bottom of the page.

CAT Contact Information

Chuck Willis, Assistant Administrator– Phone 614-387-0176– Email: [email protected]

Phone: 888-722-8829

Fax: 614-644-9641

Website: tax.ohio.gov

Address: Commercial Activity Tax Division P.O. Box 16158 Columbus, OH 43216-6158

Automatic E-Mail Notification

Subscribe to the Department’s tax Subscribe to the Department’s tax practitioner e-mailing list. practitioner e-mailing list.

Click on ODT web site at:Click on ODT web site at: Tax.Ohio.GovTax.Ohio.Gov

Questions

Ohio Department of Taxation’s Casino Training

Documents

income tax withholding

ohio income tax

remaining tax

tax withholding upload

athe tax commissioner

withholding tables

employer withholding

banking day