COLUMBUS - State Senator George Lang
(R-West Chester) today issued the following statement today following the passage of House Bill 515 by the Ohio Senate earlier this week:
"Currently under Ohio law and Ohio Department of Taxation (ODT) guidelines, the sale of an ownership interest in a business is considered nonbusiness income, meaning any income from that sale is not eligible for the flat 3% tax on all business income. This is incredibly detrimental and negatively effects business growth.
House Bill 515 offers two solutions to this problem by either first; treating the sale as a sale of assets for federal income tax purposes, or second; having the seller materially participate in the activities of the business during the taxable year the transaction took place or any of the five preceding years. When either of these two conditions exist, this income from the sale is considered business income and eligible for the preferential 3% flat tax treatment.
By reclassifying certain nonbusiness income as business income, Ohio-resident business owners will be able to rightfully benefit from the sale of their ownership interest without being overly burdened with an unfair tax rate."
House Bill 515 will now be sent to the Governor for consideration.