Ohio businesses may get automatic tax refunds

By Maggie Thurber | For Ohio Watchdog

With the tax filing deadline only two weeks away, consumers are being inundated with ads about how to spend their tax refunds. But what if you didn’t know you had a refund coming to you?

What if the state was spending your refund money instead?

That’s the situation in Ohio — but maybe not for long.

Under state law, businesses owners who overpaid their taxes would be able to get a refund, but only upon request and only during a prescribed time. The state is not even required to notify taxpayers they have overpaid. Any refunds that remain unclaimed goes to the state’s general fund.

State Reps. Mike Duffey, R-Worthington, and Al Landis, R-Dover, want to change that with House Bill 402.

“It is almost unbelievable that the Ohio Department of Taxation, literally for decades, had been outright hiding overpaid taxes from Ohio businesses, not providing them with refunds and then spending that money as if it were the state’s money,” Duffey said. “Our bill gives taxpayers a statutory right to know if they’ve overpaid their taxes and to receive automatic refunds similar to overpayments on your telephone or utility bills.”

The bill requires the Tax Commissioner to notify taxpayers of overpayments so they can claim a refund or allow overpayments to be credited toward future taxes. Taxpayers must be notified no later than 60 days before the end of the applicable three or four-year limitations period. Additionally, refunds can be applied to any outstanding debt for unpaid taxes, or any other outstanding tax or fee liability.

Ohio Tax Commissioner Joe Testa, who said the practice of keeping refunds had been going on for a long time, supported the legislation.

“If you overpaid your taxes, why should the government keep that money? The short answer is, they shouldn’t,” Landis said. “This bill is simple. It’s about returning money back to the taxpayers and Ohio’s job creators.”

The bill comes after an Ohio Inspector General report released in November that found the Ohio Department of Taxation failed to return more than $30 million in overpaid taxes to businesses who had requested refunds. The investigation said another $294 million in refunds still might be owed.

H.B. 402 was passed unanimously by the House. It was sent to the Senate for consideration.