On June 30, 2017, Governor John Kasich signed Am. Sub. H.B. 49 (Sub HB 49), the 2018-19 biennial budget legislation, but used his line-item veto authority to eliminate certain tax provisions from taking effect. Although most of the proposals made by Governor Kasich in February (see Tax Alert 2017-226) did not make it into the final legislation, significant tax changes are nonetheless in the final version, including the adoption of a tax amnesty program and a severe curtailment of taxpayer appeal rights from decisions of the Ohio Board of Tax Appeals. The final measure also includes:

— Adoption of an economic sales and use tax nexus standard similar to those adopted over the past year in other states (such as South Dakota and Alabama, which are the subject of ongoing litigation)

— Elimination of the municipal income tax "throwback" rule

— Allowance for business taxpayers to elect to make centralized municipal net profits tax filings with the Ohio Department of Taxation instead of with individual municipalities

Governor Kasich used his line-item veto authority to veto the following tax related measures: the direct pay election for vehicle dealers, a change to the definition of electronic information services for purposes of the Ohio sales tax, and the exemption for prescription glasses/contacts from the sales tax.

For an in-depth discussion of the tax changes in Sub HB 49, see Tax Alert 2017-1042.

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