PEO payment audits suspended
Today, the Ohio Tax Department announced it is suspending audits of individuals who received compensation from a professional employer organization (PEO) the individuals didn’t own but who claimed a business income deduction against the compensation. The Department is suspending these audits due to the introduction this week and last of identical bills in the Ohio House and Senate (H.B. 334 and S.B. 186) that expressly permit the deductions so long as the individual owns 20% or more of the PEO’s client. The bills indicate they are intended to clarify existing law and apply the clarification to taxable years beginning in 2013 and thereafter.
The dual legislation and the Tax Department’s announcement suggest the legislation has a very good chance of passing. A similar provision was included in the Senate-passed version of the biennial budget (H.B. 49) passed in June, but it was removed in the Conference Committee.
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