So, I get this form in the mail from the Ohio Department of Taxation... Form 7004... which states that I failed to file a school income tax return for my local school district for 2002. This letter explains that I have 20 days to respond or they will file an estimated assessment with the addition of a $500 penalty. The way that they determined that I had not filed my SD-100 return for the local school district was by matching my State Income Tax return filing address.

Well, I did not take up my new residence in the district in question until January of 2003. This is easy enough to handle as the form 7004 even instructs us to send a letter of explanation back to them that we did not live in the district until 2003.

But the more I pondered this issue, the more confused I became, so I called the Taxpayer Hotline. After about 90 minutes of trying to get past a busy signal, I got to the automated attendant, which immediately prompted me with information about how to remit my tax payement over the phone with a credit card.

Anxious bunch aren't they.

So I wade through the list of options, and get a chance to hear more information about the form 7004 itself. This was a general re-statement of the copy of the letter, with a very light, sugar coated explanation that I was somehow at fault for not filing the right forms.

I punch past and opt to talk to a live Tax agent. After a short 40 minute wait, I was greeted by a very nice voice that claimed her name was Ann. I explained to Ann that I had received this form 7004 letter in the mail and had some questions that the automated attendent didn't seem to cover.

She politely stated that she would do her best to assist me.

The first thing that I asked was, if the DeRolf IV decision by the State Supreme Court of Ohio left the school funding legislation in a de facto status of being unconstitutional; then, in all seriousness, how could the Ohio Department of Taxation send a letter like this claiming that they would assess you with a bill and a penalty if you didn't respond?

She stated that yes, school funding was declared unconstitutional by the Ohio Supreme Court, and it was up to the Ohio Legislature to fix it, but until they do, the Ohio Department of Taxation must follow the code that exists, up to and including taking people to court for non-payment of a tax that has been declared unconstitutional. Meaning, they pay legal fees, court costs, labor expenses, administrative costs, an such to file and pursue cases that they know they will lose because of the law being unconstitutional. Since most people continue to pay the taxes and even pass new school levy income taxes under the same unconstitutional law, nobody at the state legislature seems motivated to give the money back or change the law.

Then I asked Ann about their system itself. Particularly, the fact that they use the State Tax return filing address to identify any missing school district returns. If someone relocates from one district to another anytime between January 1 and April 14 of any year, though they spent the entire year at their prior address, their tax return for that year will likely be filed with their new address. This means, anyone who relocates inside the State of Ohio within the first 3 & 1/2 months of every year will likely receive the form 7004 notice letter and consume government resources to explain why they don't owe the tax for the new district.

Just how many households in Ohio do you think relocates annually in the timeframe between January 1 and April 14?

That's a lot of money spent of letters, postage, labor, long distance charges for their 888 hotline, etc...

ALL TO COLLECT A TAX THAT HAS BEEN DECLARED UNCONSTITUTIONAL BY THE OHIO SUPREME COURT

Needless to say, Ann was a bit taken aback by my statements, but... get this.... she agreed with me.

She agreed.
Thomas Jefferson must not only be flipping in his grave... the Department of the Interior is getting richter scale earthquake readings stemming from his epileptic convulsions.

Oh stop yer bitchin!

Sure our taxation system is unconstitutional, bloated, wrongheaded and unfair, but look at these awesome schools we have!

Where else can I send my 8 year old to a place filled with adults that she's smarter than!? What a great ego-boost for a child! I mean, outside of a psych ward, I can't think of anyplace she can spend the day where she's got a better command of the language than people 4 to 6 times her age. That's what our tax dollars are buying!

I just don't understand why some hitter attorney like Stan Chesley hasn't filed a class action suit to recover illegally collected taxes.

Oh wait... he's a liberal dem...

Great, I guess I will be getting that form soon enough (Moved 3/31/05).

My favorite was when we had to pay local tax to RITA. (Regional IncomeTax Authority).  We mailed the check 4/1/2000.

They send me a letter dated 8/15/2000 saying that we had not filed and need to contact them and pay penalties and taxes.  I go to look for a canceled check and find it has never cleared.  

I call them to beg mercy for penalties and to explain that the same accountant prepared all of our forms on the same date and it was mailed, but must have been lost since the check never cleared.

Before I can explain all this, the nice attendant asked me if I received a letter.  I say yes.  He asked me if I mailed it.  I said yes.  He said to ignore the letter b/c the had not finished opening and processing all of the returns yet.

Check cleared in mid October.

I just scracthed my head.

Dan

Wait until the annual Commercial Activity (CAT) tax kicks in for everyone.

This one is going to be a goocher... sure to end up in court...


From their website (and I quote)...

General Information on the Commercial Activity Tax (CAT)


Taxpayers - The CAT is an annual privilege tax measured by gross receipts on business activities in this state. This tax applies to all types of businesses: e.g. retailers, service providers (such as lawyers, accountants, and doctors), manufacturers, and other types of businesses. The CAT also applies whether the business is operated in this state or is located outside of this state if the taxpayer has enough business contacts with this state. The CAT applies to all entities regardless of form, e.g., sole proprietorships, partnerships, LLCs, and all types of corporations. A person with taxable gross receipts of more than $150,000 per calendar year is subject to this tax, which requires such person to register with this Department as a taxpayer. Please note that certain receipts are not taxable receipts, such as the wages most persons earn for doing work. Such wages are also not part of the $150,000 threshold for having to register for this tax. The tax does have limited exclusions for certain types of businesses such as financial institutions, dealers in intangibles, insurance companies and some public utilities.

Taxable Gross Receipts - Gross receipts subject to CAT are broadly defined to include most business types of receipts from the sale of property or realized in the performance of a service. The following are some examples of receipts that are not subject to the CAT: interest (other than from installment sales), dividends, capital gains, wages, amounts in excess of commissions, or gifts. In general, for the sale of property such receipt is only considered a taxable gross receipt if the property is delivered to a location in this state. For services, the receipt is sitused to Ohio in the proportion that the purchaser's benefit in this state bears to the purchaser's benefit everywhere. The physical location where the purchaser ultimately uses or receives the benefit of what was purchased is paramount in making this determination. In other words, receipts from sales to out-of-state purchasers or the proportion of the services where the benefit is primarily received outside of this state are not subject to the CAT.

Tax Start Date - Filing Date and Tax Rate. The CAT first applies for taxable gross receipts received on and after July 1, 2005. The first measurement period for all taxpayers is for receipts received from July 1, 2005 to December 31, 2005. This return is due February 10, 2006. Because the tax is being phased-in over five years, the tax rate on the first $500,000 in taxable gross receipts for that period is $75 while receipts over that amount are taxed for that measurement period at 0.06% (0.0006). Taxpayers that are required to use accrual accounting for federal tax purposes must use the same reporting method for the CAT. Beginning January 1, 2006, taxpayers with taxable gross receipts in excess of $1 million per calendar year will file and pay quarterly. All other taxpayers will pay annually. The due date for the return is forty days after the end of each tax period. For the 2006 tax year, all taxpayers will be required to pay the annual privilege tax of $150 for the first $1 million in taxable gross receipts by May 10, 2006. Taxpayers subject to quarterly tax reporting will also have to make payment of the first quarter tax at that time.

Registration- Taxpayers having over $150,000 in taxable gross receipts are required to register for the CAT. A one-time registration is required for all taxpayers (annual and quarterly taxpayers). The deadline for registration is November 15, 2005. If a person first becomes subject to the CAT after November 15, 2005 the taxpayer is required to register within 30 days. All registrations are subject to a one-time fee; single taxpayers are subject to a $15 fee if filed electronically and $20 if filed via paper, consolidated and combined taxpayers are subject to a maximum fee for all its members of $200. Electronic registration is available online through the Ohio Business Gateway at obg.ohio.gov or through our website at tax.ohio.gov. For better efficiency, the Department of Taxation urges taxpayers to file electronically. Taxpayers still wanting to file using paper can obtain the form through our website or request the form by calling 1-800-282-1782. All registration fees will be applied as a credit toward the liability on the first tax return.

Consolidated Elected Taxpayers and Combined Taxpayers -. A Consolidated Elected Taxpayer is a taxpayer that has elected to file as one combined taxpayer for itself and other entities that have either 50% or more common ownership or 80% or more common ownership. In addition, the group can elect to have foreign corporations (non-U.S.) with the same common ownership all excluded or all included in the group. A major benefit of making this election is that receipts received between members of the group are not subject to the CAT. However, taxpayers making this election must agree that all commonly owned entities are part of the group even if the requisite contacts with the state for it to exert its taxing powers do not exist (nexus). This election is binding for two years. If such election is not made, any taxpayers with common ownership of more than 50% must file as a combined taxpayer. Combined taxpayers may not exclude receipts between members of the group, however, combined taxpayers need only include in the group, those members who have nexus in Ohio.

tax.ohio.gov/divisions/communications/cat_general_information.stm


We, the subjects, only have the privilege of conducting more than $150,000 a year worth of commerce after we register (which costs $200 if you're a corp.). Then you get to pay a 'privilege' fee to the state based upon a percentage of your GROSS SALES. Not profit. Sales.

this place has way to many taxes in general, on my last few checks there was the obligitory state tax, then a cinci tax and a lebanon tax...if not for the cheap cigarette prices I'd be broke by now.

Cheap cigs?

Surely you jest. OH just had a $0.75 a pack tax hike.

Run across the river to KY if you want cheap smokes.

What cheap cigs? Are you from Canada or something?

Quoted: Cheap cigs? Surely you jest. OH just had a $0.75 a pack tax hike. Run across the river to KY if you want cheap smokes.

while KY is the place to go for cheap smokes (I usually head down to there once a week for that purpose), in comparission to my old home OH is as cheap as dirt.

Quoted: It truly amazes me that people in Ohio wonder why business is leaving in droves.  High taxes, extra taxes and unions are gonna kill us off entirely.  Its interesting, in our recruiting business I have made exactly one placement in Ohio in the last 12 months.  Everything else is in other states.

Just out of curiosity, what type of recruiting do you do?

Quoted: It truly amazes me that people in Ohio wonder why business is leaving in droves.  High taxes, extra taxes and unions are gonna kill us off entirely.  Its interesting, in our recruiting business I have made exactly one placement in Ohio in the last 12 months.  Everything else is in other states.

+1 it amazes me too

While being a union member, I have to agree somewhat about unions being bad for industry.
Where I worked at, about 75% of the union employees just don't give a shit. When the company
looses business because of bad production, people packing bad parts, wrong parts, not
enough parts and just plain making junk and even scratching cuss words on a mold so they
show up on a finished part. The union starts loosing jobs and then starts screaming about the company not being able to manage business, but it wasn't the company workers, it was the
union workers screwing up production. As far as taxes, we have been about done in, in this area.
They have just had a re-evaluation and doubled our taxes, and after six attempts they finally
passed a new school levy, and now want to continue  an old levy. That to will be double the
previous amount because it will be based on the new, doubled rate. The school board says
that the amount won't be changed because it is a continuance and the supporters believe them
even though the treasurer's office put it in the news paper that it will be almost doubled. Before
the new rate went into effect $79 out of every $111 went to the school. sorry!