Ohio House Bill 292 Changes the “Bright Line Test” for Ohio Non-resident Income Tax Purposes

When deciding whether people are responsible for Ohio income tax, the state usually relies on residency: whether the taxpayer actually lives in the state. But establishing residency or non-residency has been a bit of a gray area, and a new bill has been passed which seeks to clarify the meaning.

Taxpayers can file an affidavit with the state, claiming their non-resident status. But in 2015, the Ohio Supreme Court in Cunningham v. Testa ruled that the Tax Department could challenge the affidavit. In H.B. 292, which was signed into law on June 14 by Governor John Kasich, Ohio’s “bright line test” – the criteria used to determine whether a taxpayer is treated as a non-resident – is amended. This bill provides that a taxpayer’s claim of Ohio non-residency is “irrebuttable” if the taxpayer files an affidavit with the tax commissioner stating the following:

  • The taxpayer has no more than 212 contact periods with Ohio during the tax year,
  • The taxpayer had at least one place of residence outside Ohio during the entire tax year for which the taxpayer did not claim a federal depreciation deduction,
  • The taxpayer did not hold a valid Ohio driver’s license or identification card at any time during the tax year,
  • The taxpayer did not claim a homestead exemption for an Ohio residence during the tax year, and
  • Any tuition charged or incurred from an Ohio state institution by the taxpayer during the taxable year was not based on a place of residence in Ohio.

The bill extends the deadline for taxpayers to file the affidavit on or before October 15 following the close of the taxable year.

Also, H.B. 292 reinstates the direct right of appeal from the Board of Tax Appeals to the Ohio Supreme Court for most Ohio tax cases. This right had previously been taken away by last year’s biennial budget.

If you have any questions, please contact your CSH State & Local Tax advisor.

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