1. November, 2011
InvestOhio: New Ohio Tax Credit
Registration opens November 14, 2011
Applications accepted in first week of December
InvestOhio provides a non-refundable personal income tax credit to investors that
invest new equity (cash) into certain approved Ohio small business entities to
acquire an ownership interest in the company.
Eligibility Requirements:
The investor should confirm that the entity will be classified as a “small business
enterprise” for purposes of InvestOhio. To qualify the small business:
• Must have less than $50 million in assets or less than $10 million in
annual sales;
• Must have at least 50 full-time equivalent employees in Ohio OR more
than half of total employees are employed in Ohio
Eligible investments must be made on or after July 1, 2011.
The small business is required to reinvest that infusion of cash into one of five
categories of allowable expenses within six months of its receipt:
• Tangible personal property used in business
• Motor vehicles used in business
• Real property used in business
• Intangible property used in business
• Compensation of new employees
The investor must retain his or her ownership interest for a two year holding
period if the investment is made prior to July 1, 2013. The small business must
similarly retain the property that it purchased from the cash infusion for the entire
two year holding period. A five year holding period applies if the investment is
made on or after July 1, 2013.
How to Apply:
In order to be awarded a small business investment certificate (an InvestOhio tax
credit) there are several steps to follow. Detailed information can be found on
the Ohio Department of Development’s website, including tutorials and frequently
asked questions (FAQ). Some highlights to consider are:
1. Both the investor and the small business must have an account established
on Ohio Business Gateway.
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2. 2. Both the investor and the small business must register for InvestOhio
through the Ohio Business Gateway. At the end of registration, each
registrant will receive an InvestOhio User ID. This number will be required to
complete the application process.
3. The parties on a given transaction will decide who is responsible for applying
to the InvestOhio program. Regardless of whether it is the investor or the
small business, the party that applies must obtain the InvestOhio User ID of
the other party on the transaction. They must also reach an agreement with
that party about when the investment will take place and the amount of the
investment.
4. The party that is responsible for applying will do so on Ohio Business
Gateway, starting the first week of December. The timing of when an
eligible investor or small business applies is critical, as credits are
awarded on a first come, first served basis. Once a party has completed
an application, he or she will be given an InvestOhio Transaction ID
number. This number will determine the priority for that transaction.
5. Regardless of whether a transaction has the necessary priority to be awarded
an InvestOhio tax credit at the time of application, the investor must make the
investment on or around the date described in the application. Some
transactions that were initially eligible may be disqualified for failure to follow
the program rules.
There are additional reporting requirements and qualifications that must be
satisfied during the process to ensure the InvestOhio tax credit will be awarded.
We can discuss those details with you throughout the process.
Ohio Income Tax Credit Available:
If approved, the income tax credit equals 10% of the qualifying amount of the
taxpayer’s investment. The tax credit is available against income tax and is
nonrefundable. Any unused amount may be carried forward for seven years.
Although some of the details of this program are still being developed and
not available at this time, if you have any questions about the InvestOhio
program and registration or application process, please contact a member
of the SALT Team.
The information provided in this alert is only a general summary and is being distributed with the understanding that
Plante & Moran, PLLC is not rendering legal, tax, accounting, or other professional advice or opinions on specific
facts or matters and, accordingly, assumes no liability whatsoever in connection with its use.
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