Approximately 70 percent of the $100 million in tax credits remain available for Ohio’s InvestOhio nonrefundable tax credit program. Through InvestOhio, Ohio you can invest in qualifying Ohio small businesses as an individual taxpayer. Then, you can receive a credit for 10 percent of the amount invested against their personal Ohio income tax if they meet certain requirements.
Businesses that receive investments must make an investment in Ohio-based equipment, property or wages. Both the investor and the business must hold the investment and the items purchased from the investment for the two-year holding period. If you meet the requirements, ’you’ll receive a 10 percent credit against your personal Ohio income tax. The credits are available for a two-year period ending June 30, 2013. Program officials shared three additional details regarding the program’s guidelines.
Investing in Wages
If your investment is used for wages within a business, the state specifies that the wages do not have to be for a new worker. The provision states that the position must be retained by the business for the two-year period. Employees might change within the position during the two years, but the position itself must still be at the company at the end of the two years. The idea is that the business is “buying” an Ohio based worker for that whole two-year holding period.
Timing and Amount of Your Investment
The InvestOhio application specifies a date that the investment will be given to the company. The state provides a window of 30 days before to 30 days after the date of the investment listed on the application to get the money to the company. The application for InvestOhio will fail for investors who do not make their contribution within this time period.
The state also clarified that taxpayers must contribute at least 50 percent of the investment they stated on their application within the 60-day window. If the investment is less than 50 percent, the investor’s application for InvestOhio will automatically fail. While you are permitted to invest less money than the amount listed on your application, you cannot get credit for an additional amount invested over the application amount unless you file an additional application (assuming funding is still available for that new application).
The Ohio Department of Development announced that it isn’t currently accepting investment documentation while it works to construct a tool on the Ohio Business Gateway to allow InvestOhio participants to upload copies of their investment documentation documents. The Department will notify investors when the tool is ready and will begin the “30 day window” mentioned above at that point.
Documents considered acceptable to establish the date and amount of the investment include but are not limited to cancelled checks, wire transfers, journal entries and equity accounts of the small business entity. Documents considered acceptable to establish equity interest include but are not limited to stock certificates, partnership agreements and tables of ownership structure before and after the investment.
The credit is available first-come, first-served to taxpayers. Approximately 20 percent of the credit was claimed on the week of December 5, the first week applications were accepted through the Ohio Business Gateway. The InvestOhio program is being administered by the Ohio Department of Development in collaboration with the Ohio Department of Taxation. It is expected to generate at least $1 billion in new private investment in Ohio small businesses by 2013.
For additional information, please visit http://www.development.ohio.gov/InvestOhio/InvestOhio.htm or view this Frequently Asked Questions PDF http://www.development.ohio.gov/InvestOhio/Documents/InvestOhioFAQ110411.pdf.