Nearly $14 million in refunds will be given to 3,500 companies, the initial fruits of a Kasich administration effort to help businesses determine whether they’ve overpaid Ohio’s commercial activity tax.
The number of refunds and their cumulative dollar amounts will grow as the administration’s audit expands, but the public won’t be able to track which companies receive refunds and how it was determined that they overpaid, Department of Taxation Commissioner Joe Testa said, citing confidentiality provided by Ohio law.
Testa and Gov. John Kasich said the initiative is another step in Ohio becoming more business-friendly. They said the tax department’s review of commercial-activity tax filings and its notification of businesses that overpaid are a break from past practices; the state formerly kept the overpayment if the business didn’t apply for a refund.
“The idea is not that we’re just taking money out of the treasury and just willy-nilly giving it to people,” Kasich said. “What we’re doing here is the really important work of saying you shouldn’t overpay and then we kind of keep your money and not tell you about it. That’s just a rip-off ... a governmental rip-off.”
But the apparent inability of the public to track which businesses are receiving the refunds drew criticisms from Democrats and government watchdogs who favor transparency, citing the importance of being able to track the millions of dollars that will go from the state back to businesses.
“It’s not about being nosy, it’s about determining if our tax system is operating properly,” said Catherine Turcer of Common Cause Ohio.
People would want to track the refunds because of their impact on the state budget, she said.
House Minority Leader Armond Budish of Beachwood said: “You have to look at the context: This governor has been handing out tax money to big businesses more than any governor” in Ohio’s history — a reference to a Columbus Dispatch analysis that showed Kasich potentially set several records related to business tax credits in 2011.
“It’s very concerning that the governor is passing out mysterious tax refunds to companies and refusing to say which companies and why,” he said. Both Budish and Turcer did agree that a business should be refunded if it overpaid its taxes.
Kasich and Testa were joined by representatives of three businesses that together received more than $24,000 in refunds, including Bluegrass Farms of Ohio in Jeffersonville, which received about $1,700. Testa said those companies signed waivers allowing the state to release their identities and refund amounts, and Kasich said that many companies were absent from a news conference because of their desire to keep their tax information confidential.
A spokesman for Testa later said that confidentiality for refunds is provided by the Ohio Revised Code, citing a provision that bars divulging information acquired through an audit.
Testa said that whereas personal income-tax filers can track and determine their refunds on their filing sheets, businesses filing commercial-activity tax returns don’t have the same options on their forms.
In an information fact sheet, the Kasich administration cited several examples of how businesses might overpay, including by making duplicate payments and errors related to amended returns.
Businesses “indisputably” due a refund are required to file only a request form; others that might be due a refund will be asked to provide additional information.
“It’s not the state’s money; it’s your money, it’s the taxpayers’ money, it’s these businesses’ money,” Testa said.