OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
H.B. 66 Bill Analysis
135th General Assembly
Click here for H.B. 66’s Fiscal Note
Version: As Reported by Senate Ways and Means
Primary Sponsors: Reps. Hall and Stoltzfus
Effective Date:
Kitty Sorah, Attorney
SUMMARY
▪ Allows a wholesaler or distributor to obtain a refund of excise taxes on cigarettes, other
tobacco products, and nicotine vapor products remitted on bad debts arising from the
sale of those products.
DETAILED ANALYSIS
Excise tax refunds on bad debts
The state levies excise taxes on the sale of cigarettes, other tobacco products (OTP), and
vapor products containing nicotine. Cigarette taxes are generally paid by wholesalers, whereas,
OTP and vapor products taxes are paid by distributors. In either case, the taxes are passed
through to retailers and, ultimately, consumers of those products.
The bill allows a wholesaler or distributor to obtain a refund of excise taxes remitted on
certain bad debts arising from the sale of those products, less any discounts allowed, under
continuing law, for affixing the tax stamp or prompt payment (referred to in this analysis as
“qualifying bad debts”).1 The deduction applies only to the specific tax levied on the product that
is the basis of the qualifying bad debt, and applies to both the state and, if applicable, local excise
taxes. (Under continuing law, Cuyahoga County is authorized to levy excise taxes on cigarettes to
fund a regional arts and cultural district and to construct and operate a sports facility.2 No other
local excise tax may specifically target these products.)
1 See R.C. 5743.05 and 5743.52, not in the bill.
2 R.C. 5743.021 and 5743.024, not in the bill.
December 17, 2024
Office of Research and Drafting LSC Legislative Budget Office
Under continuing law, wholesalers are primarily required to pay the cigarette tax by
purchasing tax stamps, which must be fixed to each package of cigarettes, and distributors are
required to remit directly the taxes on OTP and vapor products.3
The bill allows a wholesaler or distributor to apply to the Tax Commissioner for a refund
of the cigarette, OTP, or vapor products taxes paid on qualifying bad debts. The application must
include a copy of the original invoice, evidence of delivery of the product to the purchaser,
evidence that the purchaser did not pay for the product, evidence that the wholesaler or
distributor used reasonable collection practices to try to collect the debt, and any other
information the Commissioner requires. An application for a refund of OTP or vapor products
taxes must, in addition to the information described above, include evidence of the wholesale
price or vapor volume, as applicable, at the time the product was subject to taxation.
A qualifying bad debt is any debt arising from the sale of cigarettes, OTP, or vapor
products that satisfy each of the following criteria:
▪ The cigarette, OTP, or vapor products tax has been paid.
▪ The debt has become worthless or uncollectible.
▪ The debt has been uncollected for at least six months, but not more than three years from
either the time the debt became uncollectible (in the case of cigarette taxes) or the time
the tax was remitted (OTP and vapor products taxes).
▪ The wholesaler or distributor charges off the debt as uncollectable on its books on or after
January 1, 2024.
▪ The wholesaler or distributor deducts, or would be allowed to deduct, the bad debt in
calculating federal income tax liability.
A qualifying bad debt does not include interest or financing charges, collections costs,
accounts receivable that have been sold or assigned to a third party, or repossessed property.
The Commissioner must provide for payment to a wholesaler or distributor entitled to a
refund. No person other than a wholesaler or distributor that remitted the applicable tax and
generated the bad debt may receive a bad debt refund. If any portion of a bad debt for which a
wholesaler or distributor receives a refund is later paid, the wholesaler or distributor must pay
the applicable tax on the amount of the debt recovered.
The Commissioner may adopt any rules necessary to administer these refunds. These
rules are not subject to the requirements in continuing law governing agency review of rules to
identify regulatory restrictions. In addition, the Commissioner is exempted from the provision of
that law requiring the removal of two regulatory restrictions upon adoption of one regulatory
restriction.4
3 R.C. 5743.03 and 5743.51, not in the bill.
4 R.C. 5743.06 and 5743.53; Section 3.
P a g e |2 H.B. 66
As Reported by Senate Ways and Means
Office of Research and Drafting LSC Legislative Budget Office
Continuing law authorizes a very similar deduction and refund for sales taxes paid on bad
debt.5However, sales taxes are assessed against a consumer and remitted to the vendor, for
payment to the state. In contrast, the wholesaler or distributor is generally liable for the cigarette,
OTP, and vapor products tax even though each tax is generally passed down to retailers and
consumers as a matter of practice.
HISTORY
Action Date
Introduced 02-21-23
Reported, H. Ways & Means 03-29-23
Passed House (85-3) 05-24-23
Reported, S. Ways & Means 12-16-24
anhb0066rs-135/ks
5 R.C. 5739.121, not in the bill.
P a g e |3 H.B. 66
As Reported by Senate Ways and Means


Statutes affected:
As Introduced: 5743.53
As Reported By House Committee: 5743.53
As Passed By House: 5743.53