The bill introduced by Representative Demetriou amends sections 718.01, 718.81, and 718.84 of the Revised Code to eliminate the five-year limit on municipal income tax net operating loss carryforwards, allowing taxpayers to carry forward their net operating losses indefinitely. It modifies the definition of "municipal taxable income" by removing references to "pre-2017 net operating loss carryforward" and permits losses to be carried forward until fully utilized. The bill also revises the provisions regarding the deduction of net operating losses, enabling deductions for the taxable year and subsequent years until the loss is fully utilized, thereby providing greater flexibility for taxpayers in managing their municipal income tax liabilities.

Additionally, the bill introduces new definitions, including "small employer," and clarifies existing terms to align with federal tax terminology. It deletes the previous definition of "pre-2017 net operating loss carryforward," indicating a significant shift in the treatment of net operating losses. The bill also allows the tax commissioner to share taxpayer information with the Internal Revenue Service while maintaining confidentiality, and it establishes procedures for municipal corporations to manage taxpayer information and audits. Overall, the bill aims to streamline municipal income tax administration and provide clearer guidelines for taxpayers.

Statutes affected:
As Introduced: 718.01, 718.81, 718.84