Hall, Kistler & Company- Time Is Running Out for the InvestOhio Tax Credit

By Keith Arner, CPA, CVA, Partner

As many of our clients already know, the InvestOhio program offers a great way to cut down on tax liability while investing in your business. Hall, Kistler & Company encourages business owners and investors to look into the program and take advantage of the generous 10% tax credits it provides, assuming they qualify. What they may not know is that the program officially ends on June 30, 2015, meaning that there is only a short window left in which to apply and qualify for the these benefits.

Originating in 2011, the InvestOhio program was created to encourage investment in small business enterprises (SBEs) within the state and was structured and approved in two-year increments. The current implementation runs July 1, 2013 through June 30, 2015. Taxpayers who wish to utilize the credit for an investment made during that period must quickly register themselves and their companies through the Ohio Business Gateway, receive their User ID numbers and apply for the program on the same website. The limited number of investment certificates available and the “first come, first serve” policy for awarding them should be added incentive to move quickly.

The program isn’t a simple one, to be sure. Numerous regulations regarding the timing of the investment, expenditures made with invested funds and documentation of said funds must be meticulously followed in order to successfully claim the credit. From applying, qualifying and investing to how the funds are utilized, certification and claiming the credit, a host of complex rules create barriers to receiving the tax credit. One hurdle, however, has been removed in the past year: the state’s decision to mandate that the investment be retained for a minimum of 5 years has been reconsidered. As with the original bill, investors are now required only to maintain the funding for a 2-year period to claim the credit.

Besides the need to hold the investment, potential tax credit users must correctly adhere to the program’s very specific procedures, application process, and certification requirements. The business itself must meet certain program guidelines to qualify as a suitable investment. Investors and businesses have to maintain all appropriate records and monitor their approved investment certificates to make sure they are not disqualified. That’s in addition to investors’ responsibility to have their investment certificates verified and ensure that they are eligible to claim the credit in the first place. Ohio Revised Code Section 122.86(A)(3) defines investors as:

An individual, estate, or trust subject to the tax imposed by section 5747.02 of the Revised Code, or a pass-through entity in which such an individual, estate, or trust holds a direct or indirect ownership or other equity interest. To qualify as an eligible investor, the individual, estate, trust, or pass-through entity shall not owe any outstanding tax or other liability to the state at the time of a qualifying investment.”

InvestOhio has been a very popular program despite the many hurdles to reaping its benefits, well worth the effort to complete the process. Investors and business owners should not miss this opportunity for significant personal income tax savings – up to $1 million per investor. Because of the complexity of complying with the regulations of the law, we encourage you to contact Hall, Kistler & Company for assistance in successfully navigating the long and winding path to claiming and using the InvestOhio tax credit before it’s too late. Our tax professionals will be happy to determine if you qualify and help you complete the entire process.

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About Keith Arner

Keith chairs the Oil and Gas niche for Hall, Kistler and has been with the firm since June 2002. Prior to that, he was with a local accounting firm for 13 years. He is skilled in providing auditing, tax and accounting services for closely held and publicly held companies, as well as business valuation and litigation consulting services. He has experience with oil & gas, business valuations, manufacturing, mining and landfill operations, construction, wholesale and retail, service industries and the healthcare industry. He also has experience in management advisory services including acquisitions and sales of businesses and assists controllers for various accounting software packages. In addition to holding a CPA license, Keith is a Certified Valuation Analyst (CVA) and earned his bachelor’s of Science Degree in Accounting from The University of Akron. He is a member of the American Institute of Certified Public Accountants, the Ohio Society of Certified Public Accountants, the National Association of Certified Valuation Analysts (NACVA), the Council of Petroleum Accountants Societies – Appalachia and the Ohio Oil & Gas Association.

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