In the court of public opinion, the Ohio Department of Taxation has not been faring well in recent months. Late in 2013, the Ohio Inspector General found that the Department chose not to respond to taxpayer requests for $30 million in refunds – and potentially withheld nearly 10 times that amount in overpayments for which taxpayers did not actively seek refunds. (See Ohio DOT Plays "Who Do You Trust?" and referenced stories.)
In the aftermath of outrage expressed by Gov. John Kasich and many others, S. 263 purports to require the Department to do the right thing without being prompted. ("Bills Would Require Ohio to Refund Tax Overpayments by Businesses," The Columbus Dispatch, January 16, 2014.) To the uninitiated, it may be surprising that no such requirement already appears anywhere in the Ohio Revised Code. Nor does any such statutory requirement exist in a number of other states. How can this be?
Looking through the prism of frailties and venality, which are fundamental elements of the human condition, Ohio’s phantom tax refund caper is a poster child explanation of why we need state (and federal) legislatures to pass meaningful laws. At every level, including this one, we need effective laws and penalties. But in this case, until now, why has the need for such legislation been overlooked in Ohio and some other states? No one has a good answer for that.
Thankfully, the Ohio General Assembly is considering S. 263, which passed the Senate on February 12th (Abe Lincoln’s birthday) with Gov. Kasich’s support. Honest Abe would be proud.
Discover the features and benefits of LexisNexis® Tax Center
For quality Tax & Accounting research resources, visit the LexisNexis® Store