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Ohio Electronic Payroll Tax Overview

OhioOhio employers have a lot going for them when it comes to state taxes. In fact, the Ohio Business Gateway (OBG), the state’s online tax filing portal, has been recognized nationally as a one-stop site for employers.[1] The site offers electronic registration and filing for a multitude of tax types, including unemployment tax, withholding tax, commercial activity tax, sales tax, worker’s compensation and municipal income tax for nearly 500 of Ohio’s cities.

Even with this handy tool, the mechanics of payroll tax law vary widely by state, so knowing how to file and pay payroll taxes in a timely manner can be challenging. The following payroll tax overview should help give companies a better sense of the specific requirements in Ohio, assist them in filing taxes accurately, and help payroll tax managers mitigate the penalties associated with failing to file taxes in a timely and accurate manner.

How to file and pay withholding taxes

The Ohio Department of Taxation (ODT) is responsible for collecting withholding taxes on behalf of the Treasurer of the State. State law requires all employers maintaining an office or transacting business in Ohio to withhold income tax from any employee working in Ohio (whether a resident or nonresident),[2] except for residents of Michigan, Indiana, Kentucky, West Virginia and Pennsylvania.[3] Employers may file online through the OBG, by mail or by phone.[4] The ODT encourages employers to file and pay online—it helps save tax dollars and reduce processing errors and delays.[5]

Employers may use a savings or checking account or pay with ACH credit or debit card if using OBG to pay tax due.[6] Another option is to pay by credit card through www.officialpayments.com or by calling 1-800-2PAYTAX.[7]

Different schedules must be followed for filing returns and paying withholding taxes depending on the combined amount of state and school district taxes that were withheld during the 12-month period ending June 30 of the preceding calendar year.[8] Employers may be required to pay weekly, monthly or quarterly based on their projected annual withholding tax.[9] Any time the withholding tax amount exceeds $100,000, payment is due electronically the next banking day.[10]

Penalties and interest for withholding taxes

For a late-filed return, the penalty is the greater of $50 per month (maximum of $500) or 5 percent per month (maximum of 50 percent of tax due).[11] For late payment of tax, the penalty is double the interest rate charged (for 2015, the interest charge is 3 percent) plus 10 percent of the delinquent tax.[12] Failure to remit taxes incurs a penalty of 50 percent of the delinquent tax.[13] Finally, a bad check penalty incurs a $50 fine.[14]

Credits and refunds for withholding taxes

There are no specific forms required when requesting a credit or a refund from the ODT. Employers may make adjustments in a subsequent period of the3. same calendar year by reducing or increasing the tax due on the next form IT 501 or EFT payment.[15] If an error is discovered after the annual reconciliation form has been filed, employers may complete an amended reconciliation form for that year. EFT filers may file an amended form through OBG.[16]

How to file and pay unemployment taxes

Unemployment insurance (UI) taxes are collected by the Ohio Department of Job and Family Services (ODJFS). In most situations, employers are liable for payment of UI taxes under the umemployment compensation law if they employ at least one employee in covered employment for part of a day in 20 different weeks in the current or preceding year, or if they paid wages of $1,500 or more to employees in any quarter within the current or preceding year.[17]

Employers can receive an Unemployment Compensation tax account number and contribution rate immediately by registering online through the Employer Resource Information Center (ERIC).[18] Mail registration is also available.[19]

Each employer is required to pay unemployment taxes on the first $9,000 in wages for each employee.[20] Tax returns are due quarterly,[21] and include a report with two sections, the Wage Detail and the Quarterly Summary.[22] To determine the amount of unemployment taxes due for the quarter, total taxable wages paid to all employees in a quarter should be multiplied by the annual tax rate.[23]

Penalties for unemployment taxes

Employers who do not provide wage information by September 1 of each year will be assigned a delinquency rate equal to 125 percent of the maximum experience rate possible for the coming year.[24] An unemployment insurance penalty (a forfeit) is assessed for failing to submit a quarterly contribution and wage report when it is due is .25 percent of the total wages reported (the minimum penalty is $50 and the maximum is $1,000). In addition, there is an interest fee of 14 percent annually for late payments.[25]

Under certain circumstances, the penalty for failing to file or for interest may be waived if a written request is submitted.[26]

Credits and refunds for unemployment taxes

If you think you’ve overpaid on unemployment insurance, contact ODJFS to confirm the correct procedure for requesting a credit or refund.

Other resources

For additional resources, check out The Bridge Sponsored by ADP®, a new secure social networking community sponsored by ADP that provides a unique peer-to-peer online forum for employers to interact, collaborate, communicate and share experiences and knowledge about a wide range of human capital management topics. Here you can find the Ohio tax forum, as well as further details about the state’s tax employment documents and requirements.

 

Learn More about ADP Employment Tax

 

The information provided in this blog post is for informational purposes only and not for the purpose of providing accounting, legal, or tax advice. The information and services ADP provides should not be deemed a substitute for the advice of any such professional.  Such information is by nature subject to revision and may not be the most current information available.

[1] http://www.tax.ohio.gov/communications/news_releases/news_release_092303.aspx

[2]http://www.tax.ohio.gov/Portals/0/employer_withholding/General%20Guidelines/WTH_WH1.pdf, pg. 1

[3]http://www.tax.ohio.gov/Portals/0/employer_withholding/General%20Guidelines/WTH_WH1.pdf, pg. 1

[4]http://www.tax.ohio.gov/Portals/0/employer_withholding/General%20Guidelines/WTH_WH1.pdf, pg. 1

[5]http://www.tax.ohio.gov/Portals/0/employer_withholding/Electronic%20Filing%20&%20Payment/FAQs%20to%20Proposed%20Rule.pdf, pg. 1

[6]http://www.tax.ohio.gov/Portals/0/employer_withholding/Instructions/2015%20Instructions/WTH_Instructions.pdf, pg. 1

[7]http://www.tax.ohio.gov/Portals/0/employer_withholding/Instructions/2015%20Instructions/WTH_Instructions.pdf, pg. 1

[8]http://www.tax.ohio.gov/Portals/0/employer_withholding/General%20Guidelines/WTH_WH1.pdf, pg.1

[9]http://www.mass.gov/dor/individuals/taxpayer-help-and-resources/tax-guides/withholding-tax-guide.html

[10]http://www.tax.ohio.gov/Portals/0/employer_withholding/General%20Guidelines/WTH_WH1.pdf, pg. 2

[11]http://www.tax.ohio.gov/Portals/0/employer_withholding/Instructions/2015%20Instructions/WTH_Instructions.pdf, pg. 2

[12]http://www.tax.ohio.gov/Portals/0/employer_withholding/Instructions/2015%20Instructions/WTH_Instructions.pdf, pg. 2

[13]http://www.tax.ohio.gov/Portals/0/employer_withholding/Instructions/2015%20Instructions/WTH_Instructions.pdf, pg. 2

[14]http://www.tax.ohio.gov/Portals/0/employer_withholding/Instructions/2015%20Instructions/WTH_Instructions.pdf, pg. 2

[15]http://www.tax.ohio.gov/Portals/0/employer_withholding/General%20Guidelines/WTH_WH1.pdf, pg. 2

[16]http://www.tax.ohio.gov/Portals/0/employer_withholding/General%20Guidelines/WTH_WH1.pdf, pg. 2

[17]http://jfs.ohio.gov/ouc/uctax/liability.stm

[18] http://jfs.ohio.gov/ouc/uctax/registering_as_an_employer.stm

[19] http://jfs.ohio.gov/ouc/uctax/registering_as_an_employer.stm

[20] http://jfs.ohio.gov/ouc/uctax/wagebase.stm

[21] http://jfs.ohio.gov/ouc/uctax/registering_as_an_employer.stm

[22] http://jfs.ohio.gov/ouc/uctax/reprting.stm

[23] http://jfs.ohio.gov/ouc/uctax/wagebase.stm

[24] http://jfs.ohio.gov/ouc/uctax/failure_to_file_and_pay.stm

[25] http://jfs.ohio.gov/ouc/uctax/failure_to_file_and_pay.stm

[26] http://jfs.ohio.gov/ouc/uctax/failure_to_file_and_pay.stm


One comment on “Ohio Electronic Payroll Tax Overview”

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