Bill Text: OH HB375 | 2013-2014 | 130th General Assembly | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: To change the basis, rates, and revenue distribution of the severance tax on oil and gas, authorize an income tax credit for oil or gas royalty holders, and to exclude some oil and gas sale receipts from the commercial activity tax base.

Spectrum: Partisan Bill (Republican 21-0)

Status: (Engrossed - Dead) 2014-05-15 - To Ways & Means [HB375 Detail]

Download: Ohio-2013-HB375-Introduced.html

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As Introduced

130th General Assembly Regular Session 2013-2014

H. B. No. 375

Representative Huffman 

Cosponsors:  Speaker Batchelder  Representatives Hall, Grossman, Conditt, Sears, Hayes, Boose, Beck, Stebelton, Hill, Wachtmann, Amstutz, Landis, Scherer, Baker, Buchy, Retherford, Rosenberger 

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A BILL

To amend sections 1509.02, 1509.071, 1509.34,

1

1513.08, 1513.182, 1514.11, 5703.052, 5747.98,

2

5749.01, 5749.02, 5749.03, 5749.06, 5749.07,

3

5749.08, 5749.10, 5749.11, 5749.12, 5749.13,

4

5749.14, 5749.15, and 5751.01, to enact section

5

5747.63, and to repeal section 1509.50 of the

6

Revised Code to levy a severance tax on well

7

owners of oil and gas severed from horizontal

8

wells, to create a nonrefundable income tax credit

9

for the amount of horizontal well severance tax

10

paid, to repeal a cost recovery assessment imposed

11

on oil and gas well owners, to reduce the

12

severance tax rate on natural gas extracted from

13

nonhorizontal wells, to exclude from the tax base

14

of the commercial activity tax gross receipts from

15

the sale of oil or natural gas severed through use

16

of a horizontal well, and to make an

17

appropriation.

18

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 1509.02, 1509.071, 1509.34, 1513.08,	19
1513.182, 1514.11, 5703.052, 5747.98, 5749.01, 5749.02, 5749.03,	20
5749.06, 5749.07, 5749.08, 5749.10, 5749.11, 5749.12, 5749.13,	21
5749.14, 5749.15, and 5751.01 be amended and section 5747.63 of	22
the Revised Code be enacted to read as follows:	23

Sec. 1509.02. (A) There is hereby created in the department	24
of natural resources the division of oil and gas resources	25
management, which shall be administered by the chief of the	26
division of oil and gas resources management. The division has	27
sole and exclusive authority to regulate the permitting, location,	28
and spacing of oil and gas wells and production operations within	29
the state, excepting only those activities regulated under federal	30
laws for which oversight has been delegated to the environmental	31
protection agency and activities regulated under sections 6111.02	32
to 6111.028 of the Revised Code. The regulation of oil and gas	33
activities is a matter of general statewide interest that requires	34
uniform statewide regulation, and this chapter and rules adopted	35
under it constitute a comprehensive plan with respect to all	36
aspects of the locating, drilling, well stimulation, completing,	37
and operating of oil and gas wells within this state, including	38
site construction and restoration, permitting related to those	39
activities, and the disposal of wastes from those wells. In order	40
to assist the division in the furtherance of its sole and	41
exclusive authority as established in this section, the chief may	42
enter into cooperative agreements with other state agencies for	43
advice and consultation, including visitations at the surface	44
location of a well on behalf of the division. Such cooperative	45
agreements do not confer on other state agencies any authority to	46
administer or enforce this chapter and rules adopted under it. In	47
addition, such cooperative agreements shall not be construed to	48
dilute or diminish the division's sole and exclusive authority as	49
established in this section. Nothing in this section affects the	50
authority granted to the director of transportation and local	51
authorities in section 723.01 or 4513.34 of the Revised Code,	52
provided that the authority granted under those sections shall not	53
be exercised in a manner that discriminates against, unfairly	54
impedes, or obstructs oil and gas activities and operations	55
regulated under this chapter.	56

The chief shall not hold any other public office, nor shall	57
the chief be engaged in any occupation or business that might	58
interfere with or be inconsistent with the duties as chief.	59

All moneys collected by the chief pursuant to sections	60
1509.06, 1509.061, 1509.062, 1509.071, 1509.13, 1509.22, 1509.222,	61
1509.28, and 1509.34, and 1509.50 of the Revised Code, ninety per	62
cent of moneys received by the treasurer of state from the tax	63
levied in divisions (A)(B)(5) and (6) of section 5749.02 of the	64
Revised Code, all civil penalties paid under section 1509.33 of	65
the Revised Code, and, notwithstanding any section of the Revised	66
Code relating to the distribution or crediting of fines for	67
violations of the Revised Code, all fines imposed under divisions	68
(A) and (B) of section 1509.99 of the Revised Code and fines	69
imposed under divisions (C) and (D) of section 1509.99 of the	70
Revised Code for all violations prosecuted by the attorney general	71
and for violations prosecuted by prosecuting attorneys that do not	72
involve the transportation of brine by vehicle shall be deposited	73
into the state treasury to the credit of the oil and gas well	74
fund, which is hereby created. Fines imposed under divisions (C)	75
and (D) of section 1509.99 of the Revised Code for violations	76
prosecuted by prosecuting attorneys that involve the	77
transportation of brine by vehicle and penalties associated with a	78
compliance agreement entered into pursuant to this chapter shall	79
be paid to the county treasury of the county where the violation	80
occurred.	81

The fund shall be used solely and exclusively for the	82
purposes enumerated in division (B) of section 1509.071 of the	83
Revised Code, for the expenses of the division associated with the	84
administration of this chapter and Chapter 1571. of the Revised	85
Code and rules adopted under them, and for expenses that are	86
critical and necessary for the protection of human health and	87
safety and the environment related to oil and gas production in	88
this state. The expenses of the division in excess of the moneys	89
available in the fund shall be paid from general revenue fund	90
appropriations to the department.	91

(B) For any fiscal year, not less than fifty per cent of any	92
money credited to the oil and gas well fund in excess of the	93
amount appropriated for that fiscal year in the most recent	94
biennial budget shall be used by the division of oil and gas	95
resources management during the succeeding fiscal year for the	96
purposes described in division (B)(1) or (2) of section 1509.071	97
of the Revised Code.	98

Sec. 1509.071.  (A) When the chief of the division of oil and	99
gas resources management finds that an owner has failed to comply	100
with a final nonappealable order issued or compliance agreement	101
entered into under section 1509.04, the restoration requirements	102
of section 1509.072, plugging requirements of section 1509.12, or	103
permit provisions of section 1509.13 of the Revised Code, or rules	104
and orders relating thereto, the chief shall make a finding of	105
that fact and declare any surety bond filed to ensure compliance	106
with those sections and rules forfeited in the amount set by rule	107
of the chief. The chief thereupon shall certify the total	108
forfeiture to the attorney general, who shall proceed to collect	109
the amount of the forfeiture. In addition, the chief may require	110
an owner, operator, producer, or other person who forfeited a	111
surety bond to post a new surety bond in the amount of fifteen	112
thousand dollars for a single well, thirty thousand dollars for	113
two wells, or fifty thousand dollars for three or more wells.	114

In lieu of total forfeiture, the surety or owner, at the	115
surety's or owner's option, may cause the well to be properly	116
plugged and abandoned and the area properly restored or pay to the	117
treasurer of state the cost of plugging and abandonment.	118

(B) All moneys collected because of forfeitures of bonds as	119
provided in this section shall be deposited in the state treasury	120
to the credit of the oil and gas well fund created in section	121
1509.02 of the Revised Code.	122

The chief annually shall spend not less than fourteen per	123
cent of the revenue credited to the fund during the previous	124
fiscal year, and not less than fifty per cent of the excess money	125
described in section 1509.02 of the Revised Code that was credited	126
to the fund during the previous fiscal year, for the following	127
purposes:	128

(1) In accordance with division (D) of this section, to plug	129
idle and orphaned wells or to restore the land surface properly as	130
required in section 1509.072 of the Revised Code;	131

(2) In accordance with division (E) of this section, to	132
correct conditions that the chief reasonably has determined are	133
causing imminent health or safety risks at an idle and orphaned	134
well or a well for which the owner cannot be contacted in order to	135
initiate a corrective action within a reasonable period of time as	136
determined by the chief.	137

Expenditures from the fund shall be made only for lawful	138
purposes. In addition, expenditures from the fund shall not be	139
made to purchase real property or to remove a dwelling in order to	140
access a well.	141

(C)(1) Upon determining that the owner of a well has failed	142
to properly plug and abandon it or to properly restore the land	143
surface at the well site in compliance with the applicable	144
requirements of this chapter and applicable rules adopted and	145
orders issued under it or that a well is an abandoned well for	146
which no funds are available to plug the well in accordance with	147
this chapter, the chief shall do all of the following:	148

(a) Determine from the records in the office of the county	149
recorder of the county in which the well is located the identity	150
of the owner of the land on which the well is located, the	151
identity of the owner of the oil or gas lease under which the well	152
was drilled or the identity of each person owning an interest in	153
the lease, and the identities of the persons having legal title	154
to, or a lien upon, any of the equipment appurtenant to the well;	155

(b) Mail notice to the owner of the land on which the well is	156
located informing the landowner that the well is to be plugged. If	157
the owner of the oil or gas lease under which the well was drilled	158
is different from the owner of the well or if any persons other	159
than the owner of the well own interests in the lease, the chief	160
also shall mail notice that the well is to be plugged to the owner	161
of the lease or to each person owning an interest in the lease, as	162
appropriate.	163

(c) Mail notice to each person having legal title to, or a	164
lien upon, any equipment appurtenant to the well, informing the	165
person that the well is to be plugged and offering the person the	166
opportunity to plug the well and restore the land surface at the	167
well site at the person's own expense in order to avoid forfeiture	168
of the equipment to this state.	169

(2) If none of the persons described in division (C)(1)(c) of	170
this section plugs the well within sixty days after the mailing of	171
the notice required by that division, all equipment appurtenant to	172
the well is hereby declared to be forfeited to this state without	173
compensation and without the necessity for any action by the state	174
for use to defray the cost of plugging and abandoning the well and	175
restoring the land surface at the well site.	176

(D) Expenditures from the fund for the purpose of division	177
(B)(1) of this section shall be made in accordance with either of	178
the following:	179

(1) The expenditures may be made pursuant to contracts	180
entered into by the chief with persons who agree to furnish all of	181
the materials, equipment, work, and labor as specified and	182
provided in such a contract for activities associated with the	183
restoration or plugging of a well as determined by the chief. The	184
activities may include excavation to uncover a well, geophysical	185
methods to locate a buried well when clear evidence of leakage	186
from the well exists, cleanout of wellbores to remove material	187
from a failed plugging of a well, plugging operations,	188
installation of vault and vent systems, including associated	189
engineering certifications and permits, restoration of property,	190
and repair of damage to property that is caused by such	191
activities. Expenditures shall not be used for salaries,	192
maintenance, equipment, or other administrative purposes, except	193
for costs directly attributed to the plugging of an idle and	194
orphaned well. Agents or employees of persons contracting with the	195
chief for a restoration or plugging project may enter upon any	196
land, public or private, on which the well is located for the	197
purpose of performing the work. Prior to such entry, the chief	198
shall give to the following persons written notice of the	199
existence of a contract for a project to restore or plug a well,	200
the names of the persons with whom the contract is made, and the	201
date that the project will commence: the owner of the well, the	202
owner of the land upon which the well is located, the owner or	203
agents of adjoining land, and, if the well is located in the same	204
township as or in a township adjacent to the excavations and	205
workings of a mine and the owner or lessee of that mine has	206
provided written notice identifying those townships to the chief	207
at any time during the immediately preceding three years, the	208
owner or lessee of the mine.	209

(2)(a) The owner of the land on which a well is located who	210
has received notice under division (C)(1)(b) of this section may	211
plug the well and be reimbursed by the division of oil and gas	212
resources management for the reasonable cost of plugging the well.	213
In order to plug the well, the landowner shall submit an	214
application to the chief on a form prescribed by the chief and	215
approved by the technical advisory council on oil and gas created	216
in section 1509.38 of the Revised Code. The application, at a	217
minimum, shall require the landowner to provide the same	218
information as is required to be included in the application for a	219
permit to plug and abandon under section 1509.13 of the Revised	220
Code. The application shall be accompanied by a copy of a proposed	221
contract to plug the well prepared by a contractor regularly	222
engaged in the business of plugging oil and gas wells. The	223
proposed contract shall require the contractor to furnish all of	224
the materials, equipment, work, and labor necessary to plug the	225
well properly and shall specify the price for doing the work,	226
including a credit for the equipment appurtenant to the well that	227
was forfeited to the state through the operation of division	228
(C)(2) of this section. Expenditures under division (D)(2)(a) of	229
this section shall be consistent with the expenditures for	230
activities described in division (D)(1) of this section. The	231
application also shall be accompanied by the permit fee required	232
by section 1509.13 of the Revised Code unless the chief, in the	233
chief's discretion, waives payment of the permit fee. The	234
application constitutes an application for a permit to plug and	235
abandon the well for the purposes of section 1509.13 of the	236
Revised Code.	237

(b) Within thirty days after receiving an application and	238
accompanying proposed contract under division (D)(2)(a) of this	239
section, the chief shall determine whether the plugging would	240
comply with the applicable requirements of this chapter and	241
applicable rules adopted and orders issued under it and whether	242
the cost of the plugging under the proposed contract is	243
reasonable. If the chief determines that the proposed plugging	244
would comply with those requirements and that the proposed cost of	245
the plugging is reasonable, the chief shall notify the landowner	246
of that determination and issue to the landowner a permit to plug	247
and abandon the well under section 1509.13 of the Revised Code.	248
Upon approval of the application and proposed contract, the chief	249
shall transfer ownership of the equipment appurtenant to the well	250
to the landowner. The chief may disapprove an application	251
submitted under division (D)(2)(a) of this section if the chief	252
determines that the proposed plugging would not comply with the	253
applicable requirements of this chapter and applicable rules	254
adopted and orders issued under it, that the cost of the plugging	255
under the proposed contract is unreasonable, or that the proposed	256
contract is not a bona fide, arm's length contract.	257

(c) After receiving the chief's notice of the approval of the	258
application and permit to plug and abandon a well under division	259
(D)(2)(b) of this section, the landowner shall enter into the	260
proposed contract to plug the well.	261

(d) Upon determining that the plugging has been completed in	262
compliance with the applicable requirements of this chapter and	263
applicable rules adopted and orders issued under it, the chief	264
shall reimburse the landowner for the cost of the plugging as set	265
forth in the proposed contract approved by the chief. The	266
reimbursement shall be paid from the oil and gas well fund. If the	267
chief determines that the plugging was not completed in accordance	268
with the applicable requirements, the chief shall not reimburse	269
the landowner for the cost of the plugging, and the landowner or	270
the contractor, as applicable, promptly shall transfer back to	271
this state title to and possession of the equipment appurtenant to	272
the well that previously was transferred to the landowner under	273
division (D)(2)(b) of this section. If any such equipment was	274
removed from the well during the plugging and sold, the landowner	275
shall pay to the chief the proceeds from the sale of the	276
equipment, and the chief promptly shall pay the moneys so received	277
to the treasurer of state for deposit into the oil and gas well	278
fund.	279

The chief may establish an annual limit on the number of	280
wells that may be plugged under division (D)(2) of this section or	281
an annual limit on the expenditures to be made under that	282
division.	283

As used in division (D)(2) of this section, "plug" and	284
"plugging" include the plugging of the well and the restoration of	285
the land surface disturbed by the plugging.	286

(E) Expenditures from the oil and gas well fund for the	287
purpose of division (B)(2) of this section may be made pursuant to	288
contracts entered into by the chief with persons who agree to	289
furnish all of the materials, equipment, work, and labor as	290
specified and provided in such a contract. The competitive bidding	291
requirements of Chapter 153. of the Revised Code do not apply if	292
the chief reasonably determines that an emergency situation exists	293
requiring immediate action for the correction of the applicable	294
health or safety risk. A contract or purchase of materials for	295
purposes of addressing the emergency situation is not subject to	296
division (B) of section 127.16 of the Revised Code. The chief,	297
designated representatives of the chief, and agents or employees	298
of persons contracting with the chief under this division may	299
enter upon any land, public or private, for the purpose of	300
performing the work.	301

(F) Contracts entered into by the chief under this section	302
are not subject to any of the following:	303

(1) Chapter 4115. of the Revised Code;

304

(2) Section 153.54 of the Revised Code, except that the	305
contractor shall obtain and provide to the chief as a bid guaranty	306
a surety bond or letter of credit in an amount equal to ten per	307
cent of the amount of the contract;	308

(3) Section 4733.17 of the Revised Code.

309

(G) The owner of land on which a well is located who has	310
received notice under division (C)(1)(b) of this section, in lieu	311
of plugging the well in accordance with division (D)(2) of this	312
section, may cause ownership of the well to be transferred to an	313
owner who is lawfully doing business in this state and who has met	314
the financial responsibility requirements established under	315
section 1509.07 of the Revised Code, subject to the approval of	316
the chief. The transfer of ownership also shall be subject to the	317
landowner's filing the appropriate forms required under section	318
1509.31 of the Revised Code and providing to the chief sufficient	319
information to demonstrate the landowner's or owner's right to	320
produce a formation or formations. That information may include a	321
deed, a lease, or other documentation of ownership or property	322
rights.	323

The chief shall approve or disapprove the transfer of	324
ownership of the well. If the chief approves the transfer, the	325
owner is responsible for operating the well in accordance with	326
this chapter and rules adopted under it, including, without	327
limitation, all of the following:	328

(1) Filing an application with the chief under section	329
1509.06 of the Revised Code if the owner intends to drill deeper	330
or produce a formation that is not listed in the records of the	331
division for that well;	332

(2) Taking title to and possession of the equipment	333
appurtenant to the well that has been identified by the chief as	334
having been abandoned by the former owner;	335

(3) Complying with all applicable requirements that are	336
necessary to drill deeper, plug the well, or plug back the well.	337

(H) The chief shall issue an order that requires the owner of	338
a well to pay the actual documented costs of a corrective action	339
that is described in division (B)(2) of this section concerning	340
the well. The chief shall transmit the money so recovered to the	341
treasurer of state who shall deposit the money in the state	342
treasury to the credit of the oil and gas well fund.	343

(I) The chief may engage in cooperative projects under this	344
section with any agency of this state, another state, or the	345
United States; any other governmental agencies; or any state	346
university or college as defined in section 3345.27 of the Revised	347
Code. A contract entered into for purposes of a cooperative	348
project is not subject to division (B) of section 127.16 of the	349
Revised Code.	350

Sec. 1509.34. (A)(1) If an owner fails to pay the fees	351
imposed by this chapter, or if the chief of the division of oil	352
and gas resources management incurs costs under division (E) of	353
section 1509.071 of the Revised Code to correct conditions	354
associated with the owner's well that the chief reasonably has	355
determined are causing imminent health or safety risks, the	356
division of oil and gas resources management shall have a priority	357
lien against that owner's interest in the applicable well in front	358
of all other creditors for the amount of any such unpaid fees and	359
costs incurred. The chief shall file a statement in the office of	360
the county recorder of the county in which the applicable well is	361
located of the amount of the unpaid fees and costs incurred as	362
described in this division. The statement shall constitute a lien	363
on the owner's interest in the well as of the date of the filing.	364
The lien shall remain in force so long as any portion of the lien	365
remains unpaid or until the chief issues a certificate of release	366
of the lien. If the chief issues a certificate of release of the	367
lien, the chief shall file the certificate of release in the	368
office of the applicable county recorder.	369

(2) A lien imposed under division (A)(1) of this section	370
shall be in addition to any lien imposed by the attorney general	371
for failure to pay the assessment imposed by section 1509.50 of	372
the Revised Code or the tax levied under division (A)(B)(5) or (6)	373
or (C) of section 5749.02 of the Revised Code, as applicable.	374

(3) If the attorney general cannot collect from a severer or	375
an owner for an outstanding balance of amounts due under section	376
1509.50 of the Revised Code or of unpaid taxes levied under	377
division (A)(B)(5) or (6) or (C) of section 5749.02 of the Revised	378
Code, as applicable, the tax commissioner may request the chief to	379
impose a priority lien against the owner's interest in the	380
applicable well. Such a lien has priority in front of all other	381
creditors.	382

(B) The chief promptly shall issue a certificate of release	383
of a lien under either of the following circumstances:	384

(1) Upon the repayment in full of the amount of unpaid fees	385
imposed by this chapter or costs incurred by the chief under	386
division (E) of section 1509.071 of the Revised Code to correct	387
conditions associated with the owner's well that the chief	388
reasonably has determined are causing imminent health or safety	389
risks;	390

(2) Any other circumstance that the chief determines to be in	391
the best interests of the state.	392

(C) The chief may modify the amount of a lien under this	393
section. If the chief modifies a lien, the chief shall file a	394
statement in the office of the county recorder of the applicable	395
county of the new amount of the lien.	396

(D) An owner regarding which the division has recorded a lien	397
against the owner's interest in a well in accordance with this	398
section shall not transfer a well, lease, or mineral rights to	399
another owner or person until the chief issues a certificate of	400
release for each lien against the owner's interest in the well.	401

(E) All money from the collection of liens under this section	402
shall be deposited in the state treasury to the credit of the oil	403
and gas well fund created in section 1509.02 of the Revised Code.	404

Sec. 1513.08.  (A) After a coal mining and reclamation permit	405
application has been approved, the applicant shall file with the	406
chief of the division of mineral resources management, on a form	407
prescribed and furnished by the chief, the performance security	408
required under this section that shall be payable to the state and	409
conditioned on the faithful performance of all the requirements of	410
this chapter and rules adopted under it and the terms and	411
conditions of the permit.	412

(B) Using the information contained in the permit	413
application; the requirements contained in the approved permit and	414
reclamation plan; and, after considering the topography, geology,	415
hydrology, and revegetation potential of the area of the approved	416
permit, the probable difficulty of reclamation; the chief shall	417
determine the estimated cost of reclamation under the initial term	418
of the permit if the reclamation has to be performed by the	419
division of mineral resources management in the event of	420
forfeiture of the performance security by the applicant. The chief	421
shall send written notice of the amount of the estimated cost of	422
reclamation by certified mail to the applicant. The applicant	423
shall send written notice to the chief indicating the method by	424
which the applicant will provide the performance security pursuant	425
to division (C) of this section.	426

(C) The applicant shall provide the performance security in	427
an amount using one of the following:	428

(1) If the applicant elects to provide performance security	429
without reliance on the reclamation forfeiture fund created in	430
section 1513.18 of the Revised Code, the amount of the estimated	431
cost of reclamation as determined by the chief under division (B)	432
of this section for the increments of land on which the operator	433
will conduct a coal mining and reclamation operation under the	434
initial term of the permit as indicated in the application;	435

(2) If the applicant elects to provide performance security	436
together with reliance on the reclamation forfeiture fund through	437
payment of the additional tax on the severance of coal that is	438
levied under division (A)(B)(8) of section 5749.02 of the Revised	439
Code, an amount of twenty-five hundred dollars per acre of land on	440
which the operator will conduct coal mining and reclamation under	441
the initial term of the permit as indicated in the application.	442
However, in order for an applicant to be eligible to provide	443
performance security in accordance with division (C)(2) of this	444
section, the applicant, an owner and controller of the applicant,	445
or an affiliate of the applicant shall have held a permit issued	446
under this chapter for any coal mining and reclamation operation	447
for a period of not less than five years. In the event of	448
forfeiture of performance security that was provided in accordance	449
with division (C)(2) of this section, the difference between the	450
amount of that performance security and the estimated cost of	451
reclamation as determined by the chief under division (B) of this	452
section shall be obtained from money in the reclamation forfeiture	453
fund as needed to complete the reclamation.	454

The performance security provided under division (C) of this	455
section for the entire area to be mined under one permit issued	456
under this chapter shall not be less than ten thousand dollars.	457

The performance security shall cover areas of land affected	458
by mining within or immediately adjacent to the permitted area, so	459
long as the total number of acres does not exceed the number of	460
acres for which the performance security is provided. However, the	461
authority for the performance security to cover areas of land	462
immediately adjacent to the permitted area does not authorize a	463
permittee to mine areas outside an approved permit area. As	464
succeeding increments of coal mining and reclamation operations	465
are to be initiated and conducted within the permit area, the	466
permittee shall file with the chief additional performance	467
security to cover the increments in accordance with this section.	468
If a permittee intends to mine areas outside the approved permit	469
area, the permittee shall provide additional performance security	470
in accordance with this section to cover the areas to be mined.	471

If an applicant or permittee has not held a permit issued	472
under this chapter for any coal mining and reclamation operation	473
for a period of five years or more, the applicant or permittee	474
shall provide performance security in accordance with division	475
(C)(1) of this section in the full amount of the estimated cost of	476
reclamation as determined by the chief for a permitted coal	477
preparation plant or coal refuse disposal area that is not located	478
within a permitted area of a mine. If an applicant for a permit	479
for a coal preparation plant or coal refuse disposal area or a	480
permittee of a permitted coal preparation plant or coal refuse	481
disposal area that is not located within a permitted area of a	482
mine has held a permit issued under this chapter for any coal	483
mining and reclamation operation for a period of five years or	484
more, the applicant or permittee may provide performance security	485
for the coal preparation plant or coal refuse disposal area either	486
in accordance with division (C)(1) of this section in the full	487
amount of the estimated cost of reclamation as determined by the	488
chief or in accordance with division (C)(2) of this section in an	489
amount of twenty-five hundred dollars per acre of land with	490
reliance on the reclamation forfeiture fund. If a permittee has	491
previously provided performance security under division (C)(1) of	492
this section for a coal preparation plant or coal refuse disposal	493
area that is not located within a permitted area of a mine and	494
elects to provide performance security in accordance with division	495
(C)(2) of this section, the permittee shall submit written notice	496
to the chief indicating that the permittee elects to provide	497
performance security in accordance with division (C)(2) of this	498
section. Upon receipt of such a written notice, the chief shall	499
release to the permittee the amount of the performance security	500
previously provided under division (C)(1) of this section that	501
exceeds the amount of performance security that is required to be	502
provided under division (C)(2) of this section.	503

(D) A permittee's liability under the performance security	504
shall be limited to the obligations established under the permit,	505
which include completion of the reclamation plan in order to make	506
the land capable of supporting the postmining land use that was	507
approved in the permit. The period of liability under the	508
performance security shall be for the duration of the coal mining	509
and reclamation operation and for a period coincident with the	510
operator's responsibility for revegetation requirements under	511
section 1513.16 of the Revised Code.	512

(E) The amount of the estimated cost of reclamation	513
determined under division (B) of this section and the amount of a	514
permittee's performance security provided in accordance with	515
division (C)(1) of this section shall be adjusted by the chief as	516
the land that is affected by mining increases or decreases or if	517
the cost of reclamation increases or decreases. If the performance	518
security was provided in accordance with division (C)(2) of this	519
section and the chief has issued a cessation order under division	520
(D)(2) of section 1513.02 of the Revised Code for failure to abate	521
a violation of the contemporaneous reclamation requirement under	522
division (A)(15) of section 1513.16 of the Revised Code, the chief	523
may require the permittee to increase the amount of performance	524
security from twenty-five hundred dollars per acre of land to five	525
thousand dollars per acre of land.	526

The chief shall notify the permittee, each surety, and any	527
person who has a property interest in the performance security and	528
who has requested to be notified of any proposed adjustment to the	529
performance security. The permittee may request an informal	530
conference with the chief concerning the proposed adjustment, and	531
the chief shall provide such an informal conference.	532

If the chief increases the amount of performance security	533
under this division, the permittee shall provide additional	534
performance security in an amount determined by the chief. If the	535
chief decreases the amount of performance security under this	536
division, the chief shall determine the amount of the reduction of	537
the performance security and send written notice of the amount of	538
reduction to the permittee. The permittee may reduce the amount of	539
the performance security in the amount determined by the chief.	540

(F) A permittee may request a reduction in the amount of the	541
performance security by submitting to the chief documentation	542
proving that the amount of the performance security provided by	543
the permittee exceeds the estimated cost of reclamation if the	544
reclamation would have to be performed by the division in the	545
event of forfeiture of the performance security. The chief shall	546
examine the documentation and determine whether the permittee's	547
performance security exceeds the estimated cost of reclamation. If	548
the chief determines that the performance security exceeds that	549
estimated cost, the chief shall determine the amount of the	550
reduction of the performance security and send written notice of	551
the amount to the permittee. The permittee may reduce the amount	552
of the performance security in the amount determined by the chief.	553
Adjustments in the amount of performance security under this	554
division shall not be considered release of performance security	555
and are not subject to section 1513.16 of the Revised Code.	556

(G) If the performance security is a bond, it shall be	557
executed by the operator and a corporate surety licensed to do	558
business in this state. If the performance security is a cash	559
deposit or negotiable certificates of deposit of a bank or savings	560
and loan association, the bank or savings and loan association	561
shall be licensed and operating in this state. The cash deposit or	562
market value of the securities shall be equal to or greater than	563
the amount of the performance security required under this	564
section. The chief shall review any documents pertaining to the	565
performance security and approve or disapprove the documents. The	566
chief shall notify the applicant of the chief's determination.	567

(H) If the performance security is a bond, the chief may	568
accept the bond of the applicant itself without separate surety	569
when the applicant demonstrates to the satisfaction of the chief	570
the existence of a suitable agent to receive service of process	571
and a history of financial solvency and continuous operation	572
sufficient for authorization to self-insure or bond the amount.	573

(I) Performance security provided under this section may be	574
held in trust, provided that the state is the primary beneficiary	575
of the trust and the custodian of the performance security held in	576
trust is a bank, trust company, or other financial institution	577
that is licensed and operating in this state. The chief shall	578
review the trust document and approve or disapprove the document.	579
The chief shall notify the applicant of the chief's determination.	580

(J) If a surety, bank, savings and loan association, trust	581
company, or other financial institution that holds the performance	582
security required under this section becomes insolvent, the	583
permittee shall notify the chief of the insolvency, and the chief	584
shall order the permittee to submit a plan for replacement	585
performance security within thirty days after receipt of notice	586
from the chief. If the permittee provided performance security in	587
accordance with division (C)(1) of this section, the permittee	588
shall provide the replacement performance security within ninety	589
days after receipt of notice from the chief. If the permittee	590
provided performance security in accordance with division (C)(2)	591
of this section, the permittee shall provide the replacement	592
performance security within one year after receipt of notice from	593
the chief, and, for a period of one year after the permittee's	594
receipt of notice from the chief or until the permittee provides	595
the replacement performance security, whichever occurs first,	596
money in the reclamation forfeiture fund shall be the permittee's	597
replacement performance security in an amount not to exceed the	598
estimated cost of reclamation as determined by the chief.	599

(K) If a permittee provided performance security in	600
accordance with division (C)(1) of this section, the permittee's	601
responsibility for repairing material damage and replacement of	602
water supply resulting from subsidence shall be satisfied by	603
either of the following:	604

(1) The purchase prior to mining of a noncancelable	605
premium-prepaid liability insurance policy in lieu of the	606
permittee's performance security for subsidence damage. The	607
insurance policy shall contain terms and conditions that	608
specifically provide coverage for repairing material damage and	609
replacement of water supply resulting from subsidence.	610

(2) The provision of additional performance security in the	611
amount of the estimated cost to the division of mineral resources	612
management to repair material damage and replace water supplies	613
resulting from subsidence until the repair or replacement is	614
completed. However, if such repair or replacement is completed, or	615
compensation for structures that have been damaged by subsidence	616
is provided, by the permittee within ninety days of the occurrence	617
of the subsidence, additional performance security is not	618
required. In addition, the chief may extend the ninety-day period	619
for a period not to exceed one year if the chief determines that	620
the permittee has demonstrated in writing that subsidence is not	621
complete and that probable subsidence-related damage likely will	622
occur and, as a result, the completion of repairs of	623
subsidence-related material damage to lands or protected	624
structures or the replacement of water supply within ninety days	625
of the occurrence of the subsidence would be unreasonable.	626

(L) If the performance security provided in accordance with	627
this section exceeds the estimated cost of reclamation, the chief	628
may authorize the amount of the performance security that exceeds	629
the estimated cost of reclamation together with any interest or	630
other earnings on the performance security to be paid to the	631
permittee.	632

(M) A permittee that held a valid coal mining and reclamation	633
permit immediately prior to April 6, 2007, shall provide, not	634
later than a date established by the chief, performance security	635
in accordance with division (C)(1) or (2) of this section, rather	636
than in accordance with the law as it existed prior to that date,	637
by filing it with the chief on a form that the chief prescribes	638
and furnishes. Accordingly, for purposes of this section,	639
"applicant" is deemed to include such a permittee.	640

(N) As used in this section:

641

(1) "Affiliate of the applicant" means an entity that has a	642
parent entity in common with the applicant.	643

(2) "Owner and controller of the applicant" means a person	644
that has any relationship with the applicant that gives the person	645
authority to determine directly or indirectly the manner in which	646
the applicant conducts coal mining operations.	647

Sec. 1513.182. (A) There is hereby created the reclamation	648
forfeiture fund advisory board consisting of the director of	649
natural resources, the director of insurance, and seven members	650
appointed by the governor with the advice and consent of the	651
senate. Of the governor's appointments, one shall be a certified	652
public accountant, one shall be a registered professional engineer	653
with experience in reclamation of mined land, two shall represent	654
agriculture, agronomy, or forestry, one shall be a representative	655
of operators of coal mining operations that have valid permits	656
issued under this chapter and that have provided performance	657
security under division (C)(1) of section 1513.08 of the Revised	658
Code, one shall be a representative of operators of coal mining	659
operations that have valid permits issued under this chapter and	660
that have provided performance security under division (C)(2) of	661
section 1513.08 of the Revised Code, and one shall be a	662
representative of the public.	663

Of the original members appointed by the governor, two shall	664
serve an initial term of two years, three an initial term of three	665
years, and two an initial term of four years. Thereafter, terms of	666
appointed members shall be for four years, with each term ending	667
on the same date as the original date of appointment. An appointed	668
member shall hold office from the date of appointment until the	669
end of the term for which the member was appointed. Vacancies	670
shall be filled in the same manner as original appointments. A	671
member appointed to fill a vacancy occurring prior to the	672
expiration of the term for which the member's predecessor was	673
appointed shall hold office for the remainder of that term. A	674
member shall continue in office subsequent to the expiration date	675
of the member's term until the member's successor takes office or	676
until a period of sixty days has elapsed, whichever occurs first.	677
The governor may remove an appointed member of the board for	678
misfeasance, nonfeasance, or malfeasance.	679

The directors of natural resources and insurance shall not	680
receive compensation for serving on the board, but shall be	681
reimbursed for the actual and necessary expenses incurred in the	682
performance of their duties as members of the board. The members	683
appointed by the governor shall receive per diem compensation	684
fixed pursuant to division (J) of section 124.15 of the Revised	685
Code and reimbursement for the actual and necessary expenses	686
incurred in the performance of their duties.	687

(B) The board annually shall elect from among its members a	688
chairperson, a vice-chairperson, and a secretary to record the	689
board's meetings.	690

(C) The board shall hold meetings as often as necessary as	691
the chairperson or a majority of the members determines.	692

(D) The board shall establish procedures for conducting	693
meetings and for the election of its chairperson,	694
vice-chairperson, and secretary.	695

(E) The board shall do all of the following:

696

(1) Review the deposits into and expenditures from the	697
reclamation forfeiture fund created in section 1513.18 of the	698
Revised Code;	699

(2) Retain periodically a qualified actuary to perform an	700
actuarial study of the reclamation forfeiture fund;	701

(3) Based on an actuarial study and as determined necessary	702
by the board, adopt rules in accordance with Chapter 119. of the	703
Revised Code to adjust the rate of the tax levied under division	704
(A)(B)(8) of section 5749.02 of the Revised Code and the balance	705
of the reclamation forfeiture fund that pertains to that rate;	706

(4) Evaluate any rules, procedures, and methods for	707
estimating the cost of reclamation for purposes of determining the	708
amount of performance security that is required under section	709
1513.08 of the Revised Code; the collection of forfeited	710
performance security; payments to the reclamation forfeiture fund;	711
reclamation of sites for which operators have forfeited the	712
performance security; and the compliance of operators with their	713
reclamation plans;	714

(5) Provide a forum for discussion of issues related to the	715
reclamation forfeiture fund and the performance security that is	716
required under section 1513.08 of the Revised Code;	717

(6) Submit a report biennially to the governor that describes	718
the financial status of the reclamation forfeiture fund and the	719
adequacy of the amount of money in the fund to accomplish the	720
purposes of the fund and that may discuss any matter related to	721
the performance security that is required under section 1513.08 of	722
the Revised Code;	723

(7) Make recommendations to the governor, if necessary, of	724
alternative methods of providing money for or using money in the	725
reclamation forfeiture fund and issues related to the reclamation	726
of land or water resources that have been adversely affected by	727
past coal mining for which the performance security was forfeited;	728

(8) Adopt rules in accordance with Chapter 119. of the	729
Revised Code that are necessary to administer this section.	730

Sec. 1514.11.  In addition to the purposes authorized in	731
section 1514.06 of the Revised Code, the chief of the division of	732
mineral resources management may use moneys in the surface mining	733
fund created under that section for the administration and	734
enforcement of this chapter, for the reclamation of land affected	735
by surface or in-stream mining under a permit issued under this	736
chapter that the operator failed to reclaim and for which the	737
performance bond filed by the operator is insufficient to complete	738
the reclamation, and for the reclamation of land affected by	739
surface or in-stream mining that was abandoned and left	740
unreclaimed and for which no permit was issued or bond filed under	741
this chapter. Also, the chief may use the portion of the surface	742
mining fund that consists of moneys collected from the severance	743
taxes levied under section 5749.02 of the Revised Code for mine	744
safety and first aid training. For purposes of this section, the	745
chief shall expend moneys in the fund in accordance with the	746
procedures and requirements established in section 1514.06 of the	747
Revised Code and may enter into contracts and perform work in	748
accordance with that section.	749

Fees collected under sections 1514.02 and 1514.03 of the	750
Revised Code, one-half of the moneys collected from the severance	751
taxes levied under divisions (A)(B)(3) and (4) of section 5749.02	752
of the Revised Code, and all of the moneys collected from the	753
severance tax levied under division (A)(B)(7) of section 5749.02	754
of the Revised Code shall be credited to the fund in accordance	755
with those sections. Notwithstanding any section of the Revised	756
Code relating to the distribution or crediting of fines for	757
violations of the Revised Code, all fines imposed under section	758
1514.99 of the Revised Code shall be credited to the fund.	759

Sec. 5703.052.  (A) There is hereby created in the state	760
treasury the tax refund fund, from which refunds shall be paid for	761
taxes illegally or erroneously assessed or collected, or for any	762
other reason overpaid, that are levied by Chapter 4301., 4305.,	763
5726., 5728., 5729., 5731., 5733., 5735., 5736., 5739., 5741.,	764
5743., 5747., 5748., 5749., 5751., or 5753. and sections 3737.71,	765
3905.35, 3905.36, 4303.33, 5707.03, 5725.18, 5727.28, 5727.38,	766
5727.81, and 5727.811 of the Revised Code. Refunds for fees or	767
wireless 9-1-1 charges illegally or erroneously assessed or	768
collected, or for any other reason overpaid, that are levied by	769
sections 128.42 or 3734.90 to 3734.9014 of the Revised Code also	770
shall be paid from the fund. Refunds for amounts illegally or	771
erroneously assessed or collected by the tax commissioner, or for	772
any other reason overpaid, that are due under section 1509.50 of	773
the Revised Code shall be paid from the fund. However, refunds for	774
taxes levied under section 5739.101 of the Revised Code shall not	775
be paid from the tax refund fund, but shall be paid as provided in	776
section 5739.104 of the Revised Code.	777

(B)(1) Upon certification by the tax commissioner to the	778
treasurer of state of a tax refund or a wireless 9-1-1 charge	779
refund, or another amount refunded, or by the superintendent of	780
insurance of a domestic or foreign insurance tax refund, the	781
treasurer of state shall place the amount certified to the credit	782
of the fund. The certified amount transferred shall be derived	783
from the receipts of the same tax, fee, or wireless 9-1-1 charge,	784
or other amount from which the refund arose.	785

(2) When a refund is for a tax, fee, or wireless 9-1-1	786
charge, or other amount that is not levied by the state or that	787
was illegally or erroneously distributed to a taxing jurisdiction,	788
the tax commissioner shall recover the amount of that refund from	789
the next distribution of that tax, fee, or wireless 9-1-1 charge,	790
or other amount that otherwise would be made to the taxing	791
jurisdiction. If the amount to be recovered would exceed	792
twenty-five per cent of the next distribution of that tax, fee,	793
or wireless 9-1-1 charge, or other amount, the commissioner may	794
spread the recovery over more than one future distribution, taking	795
into account the amount to be recovered and the amount of the	796
anticipated future distributions. In no event may the commissioner	797
spread the recovery over a period to exceed twenty-four months.	798

Sec. 5747.63.  (A) As used in this section:

799

(1) "Horizontal well severance tax" means the tax imposed	800
under division (C)(1) of section 5749.02 of the Revised Code.	801

(2) "Horizontal well" has the same meaning as in section	802
1509.01 of the Revised Code.	803

(3) "Designated taxpayer" means a taxpayer that is designated	804
by another taxpayer under division (C) of this section and that	805
has a working interest or royalty interest in the designating	806
taxpayer's horizontal well.	807

(B)(1) For taxable years beginning on or after January 1,	808
2014, a taxpayer may claim a nonrefundable credit against the tax	809
imposed by section 5747.02 of the Revised Code. The amount of the	810
credit equals the horizontal severance tax paid by the taxpayer	811
for calendar quarter periods ending in the taxpayer's taxable	812
year.	813

(2) A taxpayer that is an owner that has designated a severer	814
to pay horizontal well severance tax on behalf of the owner under	815
division (C)(2) of section 5749.02 of the Revised Code may not	816
claim the credit under this section on the basis of that tax	817
unless that owner is a designated taxpayer or that severer is a	818
pass-through entity in which the owner is a direct or indirect	819
investor. Instead, the severer so designated shall claim the	820
credit and is the taxpayer for the purposes of division (B)(1) of	821
this section.	822

(3) The credit shall be claimed in the order required under	823
section 5747.98 of the Revised Code. If the credit exceeds the	824
amount of tax otherwise due for the taxable year, the excess may	825
be carried forward and applied against the tax due for not more	826
than seven succeeding taxable years, provided that the amount	827
applied to the tax due for any taxable year shall be subtracted	828
from the amount available to carry forward to succeeding years.	829

A taxpayer that is a direct or indirect investor in a	830
pass-through entity that paid horizontal well severance tax may	831
claim the taxpayer's distributive or proportionate share of the	832
credit.	833

(C) A taxpayer authorized to claim the credit under this	834
section may designate a designated taxpayer to claim the credit	835
authorized under this section on the basis of all or a portion of	836
horizontal severance tax paid by the designating taxpayer. Before	837
making that designation, the designating taxpayer shall consider	838
any contractual arrangement with one or more holders of a working	839
interest or royalty interest in the taxpayer's horizontal well	840
that provides for an allocation of liability for any tax levied	841
under Chapter 5749. of the Revised Code with respect to that	842
horizontal well. Any designation made by a designating taxpayer	843
under this division shall be in writing and be included with each	844
quarterly severance tax return filed by that taxpayer under	845
section 5749.06 of the Revised Code, and the designated taxpayer	846
may claim the credit only on the basis of horizontal well	847
severance tax paid by the designating taxpayer for a calendar	848
quarter for which the designating taxpayer makes that designation.	849
The designated taxpayer may claim the credit under this section on	850
the basis of the portion of horizontal well severance tax the	851
taxpayer allocates to the designated taxpayer.	852

Sec. 5747.98.  (A) To provide a uniform procedure for	853
calculating the amount of tax due under section 5747.02 of the	854
Revised Code, a taxpayer shall claim any credits to which the	855
taxpayer is entitled in the following order:	856

(1) The retirement income credit under division (B) of	857
section 5747.055 of the Revised Code;	858

(2) The senior citizen credit under division (C) of section	859
5747.05 of the Revised Code;	860

(3) The lump sum distribution credit under division (D) of	861
section 5747.05 of the Revised Code;	862

(4) The dependent care credit under section 5747.054 of the	863
Revised Code;	864

(5) The lump sum retirement income credit under division (C)	865
of section 5747.055 of the Revised Code;	866

(6) The lump sum retirement income credit under division (D)	867
of section 5747.055 of the Revised Code;	868

(7) The lump sum retirement income credit under division (E)	869
of section 5747.055 of the Revised Code;	870

(8) The low-income credit under section 5747.056 of the	871
Revised Code;	872

(9) The credit for displaced workers who pay for job training	873
under section 5747.27 of the Revised Code;	874

(10) The campaign contribution credit under section 5747.29	875
of the Revised Code;	876

(11) The twenty-dollar personal exemption credit under	877
section 5747.022 of the Revised Code;	878

(12) The joint filing credit under division (G) of section	879
5747.05 of the Revised Code;	880

(13) The nonresident credit under division (A) of section	881
5747.05 of the Revised Code;	882

(14) The credit for a resident's out-of-state income under	883
division (B) of section 5747.05 of the Revised Code;	884

(15) The earned income credit under section 5747.71 of the	885
Revised Code;	886

(16) The credit for employers that reimburse employee child	887
care expenses under section 5747.36 of the Revised Code;	888

(17) The credit for adoption of a minor child under section	889
5747.37 of the Revised Code;	890

(18) The credit for purchases of lights and reflectors under	891
section 5747.38 of the Revised Code;	892

(19) The nonrefundable job retention credit under division	893
(B) of section 5747.058 of the Revised Code;	894

(20) The credit for selling alternative fuel under section	895
5747.77 of the Revised Code;	896

(21) The second credit for purchases of new manufacturing	897
machinery and equipment and the credit for using Ohio coal under	898
section 5747.31 of the Revised Code;	899

(22) The job training credit under section 5747.39 of the	900
Revised Code;	901

(23) The enterprise zone credit under section 5709.66 of the	902
Revised Code;	903

(24) The credit for the eligible costs associated with a	904
voluntary action under section 5747.32 of the Revised Code;	905

(25) The credit for employers that establish on-site child	906
day-care centers under section 5747.35 of the Revised Code;	907

(26) The ethanol plant investment credit under section	908
5747.75 of the Revised Code;	909

(27) The credit for purchases of qualifying grape production	910
property under section 5747.28 of the Revised Code;	911

(28) The small business investment credit under section	912
5747.81 of the Revised Code;	913

(29) The credit for paid horizontal well severance tax under	914
section 5747.63 of the Revised Code;	915

(30) The enterprise zone credits under section 5709.65 of the	916
Revised Code;	917

(30)(31) The research and development credit under section	918
5747.331 of the Revised Code;	919

(31)(32) The credit for rehabilitating a historic building	920
under section 5747.76 of the Revised Code;	921

(32)(33) The refundable credit for rehabilitating a historic	922
building under section 5747.76 of the Revised Code;	923

(33)(34) The refundable jobs creation credit or job retention	924
credit under division (A) of section 5747.058 of the Revised Code;	925

(34)(35) The refundable credit for taxes paid by a qualifying	926
entity granted under section 5747.059 of the Revised Code;	927

(35)(36) The refundable credits for taxes paid by a	928
qualifying pass-through entity granted under division (J) of	929
section 5747.08 of the Revised Code;	930

(36)(37) The refundable credit under section 5747.80 of the	931
Revised Code for losses on loans made to the Ohio venture capital	932
program under sections 150.01 to 150.10 of the Revised Code;	933

(37)(38) The refundable motion picture production credit	934
under section 5747.66 of the Revised Code.;	935

(38)(39) The refundable credit for financial institution	936
taxes paid by a pass-through entity granted under section 5747.65	937
of the Revised Code.	938

(B) For any credit, except the refundable credits enumerated	939
in this section and the credit granted under division (I) of	940
section 5747.08 of the Revised Code, the amount of the credit for	941
a taxable year shall not exceed the tax due after allowing for any	942
other credit that precedes it in the order required under this	943
section. Any excess amount of a particular credit may be carried	944
forward if authorized under the section creating that credit.	945
Nothing in this chapter shall be construed to allow a taxpayer to	946
claim, directly or indirectly, a credit more than once for a	947
taxable year.	948

Sec. 5749.01.  As used in this chapter:

949

(A) "Ton" shall mean two thousand pounds as measured at the	950
point and time of severance, after the removal of any impurities,	951
under such rules and regulations as the tax commissioner may	952
prescribe.	953

(B) "Taxpayer" means any person required to pay the tax	954
levied by Chapter 5749. of the Revised Code.	955

(C) "Natural resource" means all forms of coal, salt,	956
limestone, dolomite, sand, gravel, natural gas, and oil.	957

(D) "Owner" hasand "horizontal well" have the same meaning	958
meanings as in section 1509.01 of the Revised Code.	959

(E) "Person" means any individual, firm, partnership,	960
association, joint stock company, corporation, or estate, or	961
combination thereof.	962

(F) "Return" means any report or statement required to be	963
filed pursuant to Chapter 5749. of the Revised Code used to	964
determine the tax due.	965

(G) "Severance" means the extraction or other removal of a	966
natural resource from the soil or water of this state.	967

(H) "Severed" means the point at which the natural resource	968
has been separated from the soil or water in this state.	969

(I) "Severer" means any person who actually removes the	970
natural resources from the soil or water in this state.	971

(J) "First day of production" means the date on which oil or	972
natural gas is first severed through the use of a horizontal well.	973
"First day of production" does not include days on which natural	974
gas is flared from a horizontal well exclusively for testing and	975
oil is not produced when the natural gas is flared.	976

(K) "Net proceeds" means gross receipts from the severance of	977
oil and natural gas less any post-production costs related to the	978
sale of the oil or natural gas.	979

(L) "Post-production costs" includes costs related to	980
gathering, processing, transporting, fractionation of, and	981
delivery for sale of oil or natural gas, and any related	982
adjustment accounting for shrinkage.	983

Sec. 5749.02.  (A) For the purpose of providing revenue to	984
administer the state's coal mining and reclamation regulatory	985
program and oil and gas regulatory program, to meet the	986
environmental and resource management needs of this state, and to	987
reclaim land affected by mining, an excise tax is hereby levied on	988
the privilege of engaging in the severance of natural resources	989
from the soil or water of this state under divisions (B) and (C)	990
of this section. The tax	991

(B) There shall be a tax imposed upon the severer at the	992
rates prescribed by divisions (A)(B)(1) to (9) of this section:	993

(1) Ten cents per ton of coal;

994

(2) Four cents per ton of salt;

995

(3) Two cents per ton of limestone or dolomite;

996

(4) Two cents per ton of sand and gravel;

997

(5) Ten cents per barrel of oil severed through use of a well	998
that is not a horizontal well;	999

(6) TwoOne and one-half cents per thousand cubic feet of	1000
natural gas severed through use of a well that is not a horizontal	1001
well;	1002

(7) One cent per ton of clay, sandstone or conglomerate,	1003
shale, gypsum, or quartzite;	1004

(8) Except as otherwise provided in this division or in rules	1005
adopted by the reclamation forfeiture fund advisory board under	1006
section 1513.182 of the Revised Code, an additional fourteen cents	1007
per ton of coal produced from an area under a coal mining and	1008
reclamation permit issued under Chapter 1513. of the Revised Code	1009
for which the performance security is provided under division	1010
(C)(2) of section 1513.08 of the Revised Code. Beginning July 1,	1011
2007, if at the end of a fiscal biennium the balance of the	1012
reclamation forfeiture fund created in section 1513.18 of the	1013
Revised Code is equal to or greater than ten million dollars, the	1014
rate levied shall be twelve cents per ton. Beginning July 1, 2007,	1015
if at the end of a fiscal biennium the balance of the fund is at	1016
least five million dollars, but less than ten million dollars, the	1017
rate levied shall be fourteen cents per ton. Beginning July 1,	1018
2007, if at the end of a fiscal biennium the balance of the fund	1019
is less than five million dollars, the rate levied shall be	1020
sixteen cents per ton. Beginning July 1, 2009, not later than	1021
thirty days after the close of a fiscal biennium, the chief of the	1022
division of mineral resources management shall certify to the tax	1023
commissioner the amount of the balance of the reclamation	1024
forfeiture fund as of the close of the fiscal biennium. Any	1025
necessary adjustment of the rate levied shall take effect on the	1026
first day of the following January and shall remain in effect	1027
during the calendar biennium that begins on that date.	1028

(9) An additional one and two-tenths cents per ton of coal	1029
mined by surface mining methods.	1030

(B)(C) For oil and natural gas severed through use of a	1031
horizontal well on or after April 1, 2014, there shall be a tax	1032
imposed upon the well's owner, except as provided in division	1033
(C)(2) of this section, at the rates prescribed in division	1034
(C)(1)(a), (b), (c), or (d) of this section:	1035

(1)(a) Beginning on the first day of production and	1036
continuing until the last day of the twentieth calendar quarter	1037
that begins after the calendar quarter that includes the first day	1038
or production, one per cent of the owner's net proceeds related to	1039
oil and natural gas severed by the owner's horizontal well;	1040

(b) Except as provided in division (C)(1)(c) or (d) of this	1041
section, beginning on the first day of the twenty-first calendar	1042
quarter that begins after the calendar quarter that includes the	1043
first day of production and continuing thereafter, two per cent of	1044
the owner's net proceeds related to oil and natural gas severed by	1045
the owner's horizontal well;	1046

(c) For natural gas severed through use of a horizontal well	1047
that produces an average of less than one hundred thousand cubic	1048
feet of natural gas per day in a calendar quarter, one per cent of	1049
the owner's net proceeds related to natural gas severed by that	1050
well for that calendar quarter;	1051

(d) For oil severed through use of a horizontal well that	1052
produces an average of less than seventeen barrels of oil per day	1053
in a calendar quarter, one per cent of the owner's net proceeds	1054
related to oil severed by that well for that calendar quarter.	1055

(2) An owner shall pay the tax imposed under division (C) of	1056
this section in the same manner as a severer that is required to	1057
file a return under section 5749.06 of the Revised Code. An owner	1058
may designate a severer to pay the owner's tax and file the	1059
owner's return on behalf of the owner. The severer shall report	1060
this designation on each return filed by the severer. If a	1061
designated severer pays an owner's tax, the severer may recoup	1062
from the owner the amount of the tax so paid, but only to the	1063
extent that the severer does not recoup the amount by claiming the	1064
credit authorized under section 5747.63 of the Revised Code. A	1065
severer designated under division (C)(2) of this section shall pay	1066
the designating owner's tax due under division (C)(1) of this	1067
section for each calendar quarter for which the owner has	1068
designated that severer.	1069

(3) The owner or the severer designated under division (C)(2)	1070
of this section shall report the owner's net proceeds on the	1071
return the owner or severer is required to file under section	1072
5749.06 of the Revised Code.	1073

(D) After the director of budget and management transfers	1074
money from the severance tax receipts fund as required in division	1075
(H) of section 5749.06 of the Revised Code, money remaining in the	1076
severance tax receipts fund, except for money in the fund from the	1077
amounts due under section 1509.50 of the Revised Code, shall be	1078
credited as follows:	1079

(1) Of the moneys in the fund from the tax levied in division	1080
(A)(B)(1) of this section, four and seventy-six-hundredths per	1081
cent shall be credited to the geological mapping fund created in	1082
section 1505.09 of the Revised Code, eighty and	1083
ninety-five-hundredths per cent shall be credited to the coal	1084
mining administration and reclamation reserve fund created in	1085
section 1513.181 of the Revised Code, and fourteen and	1086
twenty-nine-hundredths per cent shall be credited to the	1087
unreclaimed lands fund created in section 1513.30 of the Revised	1088
Code.	1089

(2) The money in the fund from the tax levied in division	1090
(A)(B)(2) of this section shall be credited to the geological	1091
mapping fund.	1092

(3) Of the moneys in the fund from the tax levied in	1093
divisions (A)(B)(3) and (4) of this section, seven and five-tenths	1094
per cent shall be credited to the geological mapping fund,	1095
forty-two and five-tenths per cent shall be credited to the	1096
unreclaimed lands fund, and the remainder shall be credited to the	1097
surface mining fund created in section 1514.06 of the Revised	1098
Code.	1099

(4) Of the moneys in the fund from the tax levied in	1100
divisions (A)(B)(5) and (6) of this section, ninety per cent shall	1101
be credited to the oil and gas well fund created in section	1102
1509.02 of the Revised Code and ten per cent shall be credited to	1103
the geological mapping fund. All of the moneys in the fund from	1104
the tax levied in division (A)(B)(7) of this section shall be	1105
credited to the surface mining fund.	1106

(5) All of the moneys in the fund from the tax levied in	1107
division (A)(B)(8) of this section shall be credited to the	1108
reclamation forfeiture fund.	1109

(6) All of the moneys in the fund from the tax levied in	1110
division (A)(B)(9) of this section shall be credited to the	1111
unreclaimed lands fund.	1112

(7) All of the money received by the treasurer of state from	1113
the tax levied in division (C) of this section shall be credited	1114
to the horizontal well tax fund, which is hereby created in the	1115
state treasury. Not later than the fifteenth day of September of	1116
each year, the tax commissioner shall calculate and certify to the	1117
director of budget and management the total amount that would have	1118
been collected from severances during the preceding fiscal year	1119
through use of a horizontal well if such severances had been taxed	1120
under divisions (A)(5) and (6) of this section, as those divisions	1121
existed on December 31, 2013, and not under division (C) of this	1122
section. The director of budget and management shall transfer, on	1123
or before the twenty-fifth day of September, ninety per cent of	1124
the amount so certified from the horizontal well tax fund to the	1125
oil and gas well fund and ten per cent of the amount so certified	1126
to the geological mapping fund. Not later than the succeeding	1127
thirtieth day of September, the director of budget and management	1128
shall transfer any money remaining in the horizontal well tax fund	1129
from tax collected during the preceding fiscal year to the income	1130
tax reduction fund.	1131

(C)(E) When, at the close of any fiscal year, the chief finds	1132
that the balance of the reclamation forfeiture fund, plus	1133
estimated transfers to it from the coal mining administration and	1134
reclamation reserve fund under section 1513.181 of the Revised	1135
Code, plus the estimated revenues from the tax levied by division	1136
(A)(B)(8) of this section for the remainder of the calendar year	1137
that includes the close of the fiscal year, are sufficient to	1138
complete the reclamation of all lands for which the performance	1139
security has been provided under division (C)(2) of section	1140
1513.08 of the Revised Code, the purposes for which the tax under	1141
division (A)(B)(8) of this section is levied shall be deemed	1142
accomplished at the end of that calendar year. The chief, within	1143
thirty days after the close of the fiscal year, shall certify	1144
those findings to the tax commissioner, and the tax levied under	1145
division (A)(B)(8) of this section shall cease to be imposed for	1146
the subsequent calendar year after the last day of that calendar	1147
year on coal produced under a coal mining and reclamation permit	1148
issued under Chapter 1513. of the Revised Code if the permittee	1149
has made tax payments under division (A)(B)(8) of this section	1150
during each of the preceding five full calendar years. Not later	1151
than thirty days after the close of a fiscal year, the chief shall	1152
certify to the tax commissioner the identity of any permittees who	1153
accordingly no longer are required to pay the tax levied under	1154
division (A)(B)(8) of this section for the subsequent calendar	1155
year.	1156

Sec. 5749.03.  The following shall be exempt from the tax	1157
imposed by section 5749.02 of the Revised Code and the amount due	1158
under section 1509.50 of the Revised Code:	1159

The severance of natural resources from land or water in this	1160
state owned legally or beneficially by the severer, which natural	1161
resources will be used on the land from which they are taken by	1162
the severer as part of the improvement of or use in the severer's	1163
homestead and which have a yearly cumulative market value of not	1164
greater than one thousand dollars. When severed natural resources	1165
so used exceed a cumulative market value of one thousand dollars	1166
during any year, the further severance of natural resources shall	1167
be subject to the tax imposed by section 5749.02 of the Revised	1168
Code.	1169

Sec. 5749.06.  (A)(1) Each severer or owner liable for the	1170
tax imposed by section 5749.02 of the Revised Code and each	1171
severer or owner liable for the amounts due under section 1509.50	1172
of the Revised Code shall make and file returns with the tax	1173
commissioner in the prescribed form and as of the prescribed	1174
times, computing and reflecting therein the tax as required by	1175
this chapter and amounts due under section 1509.50 of the Revised	1176
Code.	1177

(2) The returns shall be filed for every quarterly period,	1178
which periods shall end on the thirty-first day of March, the	1179
thirtieth day of June, the thirtieth day of September, and the	1180
thirty-first day of December of each year, as required by this	1181
section, unless a different return period is prescribed for a	1182
taxpayer by the commissioner.	1183

(B)(1) A separate return shall be filed for each calendar	1184
quarterly period, or other period, or any part thereof, during	1185
which the severer holds a license as provided by section 5749.04	1186
of the Revised Code, or is required to hold the license, or during	1187
which an owner is required to file a return. The return shall be	1188
filed within forty-five days after the last day of each such	1189
calendar month, or other period, or any part thereof, for which	1190
the return is required. The tax due is payable along with the	1191
return. All such returns shall contain such information as the	1192
commissioner may require to fairly administer the tax.	1193

(2) All returns shall be signed by the severer or owner, as	1194
applicable, shall contain the full and complete information	1195
requested, and shall be made under penalty of perjury.	1196

(C) If the commissioner believes that quarterly payments of	1197
tax would result in a delay that might jeopardize the collection	1198
of such tax payments, the commissioner may order that such	1199
payments be made weekly, or more frequently if necessary, such	1200
payments to be made not later than seven days following the close	1201
of the period for which the jeopardy payment is required. Such an	1202
order shall be delivered to the taxpayer personally or by	1203
certified mail and shall remain in effect until the commissioner	1204
notifies the taxpayer to the contrary.	1205

(D) Upon good cause the commissioner may extend for thirty	1206
days the period for filing any notice or return required to be	1207
filed under this section, and may remit all or a part of penalties	1208
that may become due under this chapter.	1209

(E) Any tax and any amount due under section 1509.50 of the	1210
Revised Code not paid by the day the tax or amount is due shall	1211
bear interest computed at the rate per annum prescribed by section	1212
5703.47 of the Revised Code on that amount due from the day that	1213
the amount was originally required to be paid to the day of actual	1214
payment or to the day an assessment was issued under section	1215
5749.07 or 5749.10 of the Revised Code, whichever occurs first.	1216

(F) A severer or owner, as applicable, that fails to file a	1217
complete return or pay the full amount due under this chapter	1218
within the time prescribed, including any extensions of time	1219
granted by the commissioner, shall be subject to a penalty not to	1220
exceed the greater of fifty dollars or ten per cent of the amount	1221
due for the period.	1222

(G)(1) A severer or owner, as applicable, shall remit	1223
payments electronically and, if required by the commissioner, file	1224
each return electronically. The commissioner may require that the	1225
severer or owner use the Ohio business gateway, as defined in	1226
section 718.051 of the Revised Code, or another electronic means	1227
to file returns and remit payments electronically.	1228

(2) A severer or owner that is required to remit payments	1229
electronically under this section may apply to the commissioner,	1230
in the manner prescribed by the commissioner, to be excused from	1231
that requirement. The commissioner may excuse a severer or owner	1232
from the requirements of division (G) of this section for good	1233
cause.	1234

(3) If a severer or owner that is required to remit payments	1235
or file returns electronically under this section fails to do so,	1236
the commissioner may impose a penalty on the severer or owner not	1237
to exceed the following:	1238

(a) For the first or second payment or return the severer or	1239
owner fails to remit or file electronically, the greater of five	1240
per cent of the amount of the payment that was required to be	1241
remitted or twenty-five dollars;	1242

(b) For every payment or return after the second that the	1243
severer or owner fails to remit or file electronically, the	1244
greater of ten per cent of the amount of the payment that was	1245
required to be remitted or fifty dollars.	1246

(H)(1) All amounts that the commissioner receives under this	1247
section shall be deemed to be revenue from taxes imposed under	1248
this chapter or from the amount due under section 1509.50 of the	1249
Revised Code, as applicable, and shall be deposited in the	1250
severance tax receipts fund, which is hereby created in the state	1251
treasury.	1252

(2) The director of budget and management shall transfer from	1253
the severance tax receipts fund to the tax refund fund amounts	1254
equal to the refunds certified by the commissioner under section	1255
5749.08 of the Revised Code. Any amount transferred under division	1256
(H)(2) of this section shall be derived from receipts of the same	1257
tax or other amount from which the refund arose.	1258

(3) After the director of budget and management makes any	1259
transfer required by division (H)(2) of this section, but not	1260
later than the fifteenth day of the month following the end of	1261
each calendar quarter, the commissioner shall certify to the	1262
director the total amount remaining in the severance tax receipts	1263
fund organized according to the amount attributable to each	1264
natural resource and according to the amount attributable to a tax	1265
imposed by this chapter and the amounts due under section 1509.50	1266
of the Revised Code.	1267

(I) Penalties imposed under this section are in addition to	1268
any other penalty imposed under this chapter and shall be	1269
considered as revenue arising from the tax levied under this	1270
chapter or the amount due under section 1509.50 of the Revised	1271
Code, as applicable. The commissioner may collect any penalty or	1272
interest imposed under this section in the same manner as provided	1273
for the making of an assessment in section 5749.07 of the Revised	1274
Code. The commissioner may abate all or a portion of such interest	1275
or penalties and may adopt rules governing such abatements.	1276

Sec. 5749.07.  (A) If any severer or owner required by this	1277
chapter to make and file returns and pay the tax levied by section	1278
5749.02 of the Revised Code, or any severer or owner liable for	1279
the amounts due under section 1509.50 of the Revised Code, fails	1280
to make such return or pay such tax or amounts, the tax	1281
commissioner may make an assessment against the severer or owner	1282
based upon any information in the commissioner's possession.	1283

No assessment shall be made or issued against any severer or	1284
owner for any tax imposed by section 5749.02 of the Revised Code	1285
or against any severer or owner for any amount due under section	1286
1509.50 of the Revised Code more than four years after the return	1287
was due or was filed, whichever is later. This section does not	1288
bar an assessment against a severer or owner who fails to file a	1289
return as required by this chapter, or who files a fraudulent	1290
return.	1291

The commissioner shall give the party assessed written notice	1292
of such assessment in the manner provided in section 5703.37 of	1293
the Revised Code. With the notice, the commissioner shall provide	1294
instructions on how to petition for reassessment and request a	1295
hearing on the petition.	1296

(B) Unless the party assessed files with the commissioner	1297
within sixty days after service of the notice of assessment,	1298
either personally or by certified mail, a written petition for	1299
reassessment signed by the party assessed or that party's	1300
authorized agent having knowledge of the facts, the assessment	1301
becomes final and the amount of the assessment is due and payable	1302
from the party assessed to the treasurer of state. The petition	1303
shall indicate the objections of the party assessed, but	1304
additional objections may be raised in writing if received by the	1305
commissioner prior to the date shown on the final determination.	1306
If the petition has been properly filed, the commissioner shall	1307
proceed under section 5703.60 of the Revised Code.	1308

(C) After an assessment becomes final, if any portion of the	1309
assessment remains unpaid, including accrued interest, a certified	1310
copy of the commissioner's entry making the assessment final may	1311
be filed in the office of the clerk of the court of common pleas	1312
in the county in which the party assessed resides or in which the	1313
party's business is conducted. If the party assessed maintains no	1314
place of business in this state and is not a resident of this	1315
state, the certified copy of the entry may be filed in the office	1316
of the clerk of the court of common pleas of Franklin county.	1317

Immediately upon the filing of such entry, the clerk shall	1318
enter a judgment for the state against the party assessed in the	1319
amount shown on the entry. The judgment may be filed by the clerk	1320
in a loose-leaf book entitled "special judgments for state	1321
severance tax," and shall have the same effect as other judgments.	1322
Execution shall issue upon the judgment upon the request of the	1323
commissioner, and all laws applicable to sales on execution shall	1324
apply to sales made under the judgment.	1325

If the assessment is not paid in its entirety within sixty	1326
days after the day the assessment is issued, the portion of the	1327
assessment consisting of tax due or amounts due under section	1328
1509.50 of the Revised Code shall bear interest at the rate per	1329
annum prescribed by section 5703.47 of the Revised Code from the	1330
day the commissioner issues the assessment until it is paid or	1331
until it is certified to the attorney general for collection under	1332
section 131.02 of the Revised Code, whichever comes first. If the	1333
unpaid portion of the assessment is certified to the attorney	1334
general for collection, the entire unpaid portion of the	1335
assessment shall bear interest at the rate per annum prescribed by	1336
section 5703.47 of the Revised Code from the date of certification	1337
until the date it is paid in its entirety. Interest shall be paid	1338
in the same manner as the tax and may be collected by the issuance	1339
of an assessment under this section.	1340

(D) All money collected by the commissioner under this	1341
section shall be paid to the treasurer of state, and when paid	1342
shall be considered as revenue arising from the tax imposed by	1343
section 5749.02 of the Revised Code and the amount due under	1344
section 1509.50 of the Revised Code, as applicable.	1345

Sec. 5749.08.  The tax commissioner shall refund to taxpayers	1346
the amount of taxes levied by section 5749.02 of the Revised Code	1347
and amounts due under section 1509.50 of the Revised Code that	1348
were paid illegally or erroneously or paid on an illegal or	1349
erroneous assessment. Applications for refund shall be filed with	1350
the commissioner, on the form prescribed by the commissioner,	1351
within four years from the date of the illegal or erroneous	1352
payment. On the filing of the application, the commissioner shall	1353
determine the amount of refund to which the applicant is entitled,	1354
plus interest computed in accordance with section 5703.47 of the	1355
Revised Code from the date of the payment of an erroneous or	1356
illegal assessment until the date the refund is paid. If the	1357
amount is not less than that claimed, the commissioner shall	1358
certify the amount to the director of budget and management and	1359
treasurer of state for payment from the tax refund fund created by	1360
section 5703.052 of the Revised Code. If the amount is less than	1361
that claimed, the commissioner shall proceed in accordance with	1362
section 5703.70 of the Revised Code.	1363

Sec. 5749.10.  If the tax commissioner finds that a taxpayer,	1364
liable for tax under this chapter or for any amount due under	1365
section 1509.50 of the Revised Code is about to depart from the	1366
state, or remove the taxpayer's property therefrom, or conceal the	1367
taxpayer's person or property, or do any other act tending to	1368
prejudice or to render wholly or partly ineffectual proceedings to	1369
collect such tax or other amount due unless such proceedings are	1370
brought without delay, or if the commissioner believes that the	1371
collection of the tax or amount due from any taxpayer will be	1372
jeopardized by delay, the commissioner shall give notice of such	1373
findings to such taxpayer together with the demand for an	1374
immediate return and immediate payment of such tax or other amount	1375
due, with penalty as provided in section 5749.15 of the Revised	1376
Code, whereupon such tax or other amount due shall become	1377
immediately due and payable. In such cases the commissioner may	1378
immediately file an entry with the clerk of the court of common	1379
pleas in the same manner and with the same effect as provided in	1380
section 5749.07 of the Revised Code, provided that if such	1381
taxpayer, within five days from notice of the assessment,	1382
furnishes evidence satisfactory to the commissioner, under the	1383
regulations prescribed by the commissioner, that the taxpayer is	1384
not in default in making returns or paying any tax prescribed by	1385
this chapter or amount due under section 1509.50 of the Revised	1386
Code, or that the taxpayer will duly return and pay, or post bond	1387
satisfactory to the commissioner conditioned upon payment of the	1388
tax or other amount finally determined to be due, then such tax or	1389
other amount due shall not be payable prior to the time and manner	1390
otherwise fixed for payment under section 5749.07 of the Revised	1391
Code, and the person assessed shall be restored the rights granted	1392
under such section. Upon satisfaction of the assessment the	1393
commissioner shall order the bond cancelled, securities released,	1394
and judgment vacated.	1395

Any assessment issued under this section shall bear interest	1396
as prescribed under section 5749.07 of the Revised Code.	1397

Sec. 5749.11.  (A) There is hereby allowed a nonrefundable	1398
credit against the taxes imposed under division (A)(B)(8) of	1399
section 5749.02 of the Revised Code for any severer to which a	1400
reclamation tax credit certificate is issued under section	1401
1513.171 of the Revised Code. The credit shall be claimed in the	1402
amount shown on the certificate. The credit shall be claimed by	1403
deducting the amount of the credit from the amount of the first	1404
tax payment due under section 5749.06 of the Revised Code after	1405
the certificate is issued.	1406

If the amount of the credit shown on a certificate exceeds	1407
the amount of the tax otherwise due with that first payment, the	1408
excess shall be claimed against the amount of tax otherwise due on	1409
succeeding payment dates until the entire credit amount has been	1410
deducted. The total amount of credit claimed against payments	1411
shall not exceed the total amount of credit shown on the	1412
certificate.	1413

(B) A severer claiming a credit under this section shall	1414
retain a reclamation tax credit certificate for not less than four	1415
years following the date of the last tax payment against which the	1416
credit allowed under that certificate was applied. Severers shall	1417
make tax credit certificates available for inspection by the tax	1418
commissioner upon the tax commissioner's request.	1419

Sec. 5749.12.  Any nonresident of this state who accepts the	1420
privilege extended by the laws of this state to nonresidents	1421
severing natural resources in this state, and any resident of this	1422
state who subsequently becomes a nonresident or conceals the	1423
resident's whereabouts, makes the secretary of state of Ohio the	1424
person's agent for the service of process or notice in any	1425
assessment, action, or proceedings instituted in this state	1426
against such person under this chapter or for purposes of amounts	1427
due under section 1509.50 of the Revised Code.	1428

Such process or notice shall be served as provided under	1429
section 5703.37 of the Revised Code.	1430

Sec. 5749.13.  The tax commissioner may prescribe	1431
requirements as to the keeping of records and other pertinent	1432
documents and the filing of copies of federal income tax returns	1433
and determinations. The commissioner may require any person, by	1434
rule or by notice served on that person, to keep such records as	1435
the commissioner considers necessary to show whether that person	1436
is liable, and the extent of liability, for the tax imposed under	1437
this chapter and the amount due under section 1509.50 of the	1438
Revised Code. Such records and other documents shall be open	1439
during business hours to the inspection of the commissioner, and	1440
shall be preserved for a period of four years after the date the	1441
return was required to be filed or actually was filed, whichever	1442
is later, unless the commissioner, in writing, consents to their	1443
destruction within that period, or by order requires that they be	1444
kept longer.	1445

Sec. 5749.14.  The tax commissioner shall enforce and	1446
administer this chapter and applicable provisions of section	1447
1509.50 of the Revised Code. In addition to any other powers	1448
conferred upon the commissioner by law, the commissioner may:	1449

(A) Prescribe all forms required to be filed pursuant to this	1450
chapter;	1451

(B) PromulgateAdopt such rules as the commissioner finds	1452
necessary to carry out this chapter and applicable provisions of	1453
section 1509.50 of the Revised Code;	1454

(C) Appoint and employ such personnel as may be necessary to	1455
carry out the duties imposed upon the commissioner by this	1456
chapter.	1457

Sec. 5749.15.  Any person who fails to file a return or pay	1458
the tax as required under this chapter or other amount due under	1459
section 1509.50 of the Revised Code who is assessed such taxes or	1460
other amount due pursuant to section 5749.07 or 5749.10 of the	1461
Revised Code may be liable for a penalty of up to twenty-five per	1462
cent of the amount assessed. The tax commissioner may adopt rules	1463
relating to the imposition and remission of penalties imposed	1464
under this section.	1465

Sec. 5751.01.  As used in this chapter:

1466

(A) "Person" means, but is not limited to, individuals,	1467
combinations of individuals of any form, receivers, assignees,	1468
trustees in bankruptcy, firms, companies, joint-stock companies,	1469
business trusts, estates, partnerships, limited liability	1470
partnerships, limited liability companies, associations, joint	1471
ventures, clubs, societies, for-profit corporations, S	1472
corporations, qualified subchapter S subsidiaries, qualified	1473
subchapter S trusts, trusts, entities that are disregarded for	1474
federal income tax purposes, and any other entities.	1475

(B) "Consolidated elected taxpayer" means a group of two or	1476
more persons treated as a single taxpayer for purposes of this	1477
chapter as the result of an election made under section 5751.011	1478
of the Revised Code.	1479

(C) "Combined taxpayer" means a group of two or more persons	1480
treated as a single taxpayer for purposes of this chapter under	1481
section 5751.012 of the Revised Code.	1482

(D) "Taxpayer" means any person, or any group of persons in	1483
the case of a consolidated elected taxpayer or combined taxpayer	1484
treated as one taxpayer, required to register or pay tax under	1485
this chapter. "Taxpayer" does not include excluded persons.	1486

(E) "Excluded person" means any of the following:

1487

(1) Any person with not more than one hundred fifty thousand	1488
dollars of taxable gross receipts during the calendar year.	1489
Division (E)(1) of this section does not apply to a person that is	1490
a member of a consolidated elected taxpayer;	1491

(2) A public utility that paid the excise tax imposed by	1492
section 5727.24 or 5727.30 of the Revised Code based on one or	1493
more measurement periods that include the entire tax period under	1494
this chapter, except that a public utility that is a combined	1495
company is a taxpayer with regard to the following gross receipts:	1496

(a) Taxable gross receipts directly attributed to a public	1497
utility activity, but not directly attributed to an activity that	1498
is subject to the excise tax imposed by section 5727.24 or 5727.30	1499
of the Revised Code;	1500

(b) Taxable gross receipts that cannot be directly attributed	1501
to any activity, multiplied by a fraction whose numerator is the	1502
taxable gross receipts described in division (E)(2)(a) of this	1503
section and whose denominator is the total taxable gross receipts	1504
that can be directly attributed to any activity;	1505

(c) Except for any differences resulting from the use of an	1506
accrual basis method of accounting for purposes of determining	1507
gross receipts under this chapter and the use of the cash basis	1508
method of accounting for purposes of determining gross receipts	1509
under section 5727.24 of the Revised Code, the gross receipts	1510
directly attributed to the activity of a natural gas company shall	1511
be determined in a manner consistent with division (D) of section	1512
5727.03 of the Revised Code.	1513

As used in division (E)(2) of this section, "combined	1514
company" and "public utility" have the same meanings as in section	1515
5727.01 of the Revised Code.	1516

(3) A financial institution, as defined in section 5726.01 of	1517
the Revised Code, that paid the tax imposed by section 5726.02 of	1518
the Revised Code based on one or more taxable years that include	1519
the entire tax period under this chapter;	1520

(4) A person directly or indirectly owned by one or more	1521
financial institutions, as defined in section 5726.01 of the	1522
Revised Code, that paid the tax imposed by section 5726.02 of the	1523
Revised Code based on one or more taxable years that include the	1524
entire tax period under this chapter.	1525

For the purposes of division (E)(4) of this section, a person	1526
owns another person under the following circumstances:	1527

(a) In the case of corporations issuing capital stock, one	1528
corporation owns another corporation if it owns fifty per cent or	1529
more of the other corporation's capital stock with current voting	1530
rights;	1531

(b) In the case of a limited liability company, one person	1532
owns the company if that person's membership interest, as defined	1533
in section 1705.01 of the Revised Code, is fifty per cent or more	1534
of the combined membership interests of all persons owning such	1535
interests in the company;	1536

(c) In the case of a partnership, trust, or other	1537
unincorporated business organization other than a limited	1538
liability company, one person owns the organization if, under the	1539
articles of organization or other instrument governing the affairs	1540
of the organization, that person has a beneficial interest in the	1541
organization's profits, surpluses, losses, or distributions of	1542
fifty per cent or more of the combined beneficial interests of all	1543
persons having such an interest in the organization.	1544

(5) A domestic insurance company or foreign insurance	1545
company, as defined in section 5725.01 of the Revised Code, that	1546
paid the insurance company premiums tax imposed by section 5725.18	1547
or Chapter 5729. of the Revised Code, or an unauthorized insurance	1548
company whose gross premiums are subject to tax under section	1549
3905.36 of the Revised Code based on one or more measurement	1550
periods that include the entire tax period under this chapter;	1551

(6) A person that solely facilitates or services one or more	1552
securitizations of phase-in-recovery property pursuant to a final	1553
financing order as those terms are defined in section 4928.23 of	1554
the Revised Code. For purposes of this division, "securitization"	1555
means transferring one or more assets to one or more persons and	1556
then issuing securities backed by the right to receive payment	1557
from the asset or assets so transferred.	1558

(7) Except as otherwise provided in this division, a	1559
pre-income tax trust as defined in division (FF)(4) of section	1560
5747.01 of the Revised Code and any pass-through entity of which	1561
such pre-income tax trust owns or controls, directly, indirectly,	1562
or constructively through related interests, more than five per	1563
cent of the ownership or equity interests. If the pre-income tax	1564
trust has made a qualifying pre-income tax trust election under	1565
division (FF)(3) of section 5747.01 of the Revised Code, then the	1566
trust and the pass-through entities of which it owns or controls,	1567
directly, indirectly, or constructively through related interests,	1568
more than five per cent of the ownership or equity interests,	1569
shall not be excluded persons for purposes of the tax imposed	1570
under section 5751.02 of the Revised Code.	1571

(8) Nonprofit organizations or the state and its agencies,	1572
instrumentalities, or political subdivisions.	1573

(F) Except as otherwise provided in divisions (F)(2), (3),	1574
and (4) of this section, "gross receipts" means the total amount	1575
realized by a person, without deduction for the cost of goods sold	1576
or other expenses incurred, that contributes to the production of	1577
gross income of the person, including the fair market value of any	1578
property and any services received, and any debt transferred or	1579
forgiven as consideration.	1580

(1) The following are examples of gross receipts:

1581

(a) Amounts realized from the sale, exchange, or other	1582
disposition of the taxpayer's property to or with another;	1583

(b) Amounts realized from the taxpayer's performance of	1584
services for another;	1585

(c) Amounts realized from another's use or possession of the	1586
taxpayer's property or capital;	1587

(d) Any combination of the foregoing amounts.

1588

(2) "Gross receipts" excludes the following amounts:

1589

(a) Interest income except interest on credit sales;

1590

(b) Dividends and distributions from corporations, and	1591
distributive or proportionate shares of receipts and income from a	1592
pass-through entity as defined under section 5733.04 of the	1593
Revised Code;	1594

(c) Receipts from the sale, exchange, or other disposition of	1595
an asset described in section 1221 or 1231 of the Internal Revenue	1596
Code, without regard to the length of time the person held the	1597
asset. Notwithstanding section 1221 of the Internal Revenue Code,	1598
receipts from hedging transactions also are excluded to the extent	1599
the transactions are entered into primarily to protect a financial	1600
position, such as managing the risk of exposure to (i) foreign	1601
currency fluctuations that affect assets, liabilities, profits,	1602
losses, equity, or investments in foreign operations; (ii)	1603
interest rate fluctuations; or (iii) commodity price fluctuations.	1604
As used in division (F)(2)(c) of this section, "hedging	1605
transaction" has the same meaning as used in section 1221 of the	1606
Internal Revenue Code and also includes transactions accorded	1607
hedge accounting treatment under statement of financial accounting	1608
standards number 133 of the financial accounting standards board.	1609
For the purposes of division (F)(2)(c) of this section, the actual	1610
transfer of title of real or tangible personal property to another	1611
entity is not a hedging transaction.	1612

(d) Proceeds received attributable to the repayment,	1613
maturity, or redemption of the principal of a loan, bond, mutual	1614
fund, certificate of deposit, or marketable instrument;	1615

(e) The principal amount received under a repurchase	1616
agreement or on account of any transaction properly characterized	1617
as a loan to the person;	1618

(f) Contributions received by a trust, plan, or other	1619
arrangement, any of which is described in section 501(a) of the	1620
Internal Revenue Code, or to which Title 26, Subtitle A, Chapter	1621
1, Subchapter (D) of the Internal Revenue Code applies;	1622

(g) Compensation, whether current or deferred, and whether in	1623
cash or in kind, received or to be received by an employee, former	1624
employee, or the employee's legal successor for services rendered	1625
to or for an employer, including reimbursements received by or for	1626
an individual for medical or education expenses, health insurance	1627
premiums, or employee expenses, or on account of a dependent care	1628
spending account, legal services plan, any cafeteria plan	1629
described in section 125 of the Internal Revenue Code, or any	1630
similar employee reimbursement;	1631

(h) Proceeds received from the issuance of the taxpayer's own	1632
stock, options, warrants, puts, or calls, or from the sale of the	1633
taxpayer's treasury stock;	1634

(i) Proceeds received on the account of payments from	1635
insurance policies, except those proceeds received for the loss of	1636
business revenue;	1637

(j) Gifts or charitable contributions received; membership	1638
dues received by trade, professional, homeowners', or condominium	1639
associations; and payments received for educational courses,	1640
meetings, meals, or similar payments to a trade, professional, or	1641
other similar association; and fundraising receipts received by	1642
any person when any excess receipts are donated or used	1643
exclusively for charitable purposes;	1644

(k) Damages received as the result of litigation in excess of	1645
amounts that, if received without litigation, would be gross	1646
receipts;	1647

(l) Property, money, and other amounts received or acquired	1648
by an agent on behalf of another in excess of the agent's	1649
commission, fee, or other remuneration;	1650

(m) Tax refunds, other tax benefit recoveries, and	1651
reimbursements for the tax imposed under this chapter made by	1652
entities that are part of the same combined taxpayer or	1653
consolidated elected taxpayer group, and reimbursements made by	1654
entities that are not members of a combined taxpayer or	1655
consolidated elected taxpayer group that are required to be made	1656
for economic parity among multiple owners of an entity whose tax	1657
obligation under this chapter is required to be reported and paid	1658
entirely by one owner, pursuant to the requirements of sections	1659
5751.011 and 5751.012 of the Revised Code;	1660

(n) Pension reversions;

1661

(o) Contributions to capital;

1662

(p) Sales or use taxes collected as a vendor or an	1663
out-of-state seller on behalf of the taxing jurisdiction from a	1664
consumer or other taxes the taxpayer is required by law to collect	1665
directly from a purchaser and remit to a local, state, or federal	1666
tax authority;	1667

(q) In the case of receipts from the sale of cigarettes or	1668
tobacco products by a wholesale dealer, retail dealer,	1669
distributor, manufacturer, or seller, all as defined in section	1670
5743.01 of the Revised Code, an amount equal to the federal and	1671
state excise taxes paid by any person on or for such cigarettes or	1672
tobacco products under subtitle E of the Internal Revenue Code or	1673
Chapter 5743. of the Revised Code;	1674

(r) Receipts from the sale, transfer, exchange, or other	1675
disposition of motor fuel as "motor fuel" is defined in section	1676
5736.01 of the Revised Code;	1677

(s) In the case of receipts from the sale of beer or	1678
intoxicating liquor, as defined in section 4301.01 of the Revised	1679
Code, by a person holding a permit issued under Chapter 4301. or	1680
4303. of the Revised Code, an amount equal to federal and state	1681
excise taxes paid by any person on or for such beer or	1682
intoxicating liquor under subtitle E of the Internal Revenue Code	1683
or Chapter 4301. or 4305. of the Revised Code;	1684

(t) Receipts realized by a new motor vehicle dealer or used	1685
motor vehicle dealer, as defined in section 4517.01 of the Revised	1686
Code, from the sale or other transfer of a motor vehicle, as	1687
defined in that section, to another motor vehicle dealer for the	1688
purpose of resale by the transferee motor vehicle dealer, but only	1689
if the sale or other transfer was based upon the transferee's need	1690
to meet a specific customer's preference for a motor vehicle;	1691

(u) Receipts from a financial institution described in	1692
division (E)(3) of this section for services provided to the	1693
financial institution in connection with the issuance, processing,	1694
servicing, and management of loans or credit accounts, if such	1695
financial institution and the recipient of such receipts have at	1696
least fifty per cent of their ownership interests owned or	1697
controlled, directly or constructively through related interests,	1698
by common owners;	1699

(v) Receipts realized from administering anti-neoplastic	1700
drugs and other cancer chemotherapy, biologicals, therapeutic	1701
agents, and supportive drugs in a physician's office to patients	1702
with cancer;	1703

(w) Funds received or used by a mortgage broker that is not a	1704
dealer in intangibles, other than fees or other consideration,	1705
pursuant to a table-funding mortgage loan or warehouse-lending	1706
mortgage loan. Terms used in division (F)(2)(w) of this section	1707
have the same meanings as in section 1322.01 of the Revised Code,	1708
except "mortgage broker" means a person assisting a buyer in	1709
obtaining a mortgage loan for a fee or other consideration paid by	1710
the buyer or a lender, or a person engaged in table-funding or	1711
warehouse-lending mortgage loans that are first lien mortgage	1712
loans.	1713

(x) Property, money, and other amounts received by a	1714
professional employer organization, as defined in section 4125.01	1715
of the Revised Code, from a client employer, as defined in that	1716
section, in excess of the administrative fee charged by the	1717
professional employer organization to the client employer;	1718

(y) In the case of amounts retained as commissions by a	1719
permit holder under Chapter 3769. of the Revised Code, an amount	1720
equal to the amounts specified under that chapter that must be	1721
paid to or collected by the tax commissioner as a tax and the	1722
amounts specified under that chapter to be used as purse money;	1723

(z) Qualifying distribution center receipts.

1724

(i) For purposes of division (F)(2)(z) of this section:

1725

(I) "Qualifying distribution center receipts" means receipts	1726
of a supplier from qualified property that is delivered to a	1727
qualified distribution center, multiplied by a quantity that	1728
equals one minus the Ohio delivery percentage. If the qualified	1729
distribution center is a refining facility, "supplier" includes	1730
all dealers, brokers, processors, sellers, vendors, cosigners, and	1731
distributors of qualified property.	1732

(II) "Qualified property" means tangible personal property	1733
delivered to a qualified distribution center that is shipped to	1734
that qualified distribution center solely for further shipping by	1735
the qualified distribution center to another location in this	1736
state or elsewhere or, in the case of gold, silver, platinum, or	1737
palladium delivered to a refining facility solely for refining to	1738
a grade and fineness acceptable for delivery to a registered	1739
commodities exchange. "Further shipping" includes storing and	1740
repackaging property into smaller or larger bundles, so long as	1741
the property is not subject to further manufacturing or	1742
processing. "Refining" is limited to extracting impurities from	1743
gold, silver, platinum, or palladium through smelting or some	1744
other process at a refining facility.	1745

(III) "Qualified distribution center" means a warehouse, a	1746
facility similar to a warehouse, or a refining facility in this	1747
state that, for the qualifying year, is operated by a person that	1748
is not part of a combined taxpayer group and that has a qualifying	1749
certificate. All warehouses or facilities similar to warehouses	1750
that are operated by persons in the same taxpayer group and that	1751
are located within one mile of each other shall be treated as one	1752
qualified distribution center. All refining facilities that are	1753
operated by persons in the same taxpayer group and that are	1754
located in the same or adjacent counties may be treated as one	1755
qualified distribution center.	1756

(IV) "Qualifying year" means the calendar year to which the	1757
qualifying certificate applies.	1758

(V) "Qualifying period" means the period of the first day of	1759
July of the second year preceding the qualifying year through the	1760
thirtieth day of June of the year preceding the qualifying year.	1761

(VI) "Qualifying certificate" means the certificate issued by	1762
the tax commissioner after the operator of a distribution center	1763
files an annual application with the commissioner. The application	1764
and annual fee shall be filed and paid for each qualified	1765
distribution center on or before the first day of September before	1766
the qualifying year or within forty-five days after the	1767
distribution center opens, whichever is later.	1768

The applicant must substantiate to the commissioner's	1769
satisfaction that, for the qualifying period, all persons	1770
operating the distribution center have more than fifty per cent of	1771
the cost of the qualified property shipped to a location such that	1772
it would be sitused outside this state under the provisions of	1773
division (E) of section 5751.033 of the Revised Code. The	1774
applicant must also substantiate that the distribution center	1775
cumulatively had costs from its suppliers equal to or exceeding	1776
five hundred million dollars during the qualifying period. (For	1777
purposes of division (F)(2)(z)(i)(VI) of this section, "supplier"	1778
excludes any person that is part of the consolidated elected	1779
taxpayer group, if applicable, of the operator of the qualified	1780
distribution center.) The commissioner may require the applicant	1781
to have an independent certified public accountant certify that	1782
the calculation of the minimum thresholds required for a qualified	1783
distribution center by the operator of a distribution center has	1784
been made in accordance with generally accepted accounting	1785
principles. The commissioner shall issue or deny the issuance of a	1786
certificate within sixty days after the receipt of the	1787
application. A denial is subject to appeal under section 5717.02	1788
of the Revised Code. If the operator files a timely appeal under	1789
section 5717.02 of the Revised Code, the operator shall be granted	1790
a qualifying certificate effective for the remainder of the	1791
qualifying year or until the appeal is finalized, whichever is	1792
earlier. If the operator does not prevail in the appeal, the	1793
operator shall pay the ineligible operator's supplier tax	1794
liability.	1795

(VII) "Ohio delivery percentage" means the proportion of the	1796
total property delivered to a destination inside Ohio from the	1797
qualified distribution center during the qualifying period	1798
compared with total deliveries from such distribution center	1799
everywhere during the qualifying period.	1800

(VIII) "Refining facility" means one or more buildings	1801
located in a county in the Appalachian region of this state as	1802
defined by section 107.21 of the Revised Code and utilized for	1803
refining or smelting gold, silver, platinum, or palladium to a	1804
grade and fineness acceptable for delivery to a registered	1805
commodities exchange.	1806

(IX) "Registered commodities exchange" means a board of	1807
trade, such as New York mercantile exchange, inc. or commodity	1808
exchange, inc., designated as a contract market by the commodity	1809
futures trading commission under the "Commodity Exchange Act," 7	1810
U.S.C. 1 et seq., as amended.	1811

(X) "Ineligible operator's supplier tax liability" means an	1812
amount equal to the tax liability of all suppliers of a	1813
distribution center had the distribution center not been issued a	1814
qualifying certificate for the qualifying year. Ineligible	1815
operator's supplier tax liability shall not include interest or	1816
penalties. The tax commissioner shall determine an ineligible	1817
operator's supplier tax liability based on information that the	1818
commissioner may request from the operator of the distribution	1819
center. An operator shall provide a list of all suppliers of the	1820
distribution center and the corresponding costs of qualified	1821
property for the qualifying year at issue within sixty days of a	1822
request by the commissioner under this division.	1823

(ii)(I) If the distribution center is new and was not open	1824
for the entire qualifying period, the operator of the distribution	1825
center may request that the commissioner grant a qualifying	1826
certificate. If the certificate is granted and it is later	1827
determined that more than fifty per cent of the qualified property	1828
during that year was not shipped to a location such that it would	1829
be sitused outside of this state under the provisions of division	1830
(E) of section 5751.033 of the Revised Code or if it is later	1831
determined that the person that operates the distribution center	1832
had average monthly costs from its suppliers of less than forty	1833
million dollars during that year, then the operator of the	1834
distribution center shall pay the ineligible operator's supplier	1835
tax liability. (For purposes of division (F)(2)(z)(ii) of this	1836
section, "supplier" excludes any person that is part of the	1837
consolidated elected taxpayer group, if applicable, of the	1838
operator of the qualified distribution center.)	1839

(II) The commissioner may grant a qualifying certificate to a	1840
distribution center that does not qualify as a qualified	1841
distribution center for an entire qualifying period if the	1842
operator of the distribution center demonstrates that the business	1843
operations of the distribution center have changed or will change	1844
such that the distribution center will qualify as a qualified	1845
distribution center within thirty-six months after the date the	1846
operator first applies for a certificate. If, at the end of that	1847
thirty-six-month period, the business operations of the	1848
distribution center have not changed such that the distribution	1849
center qualifies as a qualified distribution center, the operator	1850
of the distribution center shall pay the ineligible operator's	1851
supplier tax liability for each year that the distribution center	1852
received a certificate but did not qualify as a qualified	1853
distribution center. For each year the distribution center	1854
receives a certificate under division (F)(2)(z)(ii)(II) of this	1855
section, the distribution center shall pay all applicable fees	1856
required under division (F)(2)(z) of this section and shall submit	1857
an updated business plan showing the progress the distribution	1858
center made toward qualifying as a qualified distribution center	1859
during the preceding year.	1860

(III) An operator may appeal a determination under division	1861
(F)(2)(z)(ii)(I) or (II) of this section that the ineligible	1862
operator is liable for the operator's supplier tax liability as a	1863
result of not qualifying as a qualified distribution center, as	1864
provided in section 5717.02 of the Revised Code.	1865

(iii) When filing an application for a qualifying certificate	1866
under division (F)(2)(z)(i)(VI) of this section, the operator of a	1867
qualified distribution center also shall provide documentation, as	1868
the commissioner requires, for the commissioner to ascertain the	1869
Ohio delivery percentage. The commissioner, upon issuing the	1870
qualifying certificate, also shall certify the Ohio delivery	1871
percentage. The operator of the qualified distribution center may	1872
appeal the commissioner's certification of the Ohio delivery	1873
percentage in the same manner as an appeal is taken from the	1874
denial of a qualifying certificate under division (F)(2)(z)(i)(VI)	1875
of this section.	1876

(iv)(I) In the case where the distribution center is new and	1877
not open for the entire qualifying period, the operator shall make	1878
a good faith estimate of an Ohio delivery percentage for use by	1879
suppliers in their reports of taxable gross receipts for the	1880
remainder of the qualifying period. The operator of the facility	1881
shall disclose to the suppliers that such Ohio delivery percentage	1882
is an estimate and is subject to recalculation. By the due date of	1883
the next application for a qualifying certificate, the operator	1884
shall determine the actual Ohio delivery percentage for the	1885
estimated qualifying period and proceed as provided in division	1886
(F)(2)(z)(iii) of this section with respect to the calculation and	1887
recalculation of the Ohio delivery percentage. The supplier is	1888
required to file, within sixty days after receiving notice from	1889
the operator of the qualified distribution center, amended reports	1890
for the impacted calendar quarter or quarters or calendar year,	1891
whichever the case may be. Any additional tax liability or tax	1892
overpayment shall be subject to interest but shall not be subject	1893
to the imposition of any penalty so long as the amended returns	1894
are timely filed.	1895

(II) The operator of a distribution center that receives a	1896
qualifying certificate under division (F)(2)(z)(ii)(II) of this	1897
section shall make a good faith estimate of the Ohio delivery	1898
percentage that the operator estimates will apply to the	1899
distribution center at the end of the thirty-six-month period	1900
after the operator first applied for a qualifying certificate	1901
under that division. The result of the estimate shall be	1902
multiplied by a factor of one and seventy-five one-hundredths. The	1903
product of that calculation shall be the Ohio delivery percentage	1904
used by suppliers in their reports of taxable gross receipts for	1905
each qualifying year that the distribution center receives a	1906
qualifying certificate under division (F)(2)(z)(ii)(II) of this	1907
section, except that, if the product is less than five per cent,	1908
the Ohio delivery percentage used shall be five per cent and that,	1909
if the product exceeds forty-nine per cent, the Ohio delivery	1910
percentage used shall be forty-nine per cent.	1911

(v) Qualifying certificates and Ohio delivery percentages	1912
issued by the commissioner shall be open to public inspection and	1913
shall be timely published by the commissioner. A supplier relying	1914
in good faith on a certificate issued under this division shall	1915
not be subject to tax on the qualifying distribution center	1916
receipts under division (F)(2)(z) of this section. An operator	1917
receiving a qualifying certificate is liable for the ineligible	1918
operator's supplier tax liability for each year the operator	1919
received a certificate but did not qualify as a qualified	1920
distribution center.	1921

(vi) The annual fee for a qualifying certificate shall be one	1922
hundred thousand dollars for each qualified distribution center.	1923
If a qualifying certificate is not issued, the annual fee is	1924
subject to refund after the exhaustion of all appeals provided for	1925
in division (F)(2)(z)(i)(VI) of this section. The first one	1926
hundred thousand dollars of the annual application fees collected	1927
each calendar year shall be credited to the revenue enhancement	1928
fund. The remainder of the annual application fees collected shall	1929
be distributed in the same manner required under section 5751.20	1930
of the Revised Code.	1931

(vii) The tax commissioner may require that adequate security	1932
be posted by the operator of the distribution center on appeal	1933
when the commissioner disagrees that the applicant has met the	1934
minimum thresholds for a qualified distribution center as set	1935
forth in division (F)(2)(z) of this section.	1936

(aa) Receipts of an employer from payroll deductions relating	1937
to the reimbursement of the employer for advancing moneys to an	1938
unrelated third party on an employee's behalf;	1939

(bb) Cash discounts allowed and taken;

1940

(cc) Returns and allowances;

1941

(dd) Bad debts from receipts on the basis of which the tax	1942
imposed by this chapter was paid in a prior quarterly tax payment	1943
period. For the purpose of this division, "bad debts" means any	1944
debts that have become worthless or uncollectible between the	1945
preceding and current quarterly tax payment periods, have been	1946
uncollected for at least six months, and that may be claimed as a	1947
deduction under section 166 of the Internal Revenue Code and the	1948
regulations adopted under that section, or that could be claimed	1949
as such if the taxpayer kept its accounts on the accrual basis.	1950
"Bad debts" does not include repossessed property, uncollectible	1951
amounts on property that remains in the possession of the taxpayer	1952
until the full purchase price is paid, or expenses in attempting	1953
to collect any account receivable or for any portion of the debt	1954
recovered;	1955

(ee) Any amount realized from the sale of an account	1956
receivable to the extent the receipts from the underlying	1957
transaction giving rise to the account receivable were included in	1958
the gross receipts of the taxpayer;	1959

(ff) Any receipts directly attributed to a transfer agreement	1960
or to the enterprise transferred under that agreement under	1961
section 4313.02 of the Revised Code.	1962

(gg)(i) As used in this division:

1963

(I) "Qualified uranium receipts" means receipts from the	1964
sale, exchange, lease, loan, production, processing, or other	1965
disposition of uranium within a uranium enrichment zone certified	1966
by the tax commissioner under division (F)(2)(gg)(ii) of this	1967
section. "Qualified uranium receipts" does not include any	1968
receipts with a situs in this state outside a uranium enrichment	1969
zone certified by the tax commissioner under division	1970
(F)(2)(gg)(ii) of this section.	1971

(II) "Uranium enrichment zone" means all real property that	1972
is part of a uranium enrichment facility licensed by the United	1973
States nuclear regulatory commission and that was or is owned or	1974
controlled by the United States department of energy or its	1975
successor.	1976

(ii) Any person that owns, leases, or operates real or	1977
tangible personal property constituting or located within a	1978
uranium enrichment zone may apply to the tax commissioner to have	1979
the uranium enrichment zone certified for the purpose of excluding	1980
qualified uranium receipts under division (F)(2)(gg) of this	1981
section. The application shall include such information that the	1982
tax commissioner prescribes. Within sixty days after receiving the	1983
application, the tax commissioner shall certify the zone for that	1984
purpose if the commissioner determines that the property qualifies	1985
as a uranium enrichment zone as defined in division (F)(2)(gg) of	1986
this section, or, if the tax commissioner determines that the	1987
property does not qualify, the commissioner shall deny the	1988
application or request additional information from the applicant.	1989
If the tax commissioner denies an application, the commissioner	1990
shall state the reasons for the denial. The applicant may appeal	1991
the denial of an application to the board of tax appeals pursuant	1992
to section 5717.02 of the Revised Code. If the applicant files a	1993
timely appeal, the tax commissioner shall conditionally certify	1994
the applicant's property. The conditional certification shall	1995
expire when all of the applicant's appeals are exhausted. Until	1996
final resolution of the appeal, the applicant shall retain the	1997
applicant's records in accordance with section 5751.12 of the	1998
Revised Code, notwithstanding any time limit on the preservation	1999
of records under that section.	2000

(hh) In the case of amounts collected by a licensed casino	2001
operator from casino gaming, amounts in excess of the casino	2002
operator's gross casino revenue. In this division, "casino	2003
operator" and "casino gaming" have the meanings defined in section	2004
3772.01 of the Revised Code, and "gross casino revenue" has the	2005
meaning defined in section 5753.01 of the Revised Code.	2006

(ii) Receipts realized from the sale of agricultural	2007
commodities by an agricultural commodity handler, both as defined	2008
in section 926.01 of the Revised Code, that is licensed by the	2009
director of agriculture to handle agricultural commodities in this	2010
state.	2011

(jj) Receipts realized from the sale of oil or natural gas by	2012
a severer or owner that paid the tax imposed under division (C) of	2013
section 5749.02 of the Revised Code on the basis of that oil or	2014
natural gas.	2015

(kk) Any receipts for which the tax imposed by this chapter	2016
is prohibited by the constitution or laws of the United States or	2017
the constitution of this state.	2018

(3) In the case of a taxpayer when acting as a real estate	2019
broker, "gross receipts" includes only the portion of any fee for	2020
the service of a real estate broker, or service of a real estate	2021
salesperson associated with that broker, that is retained by the	2022
broker and not paid to an associated real estate salesperson or	2023
another real estate broker. For the purposes of this division,	2024
"real estate broker" and "real estate salesperson" have the same	2025
meanings as in section 4735.01 of the Revised Code.	2026

(4) A taxpayer's method of accounting for gross receipts for	2027
a tax period shall be the same as the taxpayer's method of	2028
accounting for federal income tax purposes for the taxpayer's	2029
federal taxable year that includes the tax period. If a taxpayer's	2030
method of accounting for federal income tax purposes changes, its	2031
method of accounting for gross receipts under this chapter shall	2032
be changed accordingly.	2033

(G) "Taxable gross receipts" means gross receipts sitused to	2034
this state under section 5751.033 of the Revised Code.	2035

(H) A person has "substantial nexus with this state" if any	2036
of the following applies. The person:	2037

(1) Owns or uses a part or all of its capital in this state;

2038

(2) Holds a certificate of compliance with the laws of this	2039
state authorizing the person to do business in this state;	2040

(3) Has bright-line presence in this state;

2041

(4) Otherwise has nexus with this state to an extent that the	2042
person can be required to remit the tax imposed under this chapter	2043
under the Constitution of the United States.	2044

(I) A person has "bright-line presence" in this state for a	2045
reporting period and for the remaining portion of the calendar	2046
year if any of the following applies. The person:	2047

(1) Has at any time during the calendar year property in this	2048
state with an aggregate value of at least fifty thousand dollars.	2049
For the purpose of division (I)(1) of this section, owned property	2050
is valued at original cost and rented property is valued at eight	2051
times the net annual rental charge.	2052

(2) Has during the calendar year payroll in this state of at	2053
least fifty thousand dollars. Payroll in this state includes all	2054
of the following:	2055

(a) Any amount subject to withholding by the person under	2056
section 5747.06 of the Revised Code;	2057

(b) Any other amount the person pays as compensation to an	2058
individual under the supervision or control of the person for work	2059
done in this state; and	2060

(c) Any amount the person pays for services performed in this	2061
state on its behalf by another.	2062

(3) Has during the calendar year taxable gross receipts of at	2063
least five hundred thousand dollars.	2064

(4) Has at any time during the calendar year within this	2065
state at least twenty-five per cent of the person's total	2066
property, total payroll, or total gross receipts.	2067

(5) Is domiciled in this state as an individual or for	2068
corporate, commercial, or other business purposes.	2069

(J) "Tangible personal property" has the same meaning as in	2070
section 5739.01 of the Revised Code.	2071

(K) "Internal Revenue Code" means the Internal Revenue Code	2072
of 1986, 100 Stat. 2085, 26 U.S.C. 1, as amended. Any term used in	2073
this chapter that is not otherwise defined has the same meaning as	2074
when used in a comparable context in the laws of the United States	2075
relating to federal income taxes unless a different meaning is	2076
clearly required. Any reference in this chapter to the Internal	2077
Revenue Code includes other laws of the United States relating to	2078
federal income taxes.	2079

(L) "Calendar quarter" means a three-month period ending on	2080
the thirty-first day of March, the thirtieth day of June, the	2081
thirtieth day of September, or the thirty-first day of December.	2082

(M) "Tax period" means the calendar quarter or calendar year	2083
on the basis of which a taxpayer is required to pay the tax	2084
imposed under this chapter.	2085

(N) "Calendar year taxpayer" means a taxpayer for which the	2086
tax period is a calendar year.	2087

(O) "Calendar quarter taxpayer" means a taxpayer for which	2088
the tax period is a calendar quarter.	2089

(P) "Agent" means a person authorized by another person to	2090
act on its behalf to undertake a transaction for the other,	2091
including any of the following:	2092

(1) A person receiving a fee to sell financial instruments;

2093

(2) A person retaining only a commission from a transaction	2094
with the other proceeds from the transaction being remitted to	2095
another person;	2096

(3) A person issuing licenses and permits under section	2097
1533.13 of the Revised Code;	2098

(4) A lottery sales agent holding a valid license issued	2099
under section 3770.05 of the Revised Code;	2100

(5) A person acting as an agent of the division of liquor	2101
control under section 4301.17 of the Revised Code.	2102

(Q) "Received" includes amounts accrued under the accrual	2103
method of accounting.	2104

(R) "Reporting person" means a person in a consolidated	2105
elected taxpayer or combined taxpayer group that is designated by	2106
that group to legally bind the group for all filings and tax	2107
liabilities and to receive all legal notices with respect to	2108
matters under this chapter, or, for the purposes of section	2109
5751.04 of the Revised Code, a separate taxpayer that is not a	2110
member of such a group.	2111

Section 2.  That existing sections 1509.02, 1509.071,	2112
1509.34, 1513.08, 1513.182, 1514.11, 5703.052, 5747.98, 5749.01,	2113
5749.02, 5749.03, 5749.06, 5749.07, 5749.08, 5749.10, 5749.11,	2114
5749.12, 5749.13, 5749.14, 5749.15, and 5751.01, and section	2115
1509.50 of the Revised Code are hereby repealed.	2116

Section 3. This act takes effect April 1, 2014.

2117

Section 4. Section 5751.01 of the Revised Code is amended by	2118
this act and also by H.B. 59 of the 130th General Assembly,	2119
pursuant to which the amendments, except those amendments to	2120
divisions (F)(2)(z) and (jj) of that section, are effective July	2121
1, 2014. The amendments of H.B. 59 are included in this act to	2122
confirm the intention to retain them, but, except for divisions	2123
(F)(2)(z) and (jj) of that section, are not intended to be	2124
effective until July 1, 2014.	2125

Section 5. The amendments by this act of division (B) of	2126
section 1509.02 and of section 1509.071 of the Revised Code are	2127
exempt from the referendum under Ohio Constitution, Article II,	2128
Section 1d and section 1.471 of the Revised Code.	2129