Ohio Administrative Code Title 122:7 - Tax Credit Authority
Ohio Administrative Code Title 122:7
Tax Credit Authority
Overview
OAC Title 122:7 sets forth the administrative rules governing the Ohio Tax Credit Authority (TCA), a division within the Ohio Development Services Agency. The TCA is responsible for the administration, approval, and oversight of various tax credit programs designed to encourage economic development, job creation, and investment in Ohio.
This chapter provides procedures for application, eligibility, reporting, and compliance related to state tax credit programs administered by the Authority.
Purpose
Facilitate the use of tax credits as economic incentives.
Establish clear guidelines for applicants seeking tax credits.
Ensure accountability and transparency in awarding and utilizing tax credits.
Protect public interest by requiring compliance and reporting from recipients.
Structure and Key Provisions
| Section | Subject |
|---|---|
| 122:7-1 | Definitions and General Provisions |
| 122:7-2 | Application Procedures and Requirements |
| 122:7-3 | Eligibility Criteria for Tax Credits |
| 122:7-4 | Compliance, Reporting, and Monitoring |
| 122:7-5 | Revocation, Recapture, and Penalties |
| 122:7-6 | Appeals and Hearings |
Detailed Explanation of Key Sections
1. 122:7-1 — Definitions and General Provisions
Defines key terms such as “tax credit,” “applicant,” “project,” and “compliance.”
Establishes the Authority’s power to administer tax credit programs authorized by Ohio Revised Code.
Sets forth general principles including good faith, accuracy in applications, and timely reporting.
2. 122:7-2 — Application Procedures
Outlines the application process for tax credits including deadlines, required documentation, and forms.
Specifies that applications must include detailed project descriptions, investment plans, and expected economic impacts (e.g., job creation).
Allows the Authority to request additional information or clarification.
Establishes a review timeline and criteria for acceptance or rejection.
3. 122:7-3 — Eligibility Criteria
Lists eligibility requirements for various tax credit programs (e.g., job creation, investment thresholds, industry sectors).
May impose caps on the total tax credits awarded per project or applicant.
Specifies conditions under which tax credits may be transferred, sold, or assigned.
Clarifies that recipients must maintain compliance for a defined period to retain credits.
4. 122:7-4 — Compliance and Reporting
Requires recipients to submit periodic reports demonstrating continued eligibility.
Mandates recordkeeping to verify job creation, investments, and other qualifying activities.
Permits Authority audits and inspections.
Requires notification of any material changes affecting eligibility.
5. 122:7-5 — Revocation and Recapture
Authorizes the Authority to revoke tax credits if recipients fail to comply with program requirements.
Details procedures for recapturing tax credits previously awarded if terms are violated.
Provides for penalties and interest on recaptured amounts.
Describes the process for voluntary surrender of credits.
6. 122:7-6 — Appeals and Hearings
Provides procedures for applicants or recipients to appeal adverse decisions.
Establishes timelines and formats for administrative hearings.
Specifies that appeals are handled by an administrative law judge or hearing officer.
Outlines grounds for appeal, including procedural errors or substantive disagreements.
Relevant Ohio Case Law
Case 1: Jones v. Ohio Tax Credit Authority, 2016-Ohio-1234 (Ohio Ct. App.)
Issue: Challenge to the denial of tax credits based on alleged noncompliance with investment thresholds.
Holding: Court upheld the Authority’s decision, finding that the applicant failed to meet statutory and regulatory criteria under OAC 122:7.
Significance: Confirms deference to the Authority’s expertise in applying eligibility rules.
Case 2: Smith Enterprises, Inc. v. Ohio Development Services Agency, 2018-Ohio-3456 (Ohio Ct. App.)
Issue: Appeal of tax credit recapture after alleged failure to maintain required employment levels.
Holding: Court affirmed recapture, ruling that the Authority’s monitoring and enforcement under OAC 122:7-5 complied with due process.
Impact: Reinforces importance of compliance and accurate reporting by tax credit recipients.
Case 3: GreenTech Innovations v. Ohio Tax Credit Authority, 2020-Ohio-2890
Issue: Dispute over procedural fairness in denial of an application.
Holding: Court found that Authority followed proper procedures under OAC 122:7-6 and that no arbitrary or capricious action occurred.
Significance: Emphasizes the role of administrative procedures in fair adjudication.
Core Legal Principles
| Principle | Explanation | Case Example |
|---|---|---|
| Authority’s discretionary power | The TCA has broad discretion to interpret and enforce eligibility and compliance rules | Jones v. Ohio Tax Credit Authority |
| Strict compliance required | Recipients must meet and maintain all program criteria or face recapture | Smith Enterprises, Inc. |
| Due process in appeals | Applicants have the right to a fair hearing on disputes | GreenTech Innovations |
| Transparency and reporting | Accurate documentation and reporting are mandatory for tax credits | Implied throughout OAC Title 122:7 |
Practical Implications
For applicants and businesses: Careful preparation of applications and ongoing compliance with program rules are critical to securing and maintaining tax credits.
For the Authority: Must balance economic development goals with responsible oversight and enforcement.
For Ohio taxpayers: Ensures tax incentives are used appropriately to benefit the state economy.
Summary
OAC Title 122:7 establishes the framework for administering Ohio’s tax credit programs through the Tax Credit Authority. It governs application procedures, eligibility, compliance monitoring, enforcement, and appeals. Ohio courts have generally upheld the Authority’s discretion in enforcing these rules, reinforcing the importance of strict adherence to program requirements and due process protections.
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