Information Release

CFT 2004-03
CORPORATE FRANCHISE TAX INFORMATION RELEASE – Questions Regarding Ohio’s Manufacturing Machinery and Equipment Tax Credit – R.C. 5733.33 & 5747.31 – Issued September, 2004; Revised February, 2005

This information release addresses questions the Ohio Department of Taxation (“ODT”) has received regarding Ohio’s tax credit for purchases of new manufacturing machinery and equipment for use in Ohio. At the present time, taxpayers may continue to claim (i) the Ohio tax credit for such new manufacturing machinery and equipment as provided by Ohio Revised Code sections (“R.C.”) 5733.33 and 5747.31 and (ii) all other tax credits that ODT directly or indirectly administers.

Because the State of Ohio will soon be petitioning the U.S. Supreme Court to review the U.S. Sixth Circuit Court of Appeals’ decision in Cuno, the State of Ohio recently petitioned the U.S. Sixth Circuit Court of Appeals to stay the issuance of the mandate, that is, to postpone putting into effect its earlier decision which enjoined enforcement of the credit. On January 31, 2005 the U.S. Sixth Circuit Court of Appeals did, in fact, agree to stay the issuance of the mandate. Because the U.S. Sixth Circuit Court of Appeals did stay the mandate2, ODT is not currently enjoined from administering the tax credit. As such, taxpayers may continue claiming the credit for purchases of new manufacturing machinery and equipment qualifying for the credit under Ohio law.

ODT will issue future notifications to taxpayers and practitioners as the situation warrants. If you have questions regarding the legal implications of continuing to claim this tax credit or other tax credits, ODT urges you to seek advice from tax counsel.

___________________________

1If the U.S. Supreme Court issues to the U.S. Sixth Circuit Court of Appeals a writ of certiorari, then the U.S. Supreme Court will hear the State of Ohio’s appeal of the U.S. Sixth Circuit Court of Appeals’ Cuno decision. Federal law does not require that the U.S. Supreme Court issue the writ of certiorari; issuing the writ is discretionary. If the U.S. Supreme Court does not issue the writ of certiorari, then there are no further appeals, and the U.S. Sixth Circuit Court of Appeals’ Cuno decision (which “enjoined enforcement of the credit”) becomes final.

2 The order in its entirety states as follow: “Upon consideration of the appellees’ motion to stay mandate, It is ORDERED that the mandate be stayed to allow time to file a petition for a writ of certiorari, and thereafter until the Supreme Court disposes of the case, but shall promptly issue if the petition is not filed within ninety days from the date of final judgment by this court.” United States Court of Appeals for the Sixth Circuit, Case No. 01-3960, order filed January 31, 2005.