S.B. No. 186 Summary

• Amends section 5733.40 of the Revised Code to allow wages and guaranteed payments paid by a professional employer organization to a pass-through entity owner to be considered business income.

• Expands division (A)(7) to include guaranteed payments and compensation paid to an investor by a professional employer organization when the investor's qualifying entity is a client employer of that organization.

• Applies the amendment retroactively to taxable years beginning on or after January 1, 2013, and clarifies that the amendment codifies existing law rather than creating new law.

• Maintains existing requirements that such payments qualify only when the investor holds at least a 20 percent direct or indirect interest in the profits or capital of the qualifying entity.