We want to bring your attention to a significant processing issue affecting some 2023 Ohio individual income tax returns. Our tax team has identified an emerging situation that may impact clients who received interest income reported on Form 1099-INT during 2023.
What’s Happening?
The Ohio Department of Taxation (ODT) recently implemented a new tax processing system. Following a system enhancement, an error occurred where the system incorrectly interpreted interest income from Form 1099-INT as unreported Ohio income tax withholding. This resulted in automatic adjustment notices being sent to taxpayers starting in mid-September 2024, leading to erroneous refunds and carryforward adjustments.
ODT has since implemented a fix on October 10, 2024, to correct this system error. Starting the week of October 21, ODT will begin issuing new adjustment notices to affected taxpayers requesting the return of additional refunds or adjustment of carryforward amounts.
How Do I Know if I’m Affected?
You may be impacted if you:
- Received Form 1099-INT for interest income in 2023
- Received an adjustment notice from ODT between mid-September and early October 2024
- Were issued an unexpected refund or carryforward adjustment
Important: In the cases we’ve reviewed, the adjustment amount exactly matches the interest income reported on Form 1099-INT. What Should You Do?
If you receive or have received a notice from ODT:
- Don’t cash any refund checks until you’ve verified their accuracy
- Contact your Rea advisor immediately for assistance in reviewing the notice
- Keep all documentation related to any notices and refunds received
- Watch for a follow-up notice from ODT (expected to begin the week of October 21, 2024)
- Compare the adjustment amount to any 1099-INT interest income you reported
We’re Here to Help
Our tax team is actively monitoring this situation and working directly with ODT to resolve these issues. We will continue to provide updates as new information becomes available. If you have any questions or concerns about your 2023 Ohio tax return or related notices, please don’t hesitate to reach out to your Rea advisor.
By Kaitlyn Robison (Cleveland Office)
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This update is provided for informational purposes only and should not be construed as tax advice. Please consult with your Rea advisor for guidance specific to your situation.