The Ohio Commercial Activity Tax is a deceiving privilege tax. At first glance, this annual gross receipts tax, known more commonly as the CAT, seems very simple to calculate. And because the tax rate is so low, it is easy to see why many taxpayers overlook the CAT.
However, the CAT is actually quite complex. From registering to situsing receipts to calculating credits, if you don’t understand the rules, you could be paying too much or not enough.
GBQ can review your CAT calculations and tax returns to identify potential refund opportunities or exposure items. When performing a CAT review, GBQ SALT will review the following:
Registration/Registration Errors – Any individual or company with over $150,000 in taxable Ohio receipts is required to register for the CAT. However, some taxpayers completely overlook the CAT and do not register. In addition, once the initial registration is complete, many taxpayers forget to update their registration for entities that have been added or deleted from a group. Registration errors can have major impact on a taxpayer’s CAT liability.
Combined Filing/Consolidated Election – When several entities have a common owner, the entities will be treated as a combined group unless a consolidated election is made. Determining whether this election should be made can be very confusing, especially if the taxpayer has a complex organizational structure. GBQ SALT will perform a review of your organizational chart and make recommendations on the most appropriate filing methodology for you.
Situsing Receipts – Categorizing a gross receipt as an Ohio or non-Ohio receipt seems easy. However, the CAT rules contain several nuances that can make this process difficult for both sellers of tangible personal property and service providers.
Gross Receipt Analysis – The definition of a gross receipt for CAT purposes is not as clear as it may seem. GBQ SALT will determine if all required receipts have been included in your CAT calculations.
CAT Credits – The CAT statutes allow for several credits that can be applied against the CAT. GBQ SALT will confirm that you are taking full advantage of all available credits.