The annual minimum Commercial Activity Tax (CAT) is due May 12, 2014 for annual and quarterly filers. Annual CAT taxpayers (taxpayers with annual gross receipts between $150,000 and $1,000,000 in a calendar year) pay the annual minimum tax with the filing of the annual return. Quarterly CAT taxpayers (taxpayers with annual gross receipts greater than $1,000,000) pay the annual minimum tax with the filing of the first quarter return.
Quarterly CAT returns and Annual CAT returns filed on or after January 1, 2014 are required to be filed electronically. Taxpayers may file and pay electronically through the Ohio Business Gateway at business.ohio.gov. Alternatively, annual taxpayers may utilize TeleFile to file and pay the annual CAT return by using the telephone.
The CAT is a tax imposed on the privilege of doing business in Ohio, measured by taxable gross receipts from business activities in Ohio. The CAT rate of .26% plus the annual minimum tax applies to business entities with taxable gross receipts over $1,000,000. Business entities with annual taxable gross receipts between $150,000 and $1,000,000 are only subject to the $150 annual minimum tax.
Most receipts, including the receipts from the sale of property or performance of a service, generated in the ordinary course of business in Ohio are subject to the CAT. Gross receipts from sales to out-of-state purchasers or the portion of the services received outside of Ohio are not subject to the CAT.
The CAT applies to most forms of entities with taxable gross receipts of more than $150,000 in the calendar year, including individuals, pass-through entities and federally disregarded entities. Non-profit organizations, most governmental entities, certain receipts of public utilities subject to the public utility excise tax, financial institutions that pay the financial institution tax, insurance companies that pay the insurance premiums tax, certain affiliates of financial institutions, and businesses with less than $150,000 of taxable gross receipts are generally excluded from the CAT.
An out-of-state business or person is only required to register and pay the CAT if that business or person meets the bright-line presence test in Ohio. The bright-line presence test is satisfied if any one (1) of the following applies at any time during the calendar year:
1. Property in Ohio is at least $50,000; or
2. Payroll in Ohio is at least $50,000; or
3. Taxable gross receipts sourced to Ohio are at least $500,000; or
4. 25% of total property or total payroll or total gross receipts is in Ohio; or
5. The person/entity is domiciled in this state.
Taxpayers will utilize the previous calendar year’s taxable gross receipts to determine the current year’s annual minimum tax. For tax periods beginning on and after January 1, 2014, the annual minimum tax will become a tiered structure. See chart below.
|Taxable Gross Receipts||Annual Minimum Tax||CAT|
|$1 Million or less||$150||No Additional Tax|
|More than $1 Million but less than or equal to $2 Million||$800||0.26% x (Taxable Gross Receipts – $1 Million)|
|More than $2 Million but less than or equal to $4 Million||$2,100||0.26% x (Taxable Gross Receipts – $1 Million)|
|More than $4 Million||$2,600||0.26% x (Taxable Gross Receipts – $1 Million)|
Penalties may apply for the failure to timely file and pay the tax, including proceedings to revoke a person or business’ privilege to conduct business in this state. A late filed return is subject to a penalty of up to 10% of the tax due or $50, whichever is greater.
For questions or more information on the Ohio CAT go to http://www.tax.ohio.gov/commercial_activities