OH School District Income Tax: Failure to File Notices

The Ohio Department of Taxation began sending Failure to File notices by regular mail on June 5, 2017 to taxpayers who:

  • Have not filed an Ohio School District Income Tax Return Form SD 100 for 2013, 2014 and/or 2015; and
  • Appear to have lived in a taxing school district based on the school district number and/or mailing address reported on the taxpayer’s Ohio Individual Income Tax Return (Ohio Form IT-1040) filed for 2013, 2014, and/or 2015.

To learn more about the Ohio School District Income Tax, read their Guide.

If you receive(d) a notice and need assistance, please contact a member of our State and Local Tax Team.


Smashburger Sales Tax Trouble

Personally, I’m a fan of Smashburger.  However, it appears that the Ohio Department of Taxation is not so much. Three central Ohio franchise locations were shut down a couple weeks ago for their failure to file and pay sales tax.  The franchisee is reported to have been delinquent on a little over $15,000 in sales tax remittances.  This serves as a good reminder that states are serious about fiduciary taxes (such as sales tax, and payroll tax).  They are getting better at identifying delinquencies and are quicker to enforce action.  Learn more in a recent Biz Journal article.

Basic Information on the Ohio Commercial Activity Tax (CAT)

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

State and Local Tax Amnesty Programs for 2014

Now that 2013 has come to a close, a large number of state and local tax amnesty program have expired; however, a couple still remain in effect. Vermont, Delaware, Louisiana, and to a lesser degree California, Tennessee, and Ohio still have programs in place to waive certain penalties and interests. The Sales and Use Tax Institute and the Council on State Taxation both keep pretty good tabs on amnesty programs as they become active. To make sure that you are up-to-date on new and upcoming amnesty programs keep a close eye on these two sites.

REMINDER! Ohio Consumer Use Tax Amnesty Ends May 1

From the Ohio Department of Taxation:

“The Ohio Department of Taxation has reminded taxpayers that the consumer’s use tax amnesty program ends May 1, 2013. Eligible companies may qualify to pay past liability and avoid penalty and interest. A company that is behind on consumer’s use tax payments and has not received an assessment notice may qualify for amnesty. An application must be postmarked by May 1 in order to be considered.”

Subscribers can view the notice.


Tax Alert, Ohio Department of Taxation, January 28, 2013