Attention, businesses: The Ohio Department of Taxation reminds taxpayers that the first quarter 2019 commercial activity tax (CAT) return is due on 5/10/19. Taxpayers must file and pay the CAT electronically via the OH Business Gateway at http://bit.ly/2Ph4DoL.   The department suggests that taxpayers begin filing their returns early, because the Gateway system has been modernized, and the changes may slow them down a bit on first use. Annual taxpayers also may file and pay using the department’s TeleFile system at 1-800-697-0440.

Who is subject to the CAT?

The CAT applies to most businesses including but not limited to retail, wholesale, service, manufacturing, as well as rental properties and other general businesses regardless of the type of business organization such business operates. For example, sole proprietorships, partnerships, LLCs, S corporations, corporations, disregarded entities, trusts, and all other type of associations with taxable gross receipts of more than $150,000 in the calendar year are subject to the CAT.

If multiple entities have over 50% of the same owner, all must be combined for the $150,000 gross receipts test.  These entities must file a combine return, which simply adds together all their gross receipts.  They may elect, however, to file a consolidated return, which eliminates inter-company revenues, and could reduce the tax if the gross receipts are over $1 million.

For example, an owner who owns more than 50% of, say, an S-Corporation business which rents its facility which the owner holds personally or in a separate entity, must combine the receipts of both, unless consolidated filing has been elected.

The CAT is a fairly simple tax to calculate and file in most cases, but there are plenty of situations which require further explanation and planning, especially for businesses which have over $1 million of gross revenue or sell directly to out-of-state (non-Ohio) customers.  If you would like more information, please contact us at 614-418-1775.