Ohio – Commercial Activity Tax & Petroleum Activity Tax Changes

SALT Report 3075 – The Ohio Department of Taxation issued two information releases regarding the Commercial Activity Tax. CAT is an annual tax imposed on the privilege of doing business in Ohio and is based on the total gross receipts.  All businesses with taxable gross receipts of $150,000 or more in a calendar year are required to register for the CAT, file all returns, and make all payments.

CAT 2013-04/PAT 2013-01 – Commercial Activity Tax & Petroleum Activity Tax: New CAT Exclusion and Replacement Tax

This information release discusses recent legislative changes that affect the gross receipts derived from sales of motor fuels.  Specifically, the publication provides that effective July 1, 2014 receipts from the sale, transfer, exchange, or other disposition of motor fuels will be excluded from the definition of gross receipts for purposes of the CAT.

Instead, motor fuel suppliers will be required to pay the 0.65% replacement Petroleum Activity Tax.  PAT is a gross receipts tax similar to the CAT, in that it is based on a supplier’s gross receipts derived from the sale, transfer, exchange, or other disposition of motor fuel in the State.  However, unlike the CAT, there is no annual minimum tax, and there is no exclusion corresponding to that AMT.

This information release provides further guidance regarding the definition of a supplier, distribution systems, applying the PAT to exports, new licensing requirements, filing requirements, penalties, and refunds.

CAT 2013-05 – Commercial Activity Tax: Annual Minimum Tax Tiered Structure

This information release discusses recent legislative changes that affect the structure of the Annual Minimum Tax.  Currently, the Annual Minimum Tax is $150.  However, for all tax periods that occur on or after January 1, 2014, the AMT will be based on a tiered structure, and taxpayers will be required to pay an amount relative to their total commercial activity.

For example, taxpayers with $1 million or less in taxable gross receipts will continue to pay $150 AMT.  The AMT for taxpayers with taxable gross receipts between $1 and $2 million will be $800; AMT for taxpayers with taxable gross receipts between $2 million and $4 million will be $2,100; and AMT for taxpayers with taxable gross receipts in excess of $4 million will be $2,600.

For Further Information

Ohio Department of Taxation - CAT 2013-04/PAT 2013-01

Ohio Department of Taxation - CAT 2013-05