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    Are You Confused by the Commercial Activity Tax (CAT)?

    [fa icon="clock-o"] Jun 17, 2015 9:27:00 AM [fa icon="user"] Mary Lindow [fa icon="folder-open'] Financial Management, For Accountants

    You are not alone. The CAT is an annual tax imposed for the privilege of doing business in Ohio. The CAT is on taxable gross receipts from most business activities in Ohio. Most sales generated in the ordinary course of business are subject to the CAT. The CAT only applies to those gross receipts that are sitused (sourced) to Ohio. In other words, the sale is to another entity in Ohio.

    CAT

    Who is Subject to the CAT?

    The CAT applies to most businesses including but not limited to the following:

    • Retail
    • Wholesale
    • Service
    • Manufacturing
    • Other general businesses

    The type of business organization does not matter.  The following are subject to the CAT:

    • Sole Proprietorships
    • Partnerships
    • LLC’s
    • S corporations
    • C corporations
    • Disregarded entities
    • Trusts

    All these business are subject to the CAT if their taxable gross receipts are greater than $150,000 in the calendar year.

    There are a few businesses that are exempt from the CAT. They include the following:

    • Non-profit organizations
    • Most governmental entities
    • Some public utilities
    • Dealers in intangibles that pay the Ohio dealers intangibles tax
    • Financial institutions that pay the business franchise tax
    • Insurance companies that pay the insurance premiums tax

    Every company that falls into one of above taxable categories must register with the State of Ohio to pay the CAT. They can do this on the Ohio Business Gateway websiteThe Ohio Business Gateway offers electronic registration and filing tools for the CAT. 

    How do I Calculate my CAT?

    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 (paid  Quarterly)

     .26% x (taxable gross  receipts - $1 million)

     More than $2 million but less than or  equal to $4 million

     $2,100

     .26% x (taxable gross  receipts - $1 million)

     More than $4 million

     $2,600

     .26% x (taxable gross  receipts - $1 million)

    When is my CAT due?

    Annual Payers (less than $1 million in annual sales) the annual minimum tax of $150 is due 5.11.15.

    Quarterly Payers (more than $1 million in annual sales)

    2014 4Q is due 2.10.15

    2015 1Q is due 5.11.15

    2015 2Q is due 8.11.15

    2015 3Q is due 11.10.15

    For more information regarding the CAT, please visit the Ohio Department of Taxation's website here

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    Mary Lindow

    Written by Mary Lindow