Changes to the Ohio Commercial Activity Tax

By Brian Ravencraft

The recent enactment of H.B. 33 of the 135th Ohio General Assembly has changes that may eliminate the requirement for many businesses to file the Ohio CAT tax. H.B. 33 increases the CAT exclusion to $3 million in taxable gross receipts for tax periods beginning in 2024 and $6 million for tax periods beginning in 2025. The CAT rate will remain at .26% for taxpayers with taxable gross receipts exceeding these increased exclusion amounts. Combined or consolidated elected taxpayer groups are treated as one taxpayer. The annual filing minimum tax (AMT) will be eliminated after the 2023 annual return. Only quarterly returns will be accepted beginning in the calendar year 2024.

What this means for taxpayers

Annual taxpayers must file their 2023 return by May 10, 2024. Since the annual minimum tax for 2023 was prepaid with the 2022 return, no tax will be due with the final return unless taxable gross receipts exceeded $1 million in 2023. If they will no longer be required to file CAT tax starting in 2024, annual taxpayers will need to cancel their CAT accounts when filing their final 2023 returns and use an effective date of Dec. 31, 2023.

Quarterly taxpayers must file returns for all four quarters of 2023 by Feb. 12, 2024. If taxpayers anticipate that their taxable gross receipts in 2024 will be less than $3 million, they should cancel their CAT accounts and use an effective date of Dec. 31, 2023. Likewise, if taxpayers anticipate that their taxable gross receipts in 2025 will be less than $6 million, they should cancel their CAT account after filing their returns for 2024.

Though the annual filing will be eliminated, and the exclusion amounts increased in the calendar years 2024 and 2025, all registered CAT taxpayers with active accounts will still be required to file returns. Taxpayers who do not cancel their CAT accounts and fail to file the required returns may receive delinquency notices and assessments.

Taxpayers can cancel their CAT account two ways. The first way is on the Gateway by using the CAT Cancel Account transaction. The second, and easiest way, will be by clicking on the new checkbox on your 2023 CAT annual return or your 2023 fourth quarter return. This checkbox will automatically cancel your account back to 12/31/2023.

You can visit the Ohio Department of Taxations website for more information. That web address is: https://tax.ohio.gov/.

Brian E. Ravencraft, CPA, CGMA is a Principal with Holbrook & Manter, CPAs. Brian has been with Holbrook & Manter since 1995, primarily focusing on the areas of Tax Consulting and Management Advisory Services within several firm service areas, focusing on agri-business and closely held businesses and their owners. Holbrook & Manter is a professional services firm founded in 1919 and we are unique in that we offer the resources of a large firm without compromising the focused and responsive personal attention that each client deserves. You can reach Brian through www.agribusinessaccounting.com or www.HolbrookManter.com

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