Taxable Gross Receipts for Ohio Commercial Activity Tax (CAT)

The privilege of doing business in Ohio comes at a cost. Since July 1, 2005, Ohio has imposed an annual Commercial Activity Tax (“CAT”) on taxpayers doing business in Ohio. The CAT is measured by a taxpayer’s “taxable gross receipts” accumulated during the tax period, which for most taxpayers will be the calendar year.

Generally, any individual or business entity that is required to register or pay tax under Ohio law is subject to paying Ohio’s Commercial Activity Tax. There are certain “excluded taxpayers” including any taxpayer with $150,000 or less of “taxable gross receipts”, non-profit organizations, governmental entities, and others.

When determining if a taxpayer is subject to paying the CAT, a lot of the analysis focuses on what is and is not a “taxable gross receipt” under Ohio law. To determine what is a “taxable gross receipt” a taxpayer must undergo a three-step evaluation that starts with determining what is a “gross receipt” under Ohio law. Then a taxpayer must situs (or source) those “gross receipts” to Ohio in order to calculate their total “taxable gross receipts.” Lastly, a taxpayer must include all “taxable gross receipts” for the current tax period in their calculation. After the three steps have been completed a taxpayer’s total “taxable gross receipts” will then determine the remaining obligations a taxpayer has under Ohio’s Commercial Activity Tax.

To learn more about what is and is not a “taxable gross receipt” visit the Farm Office Team’s blog post that explains the “taxable gross receipt” process.



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