Commercial Activity Tax (“CAT”) Tax Base

Commercial Activity Tax (“CAT”) Tax Base. Perrigo Sales Corp. v. Harris, Slip Opinion No. 2026-Ohio-3648.

What is the amount “realized” for purposes of the Ohio CAT gross receipts tax base when the taxpayer actually receives something less than what was billed based upon an agreed to arrangement?

In this appeal, the manufacturer of prescription drugs selling wholesale invoiced its distributors the “list price” but distributors actually paid a price that was agreed to, and negotiated with, its customers (the retailers), essentially representing a “chargeback”.

What is the amount realized under such circumstances? Of course, it’s the amount actually received. The Court continued the “straightforward” application of the statute.

This case is important for not only this commonsense application of the statute but will also apply to reductions in gross receipts for discounts and rebates.

If you have any questions, please contact Steven A. Dimengo or Oliver S. Thomas.