Ohio Commercial Activity Tax: Proposed Rule Allows Retroactive Consolidated Filing Election

In our previous post, we explained the Ohio Department of Taxation proposed a regulation change to limit a taxpayer’s ability to make a retroactive consolidated filing election for Ohio Commercial Activity Tax purposes (CAT). The rule change is in response to a BTA decision where a taxpayer was permitted to make a retroactive consolidated filing election even after an audit had commenced. See our post about Nissan North America, Inc. v. McClain, Ohio BTA Case No. 2016-1076 (October 9, 2019). Ohio has revived the proposed rule change, but no hearing date has been set.

The proposed change to OAC 5739-29-02 would allow the taxpayer to make a retroactive consolidated filing application as long the taxpayer was previously registered for the CAT, had not been previously contacted for audit or investigation, and its originally filed returns reflected the intent to file on a consolidated basis (i.e., the election would not affect the original tax liability). A taxpayer would also be able to make the election through Ohio’s Voluntary Disclosure Program.

A consolidated election is essential for commonly-owned taxpayer groups with significant intercompany transactions. Such businesses should review their current CAT registration status and determine if they should elect a consolidated filing, especially if they have already been contacted for audit. Alternatively, if businesses have not been filing the CAT but have business activity in Ohio mandating a filing, voluntary disclosure is another option for pursuing consolidated filing status.

If you have questions about consolidated election for commonly-owned taxpayers or Ohio’s Commercial Activity Tax, please do not hesitate to contact us.

Attorney Steven A. Dimengo is Managing Partner of Buckingham, Doolittle & Burroughs, LLC. He helps clients with complicated tax challenges including Ohio sales/use, income, commercial activity and federal taxes and has represented clients before the Ohio Supreme Court. Steve can be reach at [email protected] or 330.258.6460.

Richard B. Fry III is a partner and Buckingham’s Taxation Practice Group Chair. He focuses on state and local tax compliance and controversies, including Ohio and multistate sales/use tax, commercial activity tax, and personal income tax issues. Rich can be reached at [email protected] or 330.258.6423

Nathan M. Fulmer is an associate in Buckingham’s Taxation Practice Group. He represents clients on a broad range of tax planning and controversy matters. His joint degree in taxation allows him to provide unique solutions when assisting clients on business matters. Nate can be reached at [email protected] or 330.258.6464.

 About Buckingham, Doolittle & Burroughs:

Buckingham, Doolittle & Burroughs, LLC is a corporate law firm that counsels middle-market executives and business leaders all over Ohio and beyond. With offices in Canton, Akron, and Cleveland, Buckingham offers clients Business Law Reimagined through sophisticated and practical legal services. Serving the region for more than 100 years, Buckingham’s mission is to deliver meaningful experiences through the practice of law, exceed expectations in terms of service, counsel and business sense, and to offer continuous value to the industries, communities and clients they serve. For more information, news and updates, visit bdblaw.com.