Recent Legislation Affecting Ohio Commercial Activity Tax (CAT)
The following changes to the CAT were enacted pursuant to H.B. 508 effective September 6, 2012, except as noted below:
- Annual Exclusion (effective January 1, 2013): Under previous law, quarterly taxpayers were required to use $250,000 of the annual exclusion each quarter, with the unused portion thereof carried forward for up to three subsequent periods. This allowed the exclusion to be carried forward to quarters in the next tax year in some circumstances. Now, quarterly taxpayers must use the $1 million exclusion on the taxpayer’s first quarter return. The unused exclusion may be carried forward for only the current tax year.
- Rate Changes: Removes the tax commissioner’s obligation to reduce the CAT rate based upon revenue actually collected during test periods since the last test period ended June 30, 2011. The tax commissioner did not adjust the rate.
- Exemption for Surplus Lines Insurers: “Surplus lines insurers,” who are not licensed to do business in Ohio, are exempt from the CAT to the extent their gross premiums are subject to the unauthorized insurance tax.
- Registration Fee Eliminated: The previous registration fee – $20 per person fee ($15 if registered online) with a maximum $200 per consolidated / combined group – is eliminated. Instead, a portion of the taxpayer’s first CAT payment is credited to the “Revenue Enhancement Fund” to cover the state’s cost to administer the CAT and implement tax reform measures.
- Registration Information: A taxpayer is no longer required to provide certain information on its CAT registration – its state or country of incorporation, names and addresses of corporate officers and agents, and the taxpayer’s annual accounting period. However, taxpayers are now required to include their organizational type and that of each member of the taxpayer’s combined or consolidated group, and the date the taxpayer is first subject to the CAT.