CAT registration lower than expected in Ohio

| Monday, December 12, 2005

Less than 30 percent of businesses anticipated to register for Ohio’s new corporate activity tax program had actually registered for the tax a week after the registration deadline passed.

When Ohio rolled out its new Commercial Activity Tax – dubbed CAT – as part of a tax package to simplify the state’s tax code July 1, a Nov. 15 registration deadline was set.

The Akron Beacon Journal reported state officials had estimated that between 350,000 and 400,000 businesses would register by the Nov. 15 deadline. Only about 93,000 had actually registered as of the deadline.

“We are not panicking at this point,” Gary Gudmundson, communications director for the department of taxation told the Beacon Journal. “Our experience with other taxes is that people wait until the last minute. Clearly that is a factor here.”

Delinquent registrations face a $100 per month penalty for each month after the deadline that passes. The penalty tops out at $1,000.

The Commercial Activity Tax is being phased in during the next five years while two other business taxes – the corporation franchise and tangible personal property taxes – are being phased out for most businesses, according to a Ohio Department of Taxation press release on the tax.

Ohio-based companies with more than $150,000 in taxable gross receipts in a calendar year and out-of-state companies doing business in Ohio must register for the tax under provisions of the state’s most recent two-year budget bill that took effect July 1.

An Ohio Department of Taxation spokesman confirmed that gross receipts will be determined based off Ohio IFTA miles. So, whatever percentage a trucker or company runs in Ohio will be calculated against the total gross receipts. For example, if a trucker grosses $300,000 in a year and runs half of his or her miles in Ohio, the tax will be levied against $150,000 – which be a minimum fee of $75 this year and $150 a year starting in 2006.

The first return is due Feb.10, 2006.

Truckers with CAT questions are encouraged to visit tax.ohio.gov or call 1-888-722-8829.

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