State and Local Tax Issues

The Ohio Commercial Activity Tax was fully phased-in as of March 31, 2009. For those taxpayers with Ohio gross receipts between $150,000 and $1 million, the tax is $150. For taxpayers with Ohio gross receipts over $1 million, the tax is $150 plus a .26% tax of any Ohio gross receipts over $1 million.

Several key changes include:

1.      The Ohio personal property tax has been completely phased out. For most businesses the final report was the 2009 personal property tax report.

2.      The Ohio franchise tax has been completely phased out. The filing of 2009 franchise tax report was the final report for both C-corporations and S-corporations. 

The Ohio Department of Taxation (“the Department”) has provided guidance on several changes to the due date of the minimum tax. Beginning 2010, the $150 annual minimum tax will be due no later than May 10^th of each year with the annual return for calendar year taxpayers or with the first quarter return for calendar quarter taxpayers, a change from the original February 9^th which will benefit most taxpayers.

The Department also provided some consistency for quarterly CAT filers. Quarterly CAT returns are now due the 10^th day of the second month following the end of the quarter or May 10^th [January 1 – March 31 quarter], August 10^th [April 1 – June 30 quarter], November 10^th [July 1 – September 30 quarter] and February 10^th [October 1 – December 31 quarter].

The Department also changed the date to cancel a CAT account. That date has been moved to May 10^th of the tax year. If a CAT account is cancelled by May 10^th, the taxpayer is not subject to the annual minimum tax. 

See the Department’s information release CAT 2009-01 - http://tax.ohio.gov/divisions/communications/information_releases/CAT/cat_2009_01.stm

Looking for assistance with State and Local Tax Issues? Contact us at 440-449-6800 or visit our State and Local Tax Services Web page.

Effective January 1, 2010, Ohio has made a few changes to the way sales of tangible personal property and taxable services are sourced. According to the Ohio Department of Taxation, the purpose of sourcing is to determine the location of the sale for sales tax purposes. If a sale is taxable, the sourcing of the sale will determine the appropriate jurisdiction’s tax rate for the seller to charge.

Below is guidance on the Ohio sales tax sourcing rules.

1. Ohio vendors who sell tangible personal property to Ohio consumers are required to collect sales tax based on where the order is received (origination) rather than the delivery location.  Those vendors who previously switched to destination sourcing are now required to switch back.   

Penalties will not be assessed so long as the vendors are compliant by April 1, 2010.

2. Sales of tangible personal property by out-of-state sellers to Ohio consumers will be sourced to where the consumer receives the tangible personal property. 

3. Sales of services (regardless of whether the provider is in Ohio or outside Ohio) should be sourced to the location where the consumer receives the service.

For a complete description from the Ohio Department of Taxation, please click here.

Looking for assistance with State and Local Tax Issues? Contact us at 440-449-6800 or visit our State and Local Tax Services Web page.