The recent enactment of H.B. 33 of the 135th Ohio General Assembly has changes that may eliminate the requirement for many businesses to file the Ohio CAT tax. H.B. 33 increases the CAT exclusion to $3 million in taxable gross receipts for tax periods beginning in 2024 and $6 million for tax periods beginning in 2025. The CAT rate will remain at .26% for taxpayers with taxable gross receipts exceeding these increased exclusion amounts. Combined or consolidated elected taxpayer groups are treated as one taxpayer. The annual filing minimum tax (AMT) will be eliminated after the 2023 annual return. Only quarterly returns will be accepted beginning in the calendar year 2024.
What This Means for Taxpayers
Annual taxpayers must file their 2023 return by May 10, 2024. Since the annual minimum tax for 2023 was prepaid with the 2022 return, no tax will be due with the final return unless taxable gross receipts exceeded $1 million in 2023. If they will no longer be required to file CAT tax starting in 2024, annual taxpayers will need to cancel their CAT accounts when filing their final 2023 returns and use an effective date of December 31, 2023.
Quarterly taxpayers must file returns for all four quarters of 2023 by February 12, 2024. If taxpayers anticipate that their taxable gross receipts in 2024 will be less than $3 million, they should cancel their CAT accounts and use an effective date of December 31, 2023. Likewise, if taxpayers anticipate that their taxable gross receipts in 2025 will be less than $6 million, they should cancel their CAT account after filing their returns for 2024.
Though the annual filing will be eliminated, and the exclusion amounts increased in the calendar years 2024 and 2025, all registered CAT taxpayers with active accounts will still be required to file returns. Taxpayers who do not cancel their CAT accounts and fail to file the required returns may receive delinquency notices and assessments.
Taxpayers can cancel their CAT account two ways. The first way is on the Gateway by using the CAT Cancel Account transaction. The second, and easiest way, will be by clicking on the new checkbox on your 2023 CAT annual return or your 2023 fourth quarter return. This checkbox will automatically cancel your account back to 12/31/2023.
Click the link below to read more from the Ohio Department of Taxation on the topic of CAT Changes.
Our team at Holbrook & Manter is a resource for any questions you have regarding these changes or to provide assistance with cancelling your account.