OUR THOUGHTS ON:

Ohio Commercial Activity Tax (CAT) - Jeopardy Assessments

State and Local Tax

By Mark Rossetti

When enacting the CAT statute, it appears that the Ohio legislature failed to include language authorizing the Ohio Department of Taxation to enter into mutually agreeable waivers with taxpayers to extend the statute of limitations.

The statute of limitations on the first reporting period for the CAT tax (July 1, 2005 through December 31, 2005) is set to expire on February 10, 2010. Since there is no statutory authority permitting the Department to extend the four-year statute with a waiver, it is issuing jeopardy assessments for those taxpayers under audit. It is important for those taxpayers to have their relevant information for the 2005 reporting period in order and readily available for review by the Ohio Department of Taxation. If not, they face the likely prospect of being issued a jeopardy assessment, typically for an amount much larger than the actual tax due. They will then have to file an appeal for a proper determination to the Ohio Board of Tax Appeals (BTA). 

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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