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Ohio Implements Multiple Tax Changes

State and Local Tax

By Jennifer Koehler

As of January 1, 2014, commercial activity tax (CAT) taxpayers are required to pay an annual minimum tax ranging from $150 to $2,600, based on the amount of the taxpayer’s annual taxable gross receipts.  The minimum tax for taxpayers with annual taxable gross receipts for the calendar year is as follows:

  • $1 million or less - $150
  • Greater than $1 million but less than or equal to $2 million - $800
  • Greater than $2 million but less than or equal to $4 million - $2,100
  • Greater than $4 million - $2,600

Taxpayers eligible to cancel their account must do so on or before May 10th in order to avoid being subject to the minimum tax requirements.  Sec. 5751.03, Ohio R.C.

Effective July 1, 2014, taxpayers required to file a motor fuel tax return must file and remit payment electronically using the Department’s eTRACS system.  The eTRACS system is accessible through the Department's website or through the state treasurer’s electronic funds transfer process.  Taxpayers may file a request for exception to the electronic filing and payment requirements with the tax commissioner. 

H.B. 492, Laws 2014, recently signed by Governor John Kasich, included motor fuel taxes provisions that:

  • Consolidate the existing exporter type A and type B licenses into a single exporter's license;
  • Require persons that deliver fuel into the state, such as railroad, pipeline, and water transportation companies, to register with the state as transporters;
  • Authorize the tax commissioner to assess a penalty of up to $50 on any person that fails to file a timely report, including parties not required to pay fuel taxes;
  • Authorize the tax commissioner to require motor fuel dealers to remit tax payments electronically and modify penalties for failing to file electronically;
  • Modify information disclosed to the public by the tax commissioner on motor fuel dealers; and
  • Remove the requirement that a taxpayer obtain a permit before receiving certain types of motor fuel tax refunds.

Governor Kasich additionally signed legislation that amends the petroleum activity tax provisions to include: 

  • Beginning July 1, 2014, the motor fuel receipts tax is renamed the petroleum activity tax (PAT).  The tax is not based on the actual gross receipts but on a calculated basis that involves multiplying the number of gallons first sold in Ohio by a taxpayer by the average price-per-gallon index.
  • Effective July 1, 2015, the determination of the first sale of motor fuel within Ohio is amended to refer to the initial sale to a point outside the distribution system, without regard to where the title transfers or other conditions of sale.
  • Effective July 1, 2015, motor fuel exchanges are exempt from the PAT. A "motor fuel exchange" means an "exchange of motor fuel between two or more suppliers, licensed motor fuel dealers, or licensed permissive motor fuel dealers if delivery occurs at a refinery, terminal, pipeline, or marine vessel, and if the parties agree that neither party requires monetary compensation from the other party for the exchanged fuel other than compensation for differences in product location, grade, or handling."

The bill explicitly advises that a taxpayer may separately or proportionately bill or invoice the PAT paid by the taxpayer to the purchaser of motor fuel.

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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.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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