FAQs - Commercial Activity Tax (CAT)

I registered as an annual taxpayer and my receipts for the calendar year now exceed the $1 million threshold. When and how do I become a quarterly taxpayer?

A calendar year taxpayer that will have over $1 million in taxable gross receipts for a calendar year is required to switch to a quarterly taxpayer in the subsequent year and, if it elects to, can switch to a quarterly taxpayer at any time during the current calendar year.

Beginning in calendar year 2013, a taxpayer switching from a calendar year tax period to a calendar quarter tax period may, for the first quarter of the change, apply the full $1 million exclusion amount to the first calendar quarter return the taxpayer files that calendar year. Such taxpayers may carry forward and apply any unused exclusion amount to subsequent calendar quarters within that same calendar year. The tax rate shall be based on the rate imposed that calendar quarter when the taxpayer switches from a calendar year to a calendar quarter tax period.

For calendar year 2012 and prior, a taxpayer switching from a calendar year tax period to a calendar quarter tax period may, for the first quarter of the change, apply the prior calendar quarter exclusion amounts to the first calendar quarter return the taxpayer files that calendar year. The tax rate shall be based on the rate imposed that calendar quarter when the taxpayer switches from a calendar year to a calendar quarter tax period.