CAT 2005-13 - Commercial Activity Tax: Estimated Payments for
Calendar Quarter Taxpayers -- Issued October, 2005; Revised
March, 2006
This rule specifies that quarterly taxpayers may make
estimated payments. This rule is now final and
effective. Please direct any questions to the
Commercial Activity Tax Division of the Ohio Department of
Taxation at 1-888-722-8829.
Rule 5703-29-09 Option for
quarterly taxpayers to make estimated payments.
(A) Division (C) of section 5751.05 of the Revised Code
allows the tax commissioner to grant written approval for a
calendar quarter taxpayer to use an alternative reporting
schedule or estimate the amount of tax due for the calendar
quarter if the taxpayer demonstrates the need for such
deviation. In addition, this section also grants the
commissioner the authority to adopt a rule to allow a group
of taxpayers such deviation without prior written
approval. Pursuant to this authority, the commissioner
hereby grants authority for all calendar quarter taxpayers,
and all taxpayers for the semi-annual period for 2005, to
make estimated payments of their tax if done pursuant to the
procedures prescribed in the following paragraphs.
(B) A calendar quarter taxpayer is allowed to file its
commercial activity tax return and make an estimated payment
of tax due thereon within forty days after the end of the
calendar quarter if all the procedures set forth in this rule
are followed.
(1) A calendar quarter taxpayer electing to make an estimated
payment shall do all of the following for this rule to apply:
(a) Check the “rule estimation” box on the return, report the
appropriate estimate of taxable gross receipts, and pay the
appropriate amount of estimated tax. Taxpayers seeking to use
the “statutory estimation” provided for under division (A)(2)
of section 5751.051 of the Revised Code shall check that box
and shall not use this rule for any calendar quarter in that
entire calendar year.
(b) Make an estimated payment of the tax using the tax rate
in effect for the calendar quarter for which the estimated
payment is being made. Any minimum annual tax amount that is
owed is in addition to the estimated tax determined pursuant
to this rule.
(c) On or before the due date of the return for the following
calendar quarter, the taxpayer must reconcile its actual tax
for the calendar quarter for which the estimate was made,
using either a form prescribed by the commissioner for such
purpose or the actual return. The taxpayer must calculate its
actual tax using the tax rate in effect for that quarter for
which the estimated payment is made, file its reconciliation
report reconciling its actual tax with its estimated tax for
that quarter, and, if applicable, pay any underpayment of the
actual tax owed for that quarter. If the taxpayer’s estimate
results in an overpayment of tax, such overpayment will be
applied to the next tax return/report. If, after
applying the overpayment to such next tax return/report an
overpayment remains, such remaining overpayment may be
refunded or carried forward to the subsequent return/report
filed by the taxpayer. A taxpayer making an election under
this rule must file the return for the following calendar
quarter. The return for that calendar quarter may again be
estimated in accordance with this rule.
(d) In order for this rule to apply, both the estimated
payment return/report and the reconciliation report/return,
along with all applicable payments for those tax periods,
must be made timely, and the taxpayer must not have any
outstanding commercial activity tax liability.
(2) A taxpayer electing to make an estimated payment, as
prescribed by paragraph (B)(1) of this rule, and subject to
paragraph (B)(3)(a) and (b) of this rule, must estimate its
taxable gross receipts as at least ninety-five percent of the
taxable gross receipts from the previous quarter, after
deducting the applicable exclusionary amount of two hundred
fifty thousand dollars. However, in no event shall a
taxpayer’s estimated payment for a given calendar quarter be
less than the seventy percent of its actual tax liability for
that calendar quarter. In the event a taxpayer’s previous
calendar quarter’s taxable gross receipts exceed its current
quarter’s taxable gross receipts, such taxpayer’s estimated
tax liability for the quarter is only required to equal or
exceed one-hundred percent of its tax liability for that
period.
(3)(a) For the first quarter of 2006, a taxpayer who elects
to make an estimated return and payment must estimate its
taxable gross receipts as at least forty-eight percent of the
actual taxable gross receipts for the semi-annual period of
July 1, 2005 through December 31, 2005.
(b) For the first quarter returns due for 2007, 2009 and
2011, taxpayers who elect to make an estimated return and
payment for these calendar quarters must make their estimate
using at least one hundred percent of the actual taxable
gross receipts from the previous calendar quarter.
(C) Notwithstanding paragraph (B) of this rule, for the
semi-annual period of July 1, 2005 through December 31, 2005,
any taxpayer may elect to make an estimated payment by
checking the “rule estimation” box on the semi-annual report.
Such taxpayer must estimate its tax due and pay this
estimated amount at the time the taxpayer files the
report. Any taxpayer who elects to estimate its tax due
is then required to file a reconciliation report along with
its first quarterly return for 2006 for calendar quarter
taxpayers or with the annual fee for calendar year taxpayers,
both of which are due by May 10, 2006. Such
reconciliation must reflect the actual tax due for the
semi-annual period and any additional tax due must be paid at
this time. The taxpayer’s estimated payment of the tax for
this semi-annual period must be the greater of seventy five
dollars or six-tenths of one per cent times the difference
between (1) at least eighty-five percent of the actual
taxable gross receipts for the semi-annual period and (2) the
five hundred thousand dollars exclusionary amount.
(D) Any taxpayer who elects to estimate its tax using this
rule shall not estimate its tax using the statutory
estimation procedure contained in division (A)(2)(b) of
section 5751.051 of the Revised Code for any calendar quarter
in that entire calendar year.
(E) Interest and penalties will not be imposed on payments
made pursuant to this rule provided the taxpayer fully
complies with this rule. In other words, such payments
will be considered to be made timely. A taxpayer who elects
to estimate its tax under this rule agrees to have any
overpayment automatically be applied to the taxpayer’s next
commercial activity tax report filed.
(F) Except as provided for in paragraph (C) of this rule, a
calendar year taxpayer may not use this rule.
Example
For example, assume a taxpayer for the second calendar
quarter of 2006 elects to make an estimated payment
pursuant to this rule. For this example, the taxpayer’s
actual taxable gross receipts for the first calendar
quarter after its applicable exclusion were $8,000,000. On
August 9, 2006, the taxpayer files its second calendar
quarter return and checks the “rule estimation” box. In
making the estimated payment, the taxpayer calculates an
estimated liability after its $250,000 exclusion of $7,644
[.00104 * ($7,600,000 - $250,000)]. In order to be
covered by the safe harbor, the taxpayer makes an
electronic payment of $7,644. Such taxpayer meets the 95%
threshold required to avoid the imposition of interest and
penalties when it reconciles its report at the beginning of
the third calendar quarter.
When reconciling the second calendar quarter return when
filing its third quarter return the taxpayer determines its
actual taxable gross receipts for the second quarter to be
$8,500,000. The taxpayer applies the effective tax rate for
the second quarter to its actual taxable gross receipts net
of its $250,000 exclusion, resulting in a tax liability of
$8,580 [.00104 * ($8,500,000 - $250,000)].
On November 9, 2006, the taxpayer will be required to
electronically file its reconciliation report, reflecting
an additional $936 tax due ($8,580 actual tax liability for
the second calendar quarter, less the $7,644 estimated
payment). At the same time, the taxpayer must timely file
its third calendar quarter return/report and may elect to
make an estimated payment for the third quarter (based on
the taxpayer’s second calendar quarter actual taxable gross
receipts).