Information Release

CAT 2013-01 - Commercial Activity Tax: Change to the Million Dollar Exclusion - Issued February, 2013 

This information release is to provide notification to calendar quarter taxpayers of the recent legislative change to the application of the annual $1 million exclusion for purposes of the commercial activity tax (CAT). Prior to this change, a calendar quarter taxpayer would exclude $250,000 on each of the four quarterly returns in the calendar year (due May 10, August 10, November 10, and February 10). Any unused exclusion amount could be carried forward for three calendar quarters. However, for tax periods beginning on January 1, 2013 and thereafter, a taxpayer that pays on a quarterly basis will exclude the first $1 million of taxable gross receipts on its first quarter return and carry-forward any unused portion of the exclusion amount to subsequent quarters within the same calendar year. Finally, any unused amount from the calendar year 2012 may not be carried forward into calendar year 2013. 

For example, a taxpayer has the following taxable gross receipts in 2012 (1st Q $625,000; 2nd Q 150,000; 3rd Q $325,000; and 4th Q $400,000).  Such taxpayer’s taxable gross receipts and $1 million exclusion are reflected as follows:

 

May 10

August 10

November 10

February 10

Taxable Gross Receipts

$625,000

$150,000

$325,000

$400,000

Less Current Exclusion

$250,000

$250,000

$250,000

$250,000

Net Taxable Gross Receipts

$375,000

$0

$75,000

$150,000

Less Unused Exclusion

$0

$0

$100,000

$25,000

Net Taxable Gross Receipts

$375,000

$0

$0

$125,000

 
Further, for purposes of showing the change beginning January 1, 2013, a taxpayer has the following taxable gross receipts in 2013 (1st Q $625,000; 2nd Q 150,000; 3rd Q $325,000; and 4th Q $400,000). Such taxpayer’s taxable gross receipts and $1 million exclusion are reflected as follows:

 


May 10

August 10

November 10

February 10

Taxable Gross Receipts

$625,000

$150,000

$325,000

$400,000

Less Exclusion

$1,000,000

$375,000

$225,000

$0

Net Taxable Gross Receipts

$0

$0

$100,000

$400,000