What is corporation franchise tax?
For tax years 2009 and prior, the Ohio corporation franchise tax was an excise tax imposed on corporations (other than nonprofit corporations) for the privilege of exercising their corporation franchise in Ohio. The tax applied to both domestic corporations (those incorporated in Ohio) and foreign corporations (those incorporated outside of Ohio) for the privilege of doing business in Ohio, owning capital or property in Ohio, holding a charter or certificate of compliance authorizing the corporation to do business in Ohio, or otherwise having a presence (nexus) in Ohio during a calendar year. Unless an exemption applied, a corporation that had nexus in or with Ohio under the Constitution of the United States was subject to the corporation franchise tax. Please refer to FAQ #3 and #4 regarding the phase-out of the franchise tax.
Note: For most taxpayers, the corporation franchise tax was ratably phased out over the franchise tax years 2006 through 2010 (taxable years ending in 2005 through 2009). During this same period Ohio’s commercial activity tax (CAT) phased in. Please refer to FAQ #3 and #4 regarding the phase-out of the franchise tax, and the informational release, CFT 2010-01 which can be located on our Web site. In addition, there are no franchise tax payments or filing obligations for report year 2010 and thereafter for most taxpayers.
For those corporations still subject to the franchise tax, prior filing and payment requirements apply. Financial institutions file form FT 1120FI; all other corporations still subject to the franchise tax must file form FT 1120.
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