FAQs - Corporation Franchise Tax

What is the exit tax?

An exiting corporation is subject to an income-based exit tax on the corporation’s unreported Ohio net income that was earned in the two calendar years prior to the tax year to the extent that such income was not included on a previous corporation franchise tax report. An exiting corporation is a corporation which previously had nexus with Ohio, but as of Jan. 1 of the tax year no longer has nexus (because, for example, prior to Jan. 1 of the tax year the corporation merged out of existence, dissolved its Ohio charter or surrendered its license to conduct business in Ohio). The exit tax does not apply to an exiting financial institution. The same deduction, apportionment, allocation and credit provisions that apply to the corporation franchise tax also apply to the exit tax. However, an exiting corporation is not subject to tax on the net worth base and is not subject to the minimum fee. See R.C. 5733.06(H).