COMMERCIAL ACTIVITY TAX: Number of Taxpayers and Tax Return Data, Fiscal Year 2016
The commercial activity tax went into effect on July 1, 2005. It is a privilege tax measured by gross receipts from activities in this state. The tax is a key component of the 2005 tax reform package enacted by Am. Sub. House Bill 66 (126th General Assembly). Major business tax components of the act consist of the phase-out of both the tangible personal property tax and the corporate franchise tax and the phase-in of the commercial activity tax.
The tax is levied and paid on a quarterly or annual basis. In general, persons with annual gross receipts of $150,000 or less are not subject to the commercial activity tax, and filers with more than $150,000 but less than or equal to $1 million taxable gross receipts in the previous calendar year pay the $150 annual minimum tax, and file an annual return.
Filers with over $1 million in taxable gross receipts are required to pay an annual minimum tax and additional tax at a rate of 0.26% of taxable gross receipts that have been reduced by a $1 million exclusion to taxable gross receipts. The annual minimum tax is $150 for filers with more than $150,000 but less than or equal to $1 million taxable gross receipts in the previous calendar year. The annual minimum tax is $800 for filers with more than $1 million but less than or equal to $2 million taxable gross receipts in the previous calendar year. The annual minimum tax is $2,100 for filers with more than $2 million but less than or equal to $4 million taxable gross receipts in the previous calendar year. The annual minimum tax is $2,600 for filers with more than $4 million taxable gross receipts in the previous calendar year.
The attached CAT-1 and CAT-2 tables reflect information reported quarterly returns for the quarterly obligation periods July 1, 2015 to June 30, 2016, encompassing FY 2016. The quarterly CAT returns for these time periods were due in November 2015, February 2016, May 2016, and August 2016, respectively. Also included in this table are annual returns based on calendar year 2015, due in May 2016. The table includes tax returns received by the Department of Taxation on or after July 1, 2015 to on or before September 30, 2016, any original or amended returns filed after September 30, 2015 are not reflected in this table. Each combined taxpayer group and each consolidated elected taxpayer group is shown as a single filer in these tables.
As shown in these tables, the total reported commercial activity tax liability before credits for fiscal year 2016 was approximately $1,842.7 million. Of this amount approximately $101.1 million was attributable to the annual minimum tax and approximately $1,741.6 million was attributable to the 0.26% tax rate. Taxable gross receipts amounted to approximately $756.4 billion but the exclusion available on each return reduced taxable gross receipts to net taxable gross receipts, which amounted to approximately $669.9 billion.
Table CAT-1 shows tax return information for 19 industrial sectors. The industrial sector data is based on each filer’s reported primary business activity, using the North American Industry Classification System (NAICS). The combined taxpayer group or consolidated elected taxpayer group is reported under the primary filer’s industry code. In fiscal year 2016, the retail sector comprised the largest group of taxpayers, and accounted for 12.0% of all taxpayers. This was followed by taxpayers in the manufacturing (11.0%), construction (10.3%), and professional, scientific and technical services (10.2%) categories. In terms of net tax liability, manufacturers accounted for the largest share at 23.8% of the total. The retail (21.1%) and wholesale (12.8%) sectors accounted for the next largest shares of total liability.
Table CAT-2 provides tax return information based on the size of each filer’s taxable gross receipts (prior to the exclusion). Each combined taxpayer group and each consolidated elected taxpayer group is shown as a single filer, and the filer’s gross receipts determine the size category in which the group is placed. Filers whose fiscal year 2016 taxable gross receipts were less than $1 million accounted for approximately 64.2% of all returns, but less than 1.0% of the net total liability. Filers with taxable gross receipts of $1 billion and above comprised less than 0.1% of all returns but accounted for approximately 20.2% of net total tax liability.
Data contained in these tables was derived from commercial activity tax returns filed by taxpayers with the Ohio Department of Taxation.