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Changes Coming to Ohio Sales and Use Tax Rate and the Commercial Activity Tax

July 29, 2013

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On June 30, 2013, Governor Kasich signed into law Ohio House Bill 59, which contains a few provisions affecting state taxes.  The Bill includes several sales and use tax provisions including the following:

  1. Effective September 1, 2013, the state sales tax rate will increase from 5.5% to 5.75%.
  2. “Digital Products” will be subject to sales and use tax. Digital products include electronically transferred audiovisual works, digital audio works and digital books. Note that digital products do not include sales to or by a cable service provider, video service provider, or broadcaster of cable service.
  3. Magazine subscriptions will be subject to sales or use tax beginning September 23, 2013.
  4. The Bill also embraces the Marketplace Fairness Act of 2013.  The Marketplace Fairness Act was approved by the Senate earlier this year and is pending approval in the House.  This Act allows states to require remote sellers to collect use tax if the state is a full member of the Streamlined Sales and Use Tax Agreement.

Significant changes have also been made to Ohio’s Commercial Activity Tax (CAT).  At present, the minimum tax for Ohio gross receipts below $1 million is $150.  Effective January 1, 2014, House Bill 59 changes the minimum tax for gross receipts over $1 million, as follows:

Gross Receipts  Minimum Tax
$1,000,000 or less $150
$1,000,001 – $2,000,000 $800
$2,000,001 – $4,000,000 $2,100
$4,000,001 and greater $2,600

Note that the rate of tax for CAT remains at 0.26% for Ohio-based gross receipts in excess of $1 million.

Ohio Information Release CAT 2013-03, issued in draft format in July 2013, will now require annual CAT filers (those with Ohio taxable gross receipts of less than $1 million) to file and pay their annual CAT electronically, via the Ohio Business Gateway, beginning with returns and payments filed on or after January 1, 2014.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

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