No, it’s not a tax on household pets, or internet memes.
CAT stands for Commercial Activity Tax. It is an annual tax imposed on the privilege of doing business in Ohio. The CAT has been in effect since 2005. It applies to all types of businesses, and to basically all business entities: corporations, LLCs, partnerships, all the way down to sole proprietorships. The CAT replaced the Ohio Corporate Franchise Tax and the Ohio Personal Property taxes for businesses.
Unlike Sales and Use taxes, the CAT is not a transactional tax. Businesses aren’t able to directly pass the cost of the CAT to their customers. It is considered a cost of doing business in Ohio, and should be included with other overhead costs such as rent, utilities, and labor.
The tax is based on gross receipts from business activities in Ohio. If a business has more than $150,000 of Ohio gross taxable receipts per calendar year they must register for the CAT.
CAT is filed and paid annually or quarterly, depending on the gross taxable receipts of the company. Businesses with gross receipts between $150,000 and $1 million file annually on May 10th, and pay an Annual Minimum Tax (AMT). Businesses with over $1 million in gross receipts file quarterly, and pay a rate component on any taxable receipts over $1 million, in addition to the Annual Minimum Tax.
There is a monthly fee of $100 for businesses that fail to register for the CAT in a timely manner. Failing to file and pay the CAT carries additional penalties and can affect your business’s ability to conduct business in Ohio.