Ohio Department of Taxation May Waive Penalties for CAT Taxpayers

July 30, 2008

The Ohio Department of Taxation (ODT) recently issued an information release (Ohio Tax Information Release No. CAT 2008-01, 07/25/2008) explaining its voluntary disclosure program with regard to the commercial activity tax (CAT).

Ohio offers a voluntary disclosure program for various taxes that allows businesses who have failed to file returns and remit taxes to come forward to negotiate their tax liabilities with the ODT on an anonymous basis. In exchange for a taxpayer agreeing to enter into a voluntary disclosure agreement, generally the ODT will agree to waive penalties and limit collection of taxes and interest owed to the current year and the three previous years.

Because the CAT is a relatively new tax (enacted in 2005) the ODT does not currently offer its voluntary disclosure program for the CAT. However, according to the information release, the ODT will waive penalties for taxpayers that voluntarily come forward to register, file, and pay the CAT, provided that the ODT has not previously contacted the taxpayer through audit or compliance, and that the taxpayer is not under investigation by the ODT. Interest is still due on delinquent accounts.

The ODT requests that taxpayers seeking to comply with the CAT should immediately register, file all outstanding returns and pay any CAT liability plus interest. Information regarding the specific registration, filing information and the entire information release can be found on the ODT’s website at:

http://www.tax.ohio.gov/commercial_activities/information_releases/cat200801.aspx

Frost Brown Todd’s State and Local Tax Practice Group has experience dealing with the ODT on voluntary disclosure agreements and like initiatives. If you would like to find out more on the CAT or any other state and local tax issue, please feel free to contact Javan Kline or Jeremy Hayden at (513) 651-6800.

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