Because Ohio’s Commercial Activity Tax (CAT) is a relatively new and unique tax system, compliance can be difficult unless you deal with the CAT on a regular basis. Many tax professionals fall into the trap of using time-tested income tax or sales tax concepts, when the CAT rules have been created using their own standards. Many companies may be overcomplying or undercomplying and are just not aware of it. With the Ohio Department of Taxation’s (ODT) audit efforts the risk of audit is increasing every day.
What can a business do to make sure there are no surprises? ZHF’s CAT Exam is just what the doctor ordered.
Our Exam assists clients by examining their payments and filings to determine if they have potential exposures, identify potential refunds and suggest optimal filing positions to mitigate future exposure or overpayments. If your business (or one of your subsidiaries) has not filed a CAT return, our CAT Exam will help you (i) identify whether you meet Ohio’s far reaching nexus requirements and should be filing, and (ii) will quantify any potential CAT exposure. If any exposure exists, we can assist you with resolving that exposure through our Voluntary Disclosure services.
Why ZHF? Our professionals have extensive experience with the CAT, which included drafting the legislation, assisting with writing ODT’s information releases and rules, and creating ODT’s audit program and audit policies. Our professionals are also experienced with defending clients under audit, negotiating settlements with the ODT, and have appealed several CAT cases to the Ohio Board of Tax Appeals.
What is the CAT Exam Process?
Because of our experienced tax professionals, we can conduct the Exam with minimal interruption to your day-to- day functions. In most cases, we can complete the on-site Exam in one or two days depending on the size of the company and the number of entities in your organization. The Exam is similar to the ODT’s audit process but takes it one giant step further as we also identify potential refunds and planning strategies to minimize the tax in the future.
1. Information Request
We will provide you with a list of the information we will need to review. We ask for certain information up front so we can have it analyzed prior to the on-site review, which saves valuable time and causes less interruption. We will analyze the remainder of the information during the on-site review.
2. On-site Review
We work closely with you to understand your corporate structure, types of gross receipts and how you have filed in the past (if you have filed in the past). We also work with you to understand where the future of the business is headed so we can properly plan to minimize the CAT you will pay in the future.
3. Exam Results
After the on-site review, we will develop a plan that will address the results of our examination. The plan will identify the areas of overcompliance and undercompliance. If you choose, we can work with you to resolve these issues, including filing refund claims or a voluntary disclosure. The plan will also identify recommendations on filing positions or planning strategies that can be implemented to reduce the amount of CAT to be paid in the future. If you choose, we can work with you to implement those strategies.
To further discuss our CAT Exam process and its benefits or to schedule a CAT Exam, please contact any one of the ZHF professionals.