Oregon’s new Corporate Activity Tax (CAT) requires qualifying businesses to register and pay tax for operating in Oregon, which mirrors similar taxes in Ohio and Washington. In Oregon, a business qualifies by exceeding $750,000 in gross receipts within state lines. After meeting the threshold, businesses must register with the Oregon Department of Revenue. Ohio and Washington have a similar tax, Ohio’s Commercial Activity Tax (CAT), and Washington’s Business and Occupation Tax (B&O).
Oregon Corporate Activity Tax
The Oregon Corporate Activity tax is a gross receipts tax for the privilege of doing business in the state. The tax is in addition to any current state taxes. The CAT is not an income tax or sales tax (also called a transaction tax), and tax is due even when there is a business loss.
A business must register with the Department of Revenue within 30 days after gross receipts exceed $750,000 within state lines. Businesses that fail to register within 30 days are subject to penalties. The first $1 million in gross receipts is exempt from tax for a fee of $250. Businesses with gross receipts between $750,000 and $1 million only pay the $250 fee. Gross receipts over $1 million are taxed at 0.57% and require the business to file an annual return by April 15th. Oregon allows a 35% subtraction for certain labor and other costs apportioned by Oregon. Click here to see example calculations and how to calculate your CAT liability: https://www.oregon.gov/DOR/programs/businesses/Documents/CAT/calculating-CAT-liability.pdf
Quarterly estimated tax payments can be made throughout the year on 4/30, 7/31, 10/31, and 1/31 for the preceding quarter. A business estimating to owe more than $5,000 in CAT for the year is required to pay estimated payments.
For more information and FAQs, visit the Oregon Department of Revenue: https://www.oregon.gov/DOR/programs/businesses/Pages/corporate-activity-tax.aspx
Ohio Commercial Activity Tax Act
The Ohio Commercial Activity Tax (CAT) taxes based on gross receipts of $150,000 or more.
Businesses with gross receipts in Ohio have a minimum tax:
- Between $150,000 to $1 million are taxed a minimum tax of $150
- Over $1 million but less than or equal to $2 million has a minimum tax of $800
- More than $2 million but less than or equal to $4 million has a minimum tax $2,100
- Above $4 million has a minimum tax of $2,600
After the minimum tax is assessed, there is an additional tax of .26% on sales over $1 million.
For more information on Ohio’s CAT, visit: https://www.tax.ohio.gov/commercial_activities.aspx
Washington Business and Occupation Tax
The Washington Business and Occupation Tax (B&O) has a variety of rates on gross receipts depending on the business classification. For example, manufacturing is .484%, retail is .471%, wholesaling is .484% and service is 1.5%.
Businesses are subject to the B&O if they meet any of the following criteria:
- Located or organized in Washington, or
- Meet any of the following in the immediately preceding tax year:
- More than $53,000 of property in Washington,
- More than $53,000 of payroll in Washington,
- More than $267,000 of receipts from Washington, or
- At least 25 percent of the person’s total property, total payroll, or total receipts in Washington
For more information on Washington’s B&O Tax, visit: https://dor.wa.gov/find-taxes-rates/business-occupation-tax
How DHJJ Can Help
Sales tax continues to be a focus for businesses to generate income for their state. Reviewing your exposure to different kinds of taxes in different states is important if you do business in other states. If you have gross receipts in OH, OR or WA, or have received a notice from any state, contact the DHJJ SALT team and we can review your sales to help you determine if you’re required to register and pay corporate activity taxes. Call us at 630-420-1360 or fill out the form below. To read more about our SALT group, click here.