In a previous post, we noted that forgiven Paycheck Protection Program (PPP) loan amounts are excluded from Ohio’s commercial activity tax (CAT) to provide taxpayer relief during the COVID-19 pandemic. H.B. 481. However, the Ohio Department of Taxation has indicated this relief does not extend to EIDL advance grants and other county-issued relief grants. Recently, the Department updated its FAQs on its COVID-19 tax relief page setting forth its position that EIDL advance grants of up to $10,000 authorized by the CARES Act are included in gross receipts for Ohio CAT purposes. Further, COVID-19 relief grants issued by counties are also taxable gross receipts according to the Department’s position. Yet, the Department’s position ignores the threshold question of whether such grants constitute gross receipts in the first place – i.e., whether they are amounts realized that contribute to the taxpayer’s gross income.
On the other hand, PPP loans that are forgiven and employee retention tax credits authorized by the CARES Act are specifically excluded from the Ohio CAT tax base under H.B. 481. If you have questions about how SBA loans or other COVID-19 relief affects your Ohio tax obligations, do not hesitate to contact us.
Attorney Steven A. Dimengo is Managing Partner of Buckingham, Doolittle & Burroughs, LLC. He helps clients with complicated tax challenges including Ohio sales/use, income, commercial activity and federal taxes and has represented clients before the Ohio Supreme Court. Steve can be reach at sdimengo@bdblaw.com or 330.258.6460.
Richard B. Fry III is a partner and Buckingham’s Taxation Practice Group Chair. He focuses on state and local tax compliance and controversies, including Ohio and multistate sales/use tax, commercial activity tax, and personal income tax issues. Rich can be reached at rfry@bdblaw.com or 330.258.6423
Nathan M. Fulmer is an associate in Buckingham’s Taxation Practice Group. He represents clients on a broad range of tax planning and controversy matters. His joint degree in taxation allows him to provide unique solutions when assisting clients on business matters. Nate can be reached at nfulmer@bdblaw.com or 330.258.6464.
About Buckingham, Doolittle & Burroughs:
Buckingham, Doolittle & Burroughs, LLC is a corporate law firm that counsels middle-market executives and business leaders all over Ohio and beyond. With offices in Canton, Akron, and Cleveland, Buckingham offers clients Business Law Reimagined through sophisticated and practical legal services. Serving the region for more than 100 years, Buckingham’s mission is to deliver meaningful experiences through the practice of law, exceed expectations in terms of service, counsel and business sense, and to offer continuous value to the industries, communities and clients they serve. For more information, news and updates, visit bdblaw.com.