Wipfli’s state and local tax (SALT) team highlights the most recent hot topics in tax, including updates to Ohio’s commercial activity tax (CAT), Colorado’s bag fees and upcoming unclaimed property deadlines.
Commercial activity tax exclusion amount update
On July 3, 2023, Governor Mike DeWine signed H.B. 33, which includes changes to the Ohio CAT.
Currently, the first $1 million in Ohio gross receipts is excluded from the CAT base, and any Ohio gross receipts over $1 million are taxed at a 0.26% rate. Also under current law, taxpayers that have more than $150,000, but less than $1 million in Ohio gross receipts, file an annual return and are subject to a $150 minimum tax.
H.B. 33 phases in an increase in the exclusion amount. For tax periods beginning in 2024, the exclusion amount increases to $3 million. For tax periods beginning in 2025, the exclusion amount increases to $6 million.
H.B. 33 also eliminated the annual minimum tax, beginning in 2024. Taxpayers with taxable gross receipts of $3 million or less per calendar year will no longer be subject to the CAT. And effective January 1, 2025, Taxpayers with taxable gross receipts of $6 million or less per calendar year will no longer be subject to the CAT.
Taxpayers will deduct the exclusion amount from their taxable gross receipts for the calendar year, and any taxable gross receipts more than the exclusion amount are subject to the 0.26% tax rate.
Colorado bag fee
Beginning January 1, 2024, Colorado H. B. 21-1162 will prohibit stores and retail food establishments from providing single-use plastic carryout bags to customers.
Retail food establishments that purchase expanded polystyrene products before January 1, 2024, may continue to use the products until their supply is depleted. Certain retail food establishments and small stores that operate solely in Colorado and have three or fewer locations may provide single-use plastic carryout bags.
For the year of 2023, retail stores should be charging customers a fee of at least 10 cents for each carryout bag furnished.
Beginning April 1, 2024, a store is required to remit, on a quarterly basis, 60% of the carryout bag fee revenues to the municipality or county within which the store is located and may retain the remaining 40% of the carryout bag fee revenues. Section 25-17-505(3)(d), C.R.S., requires that stores remit the carryout bag fee to the local finance department or equivalent agency of the municipality or county in which the store is located.
The fee is not subject to state and state-administered local sales tax.
Unclaimed property fall compliance deadline
There are approximately 45 states with upcoming unclaimed property reporting deadlines on October 31 or November 1. Companies should start reviewing their books and records for potential unclaimed property to report.
Unclaimed property is tangible or intangible property that has been abandoned, lost or without owner contact for a specified period of time, typically one to five years. By law, unclaimed property is reportable once it reaches the dormancy period.
The most common types of unclaimed property are uncashed checks, customer credits and payroll. These types of property are frequently associated with healthcare providers, construction businesses and the retail industry.
Reporting forms and dormancy periods vary by state and property type. Due diligence notifications to owners are a preliminary step in the compliance process required by all states. States with negative filing requirements, exemptions and deductions should be considered when escheating unclaimed property.
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This article was co-authored by Caroline McDonnell