Ohio Tax - Manufacturers' Education Council

2011 Ohio Tax Conference
Ohio Commercial Activity Tax (CAT) Audit Experiences
Appendix A
a gross receipt. The Department determined that the proceeds from the sale of the land would be a
taxable gross receipt.
26. Rent receipts offset in expense
The taxpayer sublet real property and offset the rental expense with the amounts received by
subletting. The Department picked up the full amount of the sublet income.
27. Concessionaire Expense
The taxpayer hires concessionaires to operate its concessions. The contract provides that the
taxpayer receives 65% of the sales and the concessionaire gets 35%. The contract also provides
that the taxpayer will collect all monies and pay the 35% to the concessionaire. The taxpayer
accounts for 100% of the sales as income and offset the 35% as a deduction to the income
account. The Department determined that the taxpayer will need to include 100% of the sales as
taxable gross receipts.
28. Tooling reimbursements
The taxpayer is a manufacturer of sun roofs for motor vehicles. The taxpayer has a part of the sun
roof manufactured by another manufacturer (contract manufacturer). The taxpayer develops
tooling that will be reimbursed by its customer (auto manufacturer) that it sends to the contract
manufacturer. The Department determined that the amounts received for the tooling are taxable
gross receipts.
29. Inter-company reimbursements
A taxpayer that filed as a combined group did not include inter-company reimbursements
received from other members in the group. The Department determined that the reimbursements
were taxable gross receipts as there is no deduction or exclusion for inter-member receipts for
combined filers.
30. Recovery of bad debts
The taxpayer did not include recoveries of bad debts as taxable gross receipts. The taxpayer
netted the recoveries in the bad debt expense account. The Department determined that the
recoveries were taxable gross receipts and picked up all recoveries.
31. Client reimbursable expenses
The taxpayer (a consulting firm) bills for its services and separately states reimbursable expenses.
The taxpayer did not include reimbursable expenses in its CAT filing. The Department
determined that the amounts received for reimbursable expenses are taxable gross receipts.
12