Ohio Tax - Manufacturers' Education Council

2011 Ohio Tax Conference
Ohio Commercial Activity Tax (CAT) Audit Experiences
63. Denied manufacturer's coupon deduction
Appendix A
The taxpayer deducted all manufacturer coupons provided to end consumers and not the
manufacturer’s customer (wholesaler/retailer). The Department denied the deduction for
manufacturer coupons in accordance with OAC 5703-29-14(B)(3)(a).
64. Denied fraud deduction
The taxpayer is a retailer of tangible personal property and ships its product via United States
mail. The taxpayer has identified that in some situations postal employees will open the box and
remove the product. Next the postal employees will rewrap the box and forward it empty to the
taxpayer’s customer. The taxpayer deducted the costs of fraud from its gross receipts. The
Department determined that there is no deduction for fraud and as a result denied the taxpayer’s
deduction.
65. Credit card fee
The taxpayer deducted the fees it paid to credit card companies for processing its sales
transactions. The Department determined that the credit card processing fees are not deductible.
66. Denied cash over/under deduction
Department policy is to deny any deduction taken by a taxpayer for cash under. Department
policy also includes not including cash over as a gross receipt.
67. Denied 1st period (semi-annual – 7/1/05 to 12/31/05) bad debt deduction
Most taxpayers have taken a bad debt deduction for the 1 st period (semi-annual period - 7/1/05
through 12/31/05). The Department is denying this deduction as none of the bad debts relate to
gross receipts that have been subject to CAT. Additionally, the bad debts have typically not been
uncollectible for more than 6 months as required by R.C. 5751.01(F)(4)(c).
68. $500K list not provided
Some taxpayers have been resistant to providing a list of vendors selling more than $500,000 of
products or services in Ohio. The Department has issued two subpoenas to obtain this information
and will continue to issue subpoenas if necessary.
69. Retroactive Consolidation Election
When we audit a taxpayer which has not registered, who has registered as a separate taxpayer (but
did not register all persons within its group) or a combined taxpayer, the Audit Division has been
instructed to audit the taxpayer as if it were a combined taxpayer. The types of taxpayers
mentioned above do not have the choice of registering as a consolidated elected taxpayer for the
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