Ohio Clarifies SBA Economic Injury Disaster Loan (EIDL) Grants Are Taxable Gross Receipts For CAT Purposes

Buckingham, Doolittle & Burroughs, LLC

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.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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