Ohio lease-bonus recipients may pay addtional tax

YOUNGSTOWN — Those who received bonus payments from oil and gas leases in 2012 may have a little extra tax to pay on their 2013 state returns.

Individuals or couples earning more than $150,000 per year are subject to filing under the state’s Commercial Activity Tax, said Benjamin DiGirolamo, supervisor at Hill, Barth and King LLC, a Youngstown-based accounting firm.

Those who earned between $150,000 and $1 million will pay a flat rate of $150 in commercial activity tax to the state. Earnings of more than $1 million are taxed at .26 percent.

“The majority of those who have to pay the CAT tax will have to pay $150,” DiGirolamo said.

It’s important that people realize if they received a bonus payment, they will have to register with the state for the commercial activity tax, and then cancel that account if royalty payments are not made for a couple of years or if their taxable income, even with royalties, falls below $150,000, he said. Once royalty payments begin, they may have to register again.

The state decided that by signing a lease with an oil and gas company, an individual has become part of the oil and gas business for tax purposes, DiGirolamo said.

Those who signed leases also may want to look at real-property-tax implications. Oil and gas are considered by the state to be real property, said Stan Dixon, deputy tax commissioner for the Ohio Department of Taxation.

For the complete story, read Sunday's Vindicator and Vindy.com

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