Tax insight

Ohio Board of Tax Appeals - chargebacks excluded from CAT gross receipts

Insight
5 minute read
October 30, 2025

What happened?

Update: The Ohio Tax Commissioner filed an appeal of this decision on November 7, 2025.

The Ohio Board of Tax Appeals (Board) held, for purposes of the Ohio Commercial Activity Tax (CAT), that the amounts actually received by a pharmaceutical manufacturer after chargebacks and other price adjustments constitute taxable gross receipts.

Why is it relevant?

This decision focuses on what is a “gross receipt,” with the Board concluding the chargebacks are not gross receipts because Perrigo Sales Corporation (Taxpayer) never received the amounts at issue. This decision highlights that there may not be a need to apply an exclusion if the amount at issue is not a gross receipt in the first place.

The decision may have broader implications for industries where invoiced amounts are routinely reduced by embedded price adjustments before payment is made. Taxpayers with comparable pricing structures should evaluate whether their CAT reporting should reflect only amounts actually realized.

Actions to consider

Taxpayers should consider how the case may impact the reporting of gross receipts for Ohio CAT. Taxpayers with price reductions to sales prices could assert that these price reductions lower gross receipts subject to the CAT.

[Perrigo Sales Corp. v. Harris, Tax Comm'r of Ohio, Ohio BTA No. 2024-485 (10/9/25)]