Current through all regulations passed and filed through September 16, 2024
(A) Division (A) of section
5751.01 of the Revised Code
defines "person" for purposes of the commercial activity tax. The definition
excludes nonprofit organizations. This rule defines a "nonprofit
organization."
(B) Solely for
purposes of the commercial activity tax, "nonprofit organization" means an
entity that meets both of the following :
(1)
The entity is organized other than for the pecuniary gain or profit of, and the
entity's net earnings or any part of them are not distributable to, the
entity's members, directors, officers, or other private persons, unless
otherwise permitted by law. The payment of reasonable compensation for services
rendered and the distribution of assets on dissolution as permitted by the laws
under which the entity is organized is not pecuniary gain or profit or
distribution of net earnings. If all of the entity's members are nonprofit
organizations, distribution to its members does not deprive the entity of the
status of a nonprofit organization.
(2) The entity is operating consistent with
its organization.
(C)
Nonprofit organizations include, by way of example, but are not limited to,
those entities organized under the nonprofit provisions in Chapter 1702.,
1707., 1711., 1713., 1715., 1716., 1717., 1719., 1721., 1724., 1725., 1727.,
1729., or 1733. of the Revised Code or similar nonprofit provisions of other
jurisdictions.
(1) Rural electric companies
and telephone cooperatives are deemed to be nonprofit organizations under
Chapter 1702. or 1729. of the Revised Code for purposes of the commercial
activity tax.
(2) Organizations
formed for the purpose of funding political campaigns are deemed to be
nonprofit organizations for purposes of the commercial activity tax. These
organizations include those authorized under federal law, and certain entities
receiving contributions that are defined in Chapter 3517. of the Revised Code
or under comparable laws of other states. These entities would include a
campaign committee, a continuing association, a political action committee, a
legislative campaign fund, and a political committee.
(3) A charitable lead trust is deemed to be a
nonprofit organization during the lifetime of the grantor. Upon the death of
the grantor, the charitable lead trust will no longer be deemed to be a
nonprofit organization.
(4) A
limited liability company ("LLC") meeting the conditions of paragraph (B) of this rule is deemed to
be a nonprofit organization. For purposes of the commercial activity tax, a
single member LLC is separate and distinct from its owner. Therefore, in order
for it to be considered a nonprofit organization, it does need to meet
the conditions of paragraph (B) of this rule separate and
apart from its owner. For example, if a nonprofit organization is the owner of
a single member LLC and that LLC does not meet the conditions of paragraph (B) of this rule, the LLC does
not qualify as a nonprofit organization.
(D) Receipts of certain contributions and
fees are excluded under divisions (F)(2)(f) and (F)(2)(j) of section
5751.01 of the Revised Code
regardless of whether the person is a nonprofit organization. To exclude
contributions under division (F)(2)(f) of section
5751.01 of the Revised Code, the
contributions need to be received by persons described in section
501(c), 501(d), or 401(a) of the "Internal Revenue Code of 1986," 100 Stat.
2085, 26 U.S.C.A.
1, as amended. For example, certain pension
plans do
not qualify as nonprofit organizations. While the contributions and fees made
to those pension plans would be exempt from the commercial activity tax, gross
receipts from the business operations of those pension plans may be taxable
gross receipts.
