Ohio Use Tax Education Program

Currently, Ohio’s hottest topic is the Use Tax and the Ohio Department of Taxation is pushing to identify those taxpayers not compliant in this area. Are you familiar with the Tax? Are you registered for the Tax?  Are you compliant with the rules? If you answered “No”, “I don’t know” or even “Maybe”, then allow me to have your attention.

When you purchase taxable goods and services from vendors and service providers within the State of Ohio, those vendors and service providers should be charging you, and you should be paying, sales tax on those goods and services. In this situation, use tax is not an issue. But what if a vendor or service provider within the State of Ohio doesn’t charge sales tax?  If you find yourself in this situation, now you have a use tax filing requirement.

Or what if a vendor or service provider is outside the State? Do you have to pay sales tax on those goods or services?  Sales tax – NO; Use tax – YES.

The Ohio Use Tax is a tax complementary to the sales tax. It was enacted in 1936 to eliminate the disadvantage in-state vendors had who were required to charge sales tax, in comparison to out-of-state vendors who do not have to charge Ohio sales tax. Because of the Ohio Use Tax, the purchaser of goods or services owes tax even if the out-of-state vendor does not collect the sales tax. It is the responsibility of the purchaser to pay the use tax directly to the State of Ohio.

Per the Ohio Revised Code, all tangible personal property stored, used or otherwise consumed in Ohio, in addition to certain taxable services used in Ohio, are subject to use tax unless:

1. Ohio sales tax has been paid, or
2. There is an exception or exemption that applies to the transaction.

To promote taxpayer compliance in this area, the Ohio Department of Taxation developed a Voluntary Disclosure Program for taxpayers to voluntarily come forward to settle any past use tax obligations. By taking quick action, this program allows taxpayers who are not compliant to become compliant and avoid penalties, interest and longer “look back” periods. In fact, recent passage of the Ohio Budget Bill is even more favorable to those taxpayers who have not been compliant under a new Consumer Use Tax Amnesty Program which begins October 1, 2011. We highly encourage all taxpayers that are not already registered for Use Tax to register immediately. 

Although we are still awaiting further guidance from the Ohio Department of Taxation on this newest law, we do know that by registering now you will only be responsible for use tax due for periods from January 1, 2009 through May 1, 2011 and all penalties and interest will be fully abated. Even if you are already registered, there are benefits to participating.