Guarantor Requirements for Ohio Use Tax Payment Plan Changed

Chad Bice | November 17th, 2011

The requirements for participating in the State of Ohio’s use tax amnesty program’s payment program just got a little easier.

When the program began, you had to provide two personal guarantors who would guarantee the entire debt owed if you wanted to participate in the interest-free payment program.

Several accounting professionals, including some from Rea & Associates, argued that this requirement created a hardship for small business owners, who may find it difficult to find two guarantors.

In response to these concerns, the department added additional ways for you to guarantee payment. You have the following guarantee options:

  • Get a surety bond. Companies who provide these bonds typically charge somewhere between 1 and 10 percent of the face amount of the bond. Depending on the amount of use tax you owe, and the length of time your payment plan stretches, it could be cheaper to get a surety bond instead of a loan.
  • Obtain a letter of credit from your bank or lending institution. You can generally get a letter of credit for comparatively little cost. But keep in mind that doing so could impact your relationship with your bank.
  • Use another acceptable form of security. This may include granting Ohio a security interest in a property that is not protected by bankruptcy, such as a rental property. If you provide a security interest in personal property, remember that the guarantee becomes a personal debt and therefore a risk.

To be eligible for Ohio’s use tax amnesty payment plan, you must owe more than $1,000. You must make a minimum $1,000 monthly payment until all of you’ve paid off all of your debt. This plan can run as long as 84 months (seven years).

If you owe more than $84,000, your monthly payments will be increased to accommodate a total payoff within 84 months.

The use tax amnesty program applies to businesses that did not have a use tax final assessment as of Sept. 29, 2011.

Ohio taxpayers have a one-time opportunity to save thousands of dollars in use tax, interest and penalties thanks to the use tax amnesty program, which operates Oct. 1, 2011 through May 1, 2013.

During this time, the Ohio Department of Taxation will abate all use tax liabilities prior to Jan. 1, 2009, for taxpayers who come forward and participate in the program. It is one of the most taxpayer-friendly programs the State of Ohio has ever enacted.

Contact Us

Think you may have an Ohio Use Tax liability? If so, please contact Chad Bice, CPA, at 740.454.3198, or click here to email Chad. In a brief consultation he can assess your situation and determine the best way to move forward.

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