Ohio’s Use Tax Amnesty Program

Chad Bice | July 6th, 2011
Your Ohio business has a one-time opportunity to lessen your use tax liability due to a use tax amnesty measure recently passed as part of Ohio’s budget bill. It’s one of the most taxpayer-friendly laws the State of Ohio has ever enacted.

Note: Ohio has established its tax amnesty program since this post was originally created.

Ohio’s Use Tax VDA program already allows businesses to anonymously come forward, perform a self-audit and remit use tax due for the prior 36-month period. Under the Use Tax VDA program, penalties are waived but you will have to pay interest. While Ohio’s Use Tax VDA program is taxpayer-friendly, Ohio’s Use Tax Amnesty program is even better.
The law would essentially eliminate several years of unpaid use tax liabilities for over 300,000 Ohio businesses, whether or not they participate in amnesty, and provides another year of savings for amnesty participants.

Use Tax Amnesty Summary

  • Pay tax only for the amnesty period with penalties and interest waived, but only if you had not registered for a use tax account as of June 1, 2011.
  • No assessment for use tax may be issued for use tax due prior to January 1, 2008. This is essentially a shorter statute of limitations. The prior statute of limitations was 7 years for non-filers.
  • Businesses that are under audit by the Ohio Department of Taxation can still participate, up until an actual assessment is filed against the taxpayer.

When Does the Use Tax Amnesty Program Begin?

  • The program will begin October 1, 2011 and will end on May 1, 2013. Currently pending VDAs may have the option to convert to the amnesty program.

Additional Ohio Use Tax Amnesty Details

  • Under the proposed Use Tax Amnesty program, the Ohio Department of Taxation is required to abate all use tax for periods prior to January 1, 2009 for those taxpayers that come forward and participate in the program.
  • As mentioned, all penalties and interest related to the period of January 1, 2009 to the current date are waived for qualifying taxpayers.

Who does the Use Tax Amnesty Program Apply To?

  • Businesses that do not have an Ohio use tax accounts as of June 1, 2011 and that have not yet been issued a formal assessment for tax owed.

What is Use Tax?

Use tax is a tax on the storage, use or consumption of a tangible personal property and certain taxable services in Ohio. It is a complement to Ohio sales tax. Generally, if you paid Ohio sales on an item, you do not owe Ohio use tax. However, if you did not pay Ohio sales tax, then you may have the responsibility to remit Ohio use tax. Chances are you have a use tax liability if you have a business that operates in Ohio — 96 percent of Ohio use tax audits result in use tax liability.

Remaining Gray Areas

Ohio Tax haven’t worked out the administrative details of the program – they have yet to determine how applications will be made and if the applications can be made anonymously (like VDAs).

What if I Currently Have a Use Tax VDA Project in Process?

Amnesty may be a better program for you (shorter look back, waiver of interest and an available payment plan) although there are taxpayers, such as those with use tax accounts prior to June 1, 2011, for whom the VDA may still be the better option. It is possible that Ohio Tax will allow current VDA applications to be rolled over to amnesty applications. We can help you determine which option may be best for your business.

Contact Our Ohio Use Tax Professionals

If you are unsure what to do regarding the Ohio Use Tax Amnesty Program, then contact us now! For additional information please contact Chad Bice, CPA at  740.454.3198, or click here to contact Chad. In a brief consultation he can assess your situation and determine the best way to proceed.
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