If your company doesn’t currently pay Ohio use tax, you will soon.
The Ohio Department of Taxation is stepping up its use tax enforcement. The department is conducting a use tax education program (UTEP) and will begin notifying businesses about their use tax liability this summer.
Note: Ohio has established a tax amnesty program since this post was originally created.
Although no one enjoys volunteering to pay taxes, volunteering to pay use tax before the state contacts you can help you save tax, interest and penalties. And, the number of years of purchases you’ll be asked to review could be decreased from seven years to three.
Use tax is a tax that wasn’t paid, but should have been, on taxable property or services your business purchased. It most often occurs when a business buys goods in-state, out-of-state or over the Internet and the retailer doesn’t collect Ohio sales tax.
If your company has a state sales tax account, you should have a use tax account. The department is cross-referencing its tax records and already identified 380,000 businesses that don’t comply.
By entering a voluntary disclosure agreement (VDA) before the department sends its notifications, your business can avoid penalties and will be asked to review three years of purchases. However, if you wait until the state contacts you, you’ll have to review four years. If you choose to ignore the state’s request, you could face a seven-year look-back and pay significant taxes, penalties and interest – possibly doubling the amount you may have to pay.
If your company doesn’t have a use tax account, consult with your accounting professional as soon as possible so that he or she can help you enter into a VDA agreement with the department. Keep in mind that you’ll need to review your company’s purchases for 36 months prior to the date you notified the state of your use tax obligation to determine what use tax you owe.
You can also learn more about Ohio’s use tax education program at