In a word, yes. The State of Ohio plans to initiate a campaign to make sure Ohio taxpayers not only have use tax accounts, but are also reporting transactions that involve use tax. This initiative is set to begin within the next six months. Here is what you need to know to be in compliance:
If you have a sales tax account, you need a use tax account. According to the State, there are more than 400,000 sales tax accounts and only 30,000 use tax accounts. Under Ohio law, anyone with a sales tax account must have a use tax account.
You have to pay use tax when you don’t pay sales tax. Use tax is owed on purchases where sales tax should have been paid but was not assessed. For example, office supplies over the Internet will not have Ohio sales tax assessed if the vendor is located outside the state. In situations like this, you are required to report that purchase and pay use tax. Failure to do so can result in a use tax audit of your company, in which you would not only have to pay the taxes, but interest and penalties, as well.
Establish a use tax account today. As we’ve noted above, statistics show many businesses have not yet set up use accounts. With the state’s new campaign to come, it is more important than ever that you establish this account before the state comes knocking at your door.
For assistance in determining if you have use tax liability for past purchases, or if you would like help setting up a use tax account, please contact your accounting professional.
Tags: Use Tax