Ready for a Walk Through Ohio’s Use Tax Amnesty Process?

Chad Bice | November 28th, 2011

If you owe use tax, you currently have an opportunity to save thousands of dollars in use tax, interest and penalties thanks to Ohio’s use tax amnesty program. The program is one of the most taxpayer-friendly programs ever enacted by the State of Ohio.

If you do not currently have an Ohio use tax account, purchased items on the internet or out-of-state and did not pay sales tax, or if you purchased goods services from smaller vendors that did not charge sales tax, you may have use tax liability. Ohio’s use tax amnesty program applies to businesses that have discovered they have unreported or unpaid Ohio use tax.

The amnesty program began on October 1, 2011, and runs through April 1, 2013. To begin the process, taxpayers can download an Excel spreadsheet from Ohio Tax’s website that is used to report use tax liability. The Excel spreadsheet is tightly locked down, so you’ll be unable to change the formulas and calculations. This also makes it harder to make additions, deletions or changes to the data. One recommendation is to create a separate blank Excel spreadsheet with the same columns, input the data, and transfer the information to the department’s spreadsheet. Because it is easy to miss purchases with liability or add unnecessary invoices to the data, working with your tax professional can help ensure you provide the required information.

Once the spreadsheet is complete, taxpayers can request a use tax account through the Ohio Business Gateway. Next, a use tax amnesty application can be completed in a separate module on the website.  The registration for use tax and the amnesty application itself can both be completed in under an hour.

When you submit your spreadsheet to the Ohio Department of Taxation, you will have the option to pay any use tax owed by electronic check, credit card or set up a payment plan. The payment plan is available for taxpayers who owe more than $1,000. The plan requires a minimum monthly payment of $1,000 (first payment due with the amnesty application) and can be paid monthly for up to seven years or 84 months. If you apply for the payment plan, you’ll be required to provide two guarantors, or obtain a surety bond, line of credit from your lending facility, or provide another acceptable form of security such as interest in a property that is not bankruptcy protected.

Although the program is currently scheduled to run through May 1, 2013, it can be modified by the legislature, and the State of Ohio will continue to conduct use tax audits. Applying for use tax amnesty now, rather than waiting, can also help you spend less of your own cash on use tax liability and determine on which items your customers should be paying tax – and incorporate those findings into your product or service pricing. In addition, Ohio’s use tax amnesty program shortens the look back period to 33 months (January 1, 2009 forward), and removes the penalties and fees that would normally be associated with a use tax audit.

Certainly no one likes to admit owing tax. However, Ohio’s use tax amnesty program makes doing so a little less painful and gives you the peace of mind of a blank slate going forward. If you believe you have use tax liability, contact your tax professional to learn how you can complete the amnesty process.

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