Understand Ohio’s New Use Tax Amnesty Program?

Chad Bice | August 31st, 2011

A new use tax amnesty program in Ohio will provide businesses with a one-time opportunity to save thousands of dollars in use tax, interest and penalties. This program was established by the Ohio legislature as part of Ohio’s biennial budget bill that passed in early July 2011.  Ohio’s amnesty program is one of the most taxpayer-friendly programs ever enacted by the State of Ohio.

What the Amnesty Program Does

The new law eliminates several years of unpaid use tax liabilities for over 300,000 Ohio businesses, by:

–          Shortening the statute of limitations, with no assessment on use tax due prior to January 1, 2008 (The prior statute of limitations was seven years).  This benefit applies regardless of if you participate in amnesty or not.

–          For taxpayers who elect to participate in the amnesty program, the look back period (for which tax must be paid) is shortened to January 1, 2009 forward.

–          Abating all penalties and interest if you had not registered for a use tax account as of June 1, 2011 and you participate in amnesty.

–          Provides a payment plan if you are unable to pay the entire tax due in one payment.

How the Program Works

If You were in a Use Tax VDA

The law also suspends indefinitely the use tax voluntary disclosure program that was being conducted by the Ohio Department of Taxation. If your business currently has a use tax VDA program in process, the look back period is being shortened to roughly 33 months (January 1, 2009 forward) and you will save interest in addition to penalties by using the amnesty program.  The Ohio Department of Taxation is still working out the details, but a new application appears to be required for current VDA participants.  A mailing is tentatively set to be mailed to former VDA participants explaining the procedure.

If You Don’t Have a Use Tax Account

Ohio’s use tax amnesty program will operate October 1, 2011 through May 1, 2013, and applies to businesses that have not been issued a formal assessment as of early July 2011.  During this time, taxpayers can come forward and self-report and pay their use tax from January 1, 2009 forward with interest and penalties being abated.  In return, Ohio will forgive use tax liabilities prior to January 1, 2009 and will resister you for a use tax account. This program will eliminate a substantial amount of use tax for thousands of Ohioans.

To Learn More

Rea & Associates CPA  will host a webinar detailing Ohio’s Use Tax Amnesty program on Thursday, September 8. To learn more, click here.

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