Do You Have Ohio Use Tax Exposure?

Joe Popp | June 26th, 2012

Commonly Overlooked Ohio Use Tax Liabilities

For the last year, we’ve been telling you about the State of Ohio’s efforts to step up enforcement of its use tax law. Use tax can be thought of as a companion tax to sales tax. In many cases, if you didn’t pay Ohio sales tax, chances are you will owe Ohio use tax.

Common Use Tax Liabilities

There are three common categories of purchases where individuals and businesses may face liability for use tax. How many do you recognize?

Internet sales

If you’ve made a purchase from, your purchase did not include Ohio sales tax. That’s because these internet retailers don’t have what’s called nexus in Ohio and therefore don’t have a reason to charge the tax. However, as a buyer of goods in Ohio, you in turn must report the purchases and pay Ohio use tax.  Note that Amazon is beginning to collect tax in more states, but for many years they only collected in 1 or 2 states nationwide.

Out-of-state purchases

If you’ve made a purchase from an out-of-state company, it’s likely this company did not have nexus and didn’t charge Ohio sales tax either, which again makes you responsible for reporting the purchase and paying Ohio use tax.

In-state purchases

Many small businesses, often those who don’t have an Ohio vendor’s license, fail to charge Ohio sales tax on items and services they sell. Unless you provide the business with a tax exemption certificate, the business is supposed to charge Ohio sales tax on these purchases. Once again, this means you’ll have to report the purchase and pay Ohio use tax on it.

So what happens if you owe Ohio use tax?

The state is currently in the midst of a Use Tax Amnesty program, which began October 1, 2011 and will run through May 1, 2013. The current program is one of the most taxpayer-friendly programs enacted by the State of Ohio.  By voluntarily admitting purchases that you owe use tax on, the state will shorten the look-back period for use tax, and not charge interest or penalties on your past use tax liability.

The Use Tax Amnesty program requires that you complete a spreadsheet listing your purchases back to January 1, 2009, as well as obtain a use tax account with the State of Ohio, and then complete a Use Tax Amnesty application/return. A use tax professional can help you focus on receipts for goods and services most likely to require use tax, as well as help you through the application and reporting process. You may not want to complete the amnesty process on your own – because entering the process improperly could raise suspicion with the State of Ohio which could lead to an audit.

Why file for amnesty now?

Because of the changing nature of today’s legislative environment, there’s no guarantee that the current Use Tax Amnesty program will continue until its current end date – so entering the current Use Tax Amnesty program sooner rather than later can save you a great deal of money in interest, penalties or additional years of review. Prior legislation had the look back period through January 1, 2008, one year longer than the current program, and prior to that, the Ohio Department of Taxation could go back as long as seven years, or longer, depending on its audit findings.

If you’re interested in learning more about applying for Ohio use tax amnesty, contact your Rea associate.

Contact our Ohio use tax amnesty professionals

Do you have outstanding Ohio use tax delinquencies?  Are you worried about the day when the state’s Use Tax Education Program finally makes you pay up on those taxes – and potentially large interest and penalties?  Contact Rea & Associates for assistance filing Ohio use tax amnesty.  Our Ohio state and local tax specialists will help you to determine what to include in your filing, clearing up your outstanding use tax liability at the lowest cost to you.

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