Use and Sales tax + Use tax rates + Business taxes | Ohio

What Is The Ohio Use Tax?


The Ohio General Assembly established the use tax in 1936 to complement the State’s sales tax. According to the Ohio Department of Taxation’s website, “Use tax is owed by a purchaser on a transaction when the vendor does not collect sales tax (assuming the item being purchased is taxable).”

So let’s say the computer, tablet or phone you’re using to read this website came from an online catalog or website headquartered in another state.Your business should pay a use tax on that purchase. It’s also the responsibility of your business to pay that tax to the State of Ohio.

The Current Situation:

The Ohio use tax is different from income tax or sales tax. For decades, many businesses failed to pay a dime of use tax. But as states like Ohio face substantial budget shortfalls, collecting use tax revenue is becoming more of a priority. In fact, the Ohio Department of Taxation (ODT) hired 90 auditors last year to deal with this issue as part of its Use Tax Education Program (UTEP).

Why? In Ohio, estimates suggest 300,000 businesses have unpaid Ohio use taxes. Compare that to just 18,000 Ohio businesses with a use tax account.

The Best Solution:

ODT is taking a proactive approach to collecting use tax dollars. It recently created the Ohio Use Tax Amnesty Program which encourages Ohio businesses to self-report back use taxes. There is massive incentive for businesses to immediately participate in the Ohio Use Tax Amnesty Program.

ODT has pledged to issues audits or blanket assessments to those businesses failing to come forward. Your business has two choices:

1. Pay the use tax between now and May 1, 2013 without the fear of penalty.

2. Not pay the use tax by May 1, 2013. Incur a penalty. Pay interest. Potentially deal with the hassle of an audit.

What if your business owes back Ohio use taxes? Ohio businesses can take advantage of a limited look back period with no penalty. Here’s how it works.