Alert: Advantageous State of Ohio Consumers Use Tax Amnesty Program Ending in May 2013

By Craig Howard, CPA

The State of Ohio began a Use Tax Amnesty program on October 1, 2011, which will end on May 1, 2013.

Consumers use tax must be paid on all taxable purchases of tangible personal property or services used, stored, or otherwise consumed in Ohio unless Ohio sales tax has been paid to a vendor or the tax has been properly paid to another state. Taxpayers who have made taxable purchases and not previously paid the use tax or sales tax, can take advantage of the amnesty program before May 1, 2013. Examples of tangible personal property subject to use tax are computers, office machines, office supplies, furniture, electronics, cleaning supplies, etc. Examples of taxable services include installation, maintenance and repair, employment services (temporary labor), data processing, snow removal, towing, and others.

Contractors are subject to use tax when they install tangible personal property and it remains personal property, as opposed to real property, after installation. In this case the contractor should charge sales tax unless the customer is an exempt entity or provides a completed exemption certificate. If the contractor charges sales tax, he or she may purchase the material without paying sales tax or use tax because the purchase is for resale.

Internet purchases from other states will give rise to a use tax liability if the seller does not properly charge and collect the tax at the point of sale. Service providers that purchase some of their materials and supplies from another state may be liable for unpaid use tax on those supplies.

The advantages of participating in the consumer’s use tax amnesty program before May 1 are:

1. A previously unregistered taxpayer will not be subject to interest, civil or criminal penalties.
2. The Ohio Tax Commissioner will waive all use tax liability that has not been assessed for periods prior to January 1, 2009.
3. Previously registered use tax payers will be subject to interest but not penalties.
4. A previously unregistered business may pay their use tax liability under the plan in monthly installments of $500 for up to seven years, as applicable.

Additional information is also available at http://www.tax.ohio.gov/amnesty/faqs/amnesty_consumers_use.

If you believe that the consumer use tax amnesty program will be of benefit to you, please contact an advisor with Decosimo's Cincinnati, Ohio office to discuss the matter in more detail.