Has Your Business Registered for the Ohio Use Tax Amnesty: Is it Right for You?

Most businesses are familiar with Ohio sales tax, but many are unaware of a related tax, use tax. Use tax is imposed on the storage, use or other consumption of property or services in Ohio. A purchase may be subject to use tax if no sales tax was collected with the purchase, or if the sales tax collected was less than that which would have been collected in Ohio. The most common transactions subject to use tax are mail order transactions with out of state retailers and internet transactions.

Whether you agree or disagree with the collection of use tax, it is the law in Ohio and all consumers, both businesses and individuals, must comply. Despite this, many businesses have failed to register for or pay use tax and the Ohio Department of Taxation has noticed. In fact, it has been reported that approximately 380,000 Ohio businesses are not registered for use tax. If your business is not registered for use tax, there is a strong possibility that your business will be audited in the future. The Ohio Department of Taxation has stepped up enforcement by hiring new use tax auditors and actively auditing companies that have not registered for or paid use tax.

However, as a way to encourage voluntary compliance, the Ohio Department of Taxation has created the Ohio Use Tax Amnesty Program. In order to participate in the program, you must apply before May 1, 2013. The benefits of completing the program are substantial: your overall liability is limited to the period from January 1, 2009, and forward; you are not subject to penalties and interest; and you may be able to enter a payment plan of up to seven years. If you were registered to pay use tax on or prior to June 1, 2011, some limitations may apply. Further, if you received a use tax assessment prior to October 1, 2011, you are not eligible for the program, but other remedies may be available. Ultimately, the Ohio Use Tax Amnesty Program is an excellent opportunity to voluntarily comply with the use tax laws and minimize your risk and exposure to delinquent use taxes.

For assistance in registering for use tax and reviewing whether the Ohio Use Tax Amnesty Program is right for you or your business, please contact your Stark & Knoll attorney at 330.376.3300, or, Donald Scherer, at 330.572.1317.