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Tax Resources for Accountants and Small Businesses (U.S.)

Ohio Use Tax Amnesty Program

The amnesty program begins October 1, 2011 and ends May 1, 2013.

WHAT IS CONSUMER’S USE TAX?

Consumer’s 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.  In general, if you have paid Ohio sales tax on the purchase of tangible personal property or a taxable service, you do not owe consumer’s use tax on that transaction. Examples of tangible personal property subject to use tax are computer equipment, printers, fax machines, office supplies (paper, envelopes, folders, pens, paper clips, etc.), furniture and cleaning supplies (mops, brooms, cleaners, paper towels, etc.).  Consumer’s use tax is also due on the use of taxable services in Ohio.  Examples of taxable services include, but are not limited to, installation, repair, employment services (temporary labor), automatic data processing, janitorial and maintenance services, storage services and maintenance contracts.  The Ohio Department of Taxation (“ODT”) has developed a series of fact sheets to further explain use tax and how use tax commonly applies to certain types of businesses such as construction contractors, manufacturing, retail and service-related enterprises. The fact sheets can be found at the bottom of this page.

WHAT CONSUMER’S USE TAX PERIODS SHOULD
BE INCLUDED IN MY AMNESTY APPLICATION?

Consumer’s use tax due on purchases made on or after January 1, 2009 should be included in your amnesty application.  However, if you have been issued an assessment for consumer’s use tax due for any period, you are not eligible for amnesty.  You can apply for consumer’s use tax amnesty only once during the program.

WHAT IF I DON’T QUALIFY FOR CONSUMER’S USE TAX AMNESTY?

Taxpayers who do not qualify for consumer’s use tax amnesty may still qualify for ODT’s Voluntary Disclosure Program.  For more information on voluntary disclosure, please scroll down to the bottom of this page.  However, if you qualify for consumer’s use tax amnesty, you are not eligible for voluntary disclosure for consumer’s use tax.

WHAT ARE THE ADVANTAGES OF AMNESTY?

The Tax Commissioner will waive all unassessed use tax liability due for any periods prior to January 1, 2009.  Consumer’s use tax paid under amnesty is not subject to interest or civil or criminal penalties.  However, if you are registered for Ohio use tax as of June 1, 2011, you will be required to pay interest on any under-reported or unreported consumer’s use tax.

AM I REQUIRED TO PAY TAX FOR PAST PERIODS?

Yes.  You must make a nonrefundable payment of all consumer’s use tax due on purchases made on or after January 1, 2009 through the last day of the month preceding the month in which you request amnesty.  You will also be required to register for consumer’s use tax and may be required to file returns on an ongoing basis. Even if you are not required to file use tax returns on a regular basis, you still must report and pay consumer’s use tax on your annual personal income tax return (e.g., Schedule C filers), Form IT1040, or via a Use Tax Voluntary Payment Form VP-Use.  Both forms are available on ODT’s Web site.

IS THE INFORMATION I SUBMIT UNDER AMNESTY SUBJECT TO REVIEW?

The Tax Commissioner reserves the right to review the documentation provided under amnesty and any other records that support the amnesty submission in order to confirm that the amount of the amnesty payment accurately reflects your consumer’s use tax liability.

WHAT HAPPENS IF I APPLY FOR AMNESTY BUT DON’T QUALIFY?

If you apply for amnesty but ODT determines that you don’t qualify because of a prior consumer’s use tax assessment or prior consumer’s use tax amnesty submission, ODT will issue an assessment for the balance of your consumer’s use tax liability, plus interest.  Any payment submitted with your application will be applied to your consumer’s use tax liability.  A payment plan is not available to consumers who do not qualify for amnesty.

IS THERE A PAYMENT PLAN AVAILABLE?

A no-interest payment plan is available to businesses that were not registered for consumer’s use tax as of June 1, 2011.  In order to qualify for a payment plan, the amount of consumer’s use tax due under amnesty must exceed $1,000.  The length of the payment plan will be determined by the total consumer’s use tax liability and the payment period cannot exceed 7 years (84 months).  Further, a minimum payment of $1,000 per month is required.  If you request a payment plan:

  1. At least one corporate officer, LLC member, general partner or other guarantor (“Guarantor”) must agree to the terms of the payment plan on behalf of the business and agree to accept personal liability for the entire debt; and
  2. One additional Guarantor must agree to accept personal liability for the entire debt. If the business is a single member LLC, no additional Guarantor is required.

Guarantors signing the payment plan agreement must provide his or her social security number on the payment plan agreement.  Further, the business must waive the statute of limitations for assessment of the consumer’s use tax due under the payment plan.  The first month’s payment must be remitted at the time you submit your amnesty application.

The proposed rule for the use tax amnesty payment plan has been filed with the Joint Committee on Agency Rule Review (JCARR). Comments on the rule can be submitted to Taxation via e-mail.

CAN YOU PROVIDE EXAMPLES OF HOW TO CALCULATE
PAYMENTS UNDER THE PAYMENT PLAN?

The formula for calculating the monthly payment under the payment plan is:

  1. If amount due is $1,000 or less—the full amount must be paid with the amnesty application.
  2. If amount due is $84,000 or more—Total Amount Due Under Amnesty/84 months; or
  3. If amount due is more than $1,000 and less than $84,000—the monthly payment is $1,000.

Here are some examples:

Example 1—Total use tax liability is $10,000.  Since the minimum payment is $1,000, the monthly payment is calculated by dividing $10,000 by $1,000, or $1,000 per month for 10 months.

Example 2—Total use tax liability is $126,000.  Since the maximum payment period is 84 months, the monthly payment is calculated by dividing $126,000 by 84 or $1,500 per month for 84 months.

Example 3—Total use tax liability is $1,000 or less.  Since the minimum payment is $1,000, the full amount due must be remitted with the amnesty application.

Example 4—Total use tax liability is $1,700.  The first payment is $1,000 and second payment is $700.  For amounts not evenly divisible by 1,000, the final payment will be the remaining amount due.

WHAT ARE THE STEPS TO REQUEST AMNESTY?

Here’s a step-by-step guide to requesting amnesty.

  1. To calculate the consumer’s use tax due, complete the spreadsheet listing all untaxed taxable tangible personal property and services used, stored or consumed in Ohio during the amnesty period beginning with January 1, 2009 (or when you began making purchases of taxable tangible personal property used in Ohio if later than January 1, 2009).  The spreadsheet must include the name and address of the supplier, a brief description of the item(s) and/or service(s) purchased, the total purchase price and the county in which each purchase was used.  The spreadsheet is available at the bottom of this page..
  2. If not already registered to use the Ohio Business Gateway (“OBG”, go to http://business.ohio.gov ) and complete the OBG registration process.
  3. If you do not have a consumer’s use tax account, complete the registration process on OBG.
  4. If you were registered for consumer’s use tax as of June 1, 2011, please call 1-800-304-3211 on or after October 1, 2011 to request amnesty.
  5. On OBG, electronically complete and sign the amnesty return.  Enter the total amount of consumer’s use tax due by county as calculated in Step 1 above.
  6. Upload the spreadsheet at the link provided on OBG.
  7. Submit payment through OBG for either the full amount of consumer’s use tax due or, if you request and qualify for a payment plan, an initial payment equal to your first month’s payment amount.  (For further information regarding who qualifies for a payment plan see “Is There a Payment Plan Available?” on page 2.)
  8. If you have requested and qualify for a payment plan, ODT will mail a payment plan agreement to you for signatures.
  9. Mail the completed, signed payment plan agreement to the address below marked “ATTENTION—USE TAX AMNESTY.”  If ODT does not receive the signed payment plan agreement, your application will be rejected.  Please keep a signed copy for your records.

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