March 17, 2011
Now is the time to get educated on Use Tax
The Ohio Department of Taxation has recently launched a new initiative to target small and mid-sized businesses with potential Ohio Use Tax exposure. If your company is not currently registered for use tax, now is the time to comply to avoid future penalties.
What is Use Tax?
Use tax is a tax on the storage, use or other consumption of tangible personal property and certain services. In general, if you have paid sales tax on an item, then you do not owe Ohio use tax. If you have not paid Ohio sales tax (by purchasing goods from out of state, for example), then you have a responsibility to remit tax to the State.
As a part of the recently launched Use Tax Education Program (UTEP), the Ohio Department of Taxation will begin identifying businesses that are not registered for use tax and aggressively informing them of their responsibility to be remitting the tax.
I Haven't Been Paying Use Tax. What Happens Now?
Businesses that are not currently registered with Ohio to pay use tax have some options.
1) As a part of UTEP, businesses can enter into a voluntary agreement to clear up past unpaid use tax liability. For businesses who pro-actively contact the Department through the Voluntary Disclosure program, the look-back period will be limited to the last three years, with penalties waived.
2) Unregistered businesses can wait to be contacted by the Department, and enter in to a Voluntary Disclosure program at that time. The look-back period after a business has been contacted is for the last four years with penalties waived.
3) Businesses that do nothing may be audited and/or assessed use tax for the last seven years, and subject to a 15% penalty for unpaid use tax.
Please contact our office if you have questions or concerns about your company's use tax compliance. Being proactive now could prevent penalties and potential audits later!
