Sales tax is a "trust" tax that is to be collected by all retailers and certain service providers when they make taxable retail sales. It is called a "trust" tax because the consumer has entrusted this tax to retailers and certain service providers with the understanding that it will be reported and paid to the State of Ohio in a timely manner.

Every Ohio retailer (vendor) and certain service providers making taxable retail sales must obtain a vendor's license, collect the proper amount of sales tax, file tax returns with payment of tax collected, and maintain complete records of transactions.

Yes, all vendors must obtain one or more of the following licenses depending on the nature of their business.
 

• Regular Vendor's License (ST-1) -- Issued by the County Auditor to vendors with a fixed place of business in Ohio. Vendors of tangible personal property and certain services must have one regular vendor's license for each fixed sales location.
  Application Fee $25 

• Delivery Vendor's License (ST-1D) -- Issued by the Department of Taxation to vendors who make sales based on delivery of tangible personal property and certain services at the consumer's location.
  Application Fee $25
   

• Transient Vendor's License (ST-1T) -- Issued by the Department of Taxation to vendors who transport stocks of goods to temporary places of business or exhibits in a county where they have no fixed place of business in order to make sales or lease motor vehicles.
  Application Fee $25
   

• Service Vendor's License (ST-1S) -- Issued by the Department of Taxation to vendors providing automatic data processing, computer services or electronic information services; taxable telecommunications service; landscaping and lawn care service; private investigation and security service; information service (1-900 telephone calls); exterminating service; building maintenance and janitorial service; employment service; employment placement service; satellite broadcasting service; and snow removal service (Mechanical).
  Application Fee $25

You must have an active regular vendor’s license for each fixed place of business from which taxable retail sales are made.

A regular vendor’s license, which is issued by the County Auditor to cover a fixed place of business, may be transferred from one existing business location to another when you move an existing business to a new location within the same county. If the business location is being moved to a different county, a new regular vendor’s license must be obtained from the County Auditor of the different county.  A vendor, who is moving an existing business to a new location within the same county and wishes to transfer the existing regular vendor’s license, must submit a transfer application to the Department of Taxation requesting transfer of the license to the new location. See form ST-3TL or contact your local County Auditor’ Office or call 1-800-282-1782 or visit our website. If approved, the Department of Taxation will update its file, issue a transfer license, and advise the County Auditor.  There is NO FEE for transferring a regular vendor’s license from one location to another within the same county.

If you hold a permit issued by the Division of Liquor Control, the vendor’s license and permit must have the identical name and be for the identical address as shown on the permit. If you move to a new location within the same county, you must contact the Division of Liquor Control to have the permit transferred to the new location address. The Department of Taxation will not issue a Transfer License until we have been notified by the Division of Liquor Control that the permit has been transferred.

Any change in ownership (sole proprietor to partnership, partnership to corporation, corporation to sole proprietor, partnership to sole proprietor, etc.) requires a new license.

A change in your mailing address does not require a new license.

If you are required to obtain a new vendor’s license due to a change in ownership or location, a final return must be filed within fifteen days of the last day of business under the original vendor’s license.

If you have any questions regarding the transfer of an existing license or the requirement to obtain a new vendor’s license, please call Tax Registration at 1-888-405-4089.

SUSPENSION: Your vendor’s license may be suspended if you fail to file sales tax returns when due or you fail to pay the tax due thereon.  If your vendor’s license is suspended, no retail sales may be made until the license is reinstated.  To have a suspended license reinstated, you would be required to file complete and correct returns for all periods and pay the full amount of tax, penalties, and other charges due on those returns. You may also be required to furnish security in an amount equal to your average tax liability for one year.

REVOCATION: Your vendor’s license may be revoked if the Tax Commissioner ascertains that you have no need for the license because you are not engaged in making taxable retail sales.

The State tax rate is currently 5.5%.

Counties and regional transit authorities may each levy sales tax in multiples of .25% up to 1.5%. The total combined rate - state, county and transit authority - may not exceed 8 1/2 %.

The County Auditor will reimburse vendors for the cost of reprogramming computer cash registers when a county or transit authority imposes or increases the sales tax. Vendors must apply within six months of the increase on a form provided by the Auditor.

A taxable sale includes any transaction in which title or possession of tangible personal property or the benefit of certain services is, or will be, transferred or provided for a price. All retail sales are subject to the tax unless they are specifically excepted or exempted in Ohio's sales tax law.

If the seller is located in Ohio or the out-of-state seller has substantial nexus with Ohio, sales or use tax is due on all sales of tangible personal property and selected services to purchasers in Ohio, unless the purchaser has a statutory basis for claiming exception or exemption.  NOTE: Many out-of-state sellers are registered with Ohio to collect and remit Ohio use tax on taxable sales made to Ohio consumers.

If the seller is not located in Ohio and does not have substantial nexus with Ohio, the seller cannot be required to collect and remit Ohio use tax.  However, the  purchaser will still owe Ohio use tax on the purchase of goods or services, unless the purchaser has a statutory basis for claiming exception or exemption.

• Rental of hotel rooms or similar sleeping accommodations for less than 30 days by establishments with 5 or more sleeping rooms.

• Provision of landscaping or lawn care service, if annual sales of this service equal or exceed $5,000.

• Provision of private investigation or security service.

• Provision of information service through use of a nine-hundred telephone call (1-900).

• Production of tangible personal property from material supplied by the customer. For example, a tailor using fabric furnished by the customer.

• Building maintenance and janitorial service, if annual sales of this service equal or exceed $5,000.

•  Exterminating service.

• Employment service.

• Employment placement service.

• Physical fitness facility service.

• Recreation and sports club service.

• Repair of tangible personal property (except repair of property which is exempt from sales tax).

• Installation of tangible personal property (except installation of property which is exempt from sales tax).

• Washing (except coin-operated), cleaning, waxing, polishing, or painting of motor vehicles.

• Towing service for motor vehicles, this includes the conveyance of a wrecked, disabled, or illegally parked motor vehicle.

•  Laundry and dry cleaning service, excluding sales made through coin operated machines.

• Automatic data processing, computer services, or electronic information services provided for use in a business. Electronic information services include, but are not limited to, Internet access charges and e-mail service charges for use in a business.

• Certain telecommunication services.

• Satellite broadcasting service.

•  Personal care service, including skin care, application of cosmetics, manicures, pedicures, hair removal, tattoos, body piercing, tanning, massage and other similar services.  It does not include hair care: cutting, coloring, and styling.

• Transportation of persons, within Ohio, except by public transit systems or commercial airlines.

• Snow removal service, if annual sales of this service equal or exceed $5,000.

• Storage of tangible personal property (except such property that the consumer of the storage holds for sale in the regular course of business).

YES.  The sale of a prepaid authorization number and/or a prepaid telephone calling card is considered a sale subject to sales tax, unless the purchaser has a statutory basis for claiming exception or exemption.

“Prepaid authorization number” means a numeric or alphanumeric combination that represents a prepaid account that can be used by the account holder solely to obtain telecommunications service, and includes any renewals or increases in the prepaid account.

“Prepaid telephone calling card” means a tangible item that contains a prepaid authorization number that can be used solely to obtain telecommunications service, and includes any renewals or increases in the prepaid account.

The charges for Internet service (on-line access to information stored in a computer) for use in business are subject to Ohio sales or use tax. The charges for Internet service for individuals are not subject to Ohio sales or use tax.

The charge for creating a website on an ISP’s server is a charge for personal service and it is not subject to sales or use tax.  

If your Bed & Breakfast has five or more sleeping rooms, you must charge sales tax on the total amount charged.

If your Bed & Breakfast has fewer than five sleeping rooms, you should separate the charges for the sleeping room from the charges for the food. You must collect sales tax on the amount charged for food. If you do not separate the room charges from food charges, you must collect sales tax on the total amount charged.

Professional, personal, and insurance transactions are not taxable when any transfer of tangible personal property is a small item for which no separate charge is made.

Basically, YES. However, warranties, extended warranties, maintenance agreements or service contracts covering exempt equipment would also be exempt.

Vendors must charge and collect the sales tax at the rate in effect in the county where the sale is made or obtain valid documentation detailing why the sale is exempt from tax. Tax on titled motor vehicles, off-highway motorcycles, all-purpose vehicles, personal watercraft, titled watercraft and titled outboard motors is paid to the Clerk of Courts at the rate in effect in the purchaser's county of residence. Telecommunication services are taxed at the rate in effect in the county of the billable telephone number. Most other areas listed under services are taxed at the county rate where the service is received.

The tax applies when the sale is made, not at some future date when payment is received. For example, if a vendor makes a sale on credit in January, but the money is not received until February, the tax must be reported and paid with January's return.

Vendors must charge the tax on every sale unless the customer provides a properly completed exemption certificate or the sale is exempt by law. Tax must be paid to the State on every taxable sale, even if the price is not collected from the customer. Vendors who fail to send in collected taxes, make sales without a license, or make sales with a suspended or revoked license, are subject to assessments, fines, and criminal penalties.

Vendors are required to keep complete records of daily sales, tax charged and exemption certificates. All records of daily sales and tax charged must be retained for four years and must be open for inspection by agents of the Tax Commissioner. Blanket exemption certificates must be maintained for at least four years after the final sale is made to the purchaser who issued the certificate.  The Tax Commissioner may allow the records to be destroyed early or may request that they be kept longer.

Restaurateurs and other food service operators, licensed under Section 3732.03 of the Ohio Revised Code, are allowed to maintain records for only 14 days per calendar quarter. The specific dates for which records must be kept are determined by the Tax Commissioner four times a year.

Tax must be charged on the total price billed to the customer. This includes delivery charges, charges for set-up, assembly, installation, preparation, engraving, and all other costs that make up the total amount charged.

• Price Discounts – The tax base is reduced when the discount is allowed at the time of sale. Also qualifying are cash and term discounts allowed by a vendor and taken by the consumer.

• Coupons -- The tax base is reduced when the customer uses a coupon supplied or published by the vendor free of charge. Manufacturers' coupons that are redeemable by any vendor and for which the vendor will be reimbursed by the manufacturer do not reduce the tax base.

• Manufacturers' Rebates -- The tax base is never reduced by any form of rebate for goods and services sold. The vendor must charge tax on the total amount charged at the time of the sale.

Trade-in Allowances:

• New Motor Vehicles (including all-purpose vehicles and off-highway motorcycles but does not include manufactured homes or mobile homes) -- the tax base can be reduced on the sale of a new motor vehicle when a licensed new motor vehicle dealer accepts a motor vehicle in trade. No other item accepted in trade can reduce the tax base of a motor vehicle.

For example, a new car is priced at $18,500 and the customer receives a trade-in allowance of $500, leaving the net difference $18,000. The tax base becomes $18,000.

Note: The tax base is not reduced on the sale of a used motor vehicle when a trade-in is allowed.

• New and Used Titled Watercraft and Outboard Motors (includes titled personal watercraft) -- The tax base can be reduced on the sale of new and used watercraft and outboard motors when a licensed watercraft dealer accepts a watercraft, watercraft and trailer and/or outboard motor in trade.

Note: The tax base cannot be reduced when only a trailer is accepted in trade.

For all other sales, a trade-in allowance does not reduce the tax base.

“Food” means substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value. “Food” does not include alcoholic beverages, dietary supplements, soft drinks, or tobacco. Please refer to the information release titled “Food Definition Change” on our website for additional information.

Federal law prohibits states from imposing sales tax on items purchased with food stamps. This includes items, such as soft drinks, which are normally subject to Ohio sales tax.

SALES - You are required to collect and remit sales tax on all sales including rentals, except for sales of food for consumption off the premises where sold.  For example, if you are catering a wedding at your facility, you would be required to collect and remit sales tax on the sale of the food and beverages and on the rental of chairs, tables, dishware, stemware, silverware, napkins, tablecloths, silk flowers etc.  If you are catering a wedding at a facility arranged for by the wedding party (not your facility or a facility arranged for by you), you would be required to collect and remit tax on sales of all beverages (soda, beer, wine, mixed drinks, etc.) and on all rental items, but you would not be required to collect tax on the sale of food as the food is consumed off the premises where sold.

PURCHASES - You would be entitled to claim exemption on the purchase of all items that are purchased for “resale” (food, beverages and/or rental items). If you are licensed to conduct a food service operation pursuant to section 3732.03 of the Revised Code, you are entitled to claim exemption on the purchase of items primarily used directly in preparing and preserving food for human consumption for sale (not including items used to display food for selection by the consumer), and to clean items used to prepare or preserve food for human consumption for sale.

YES.  Effective August 1, 2003 delivery charges by a vendor for preparation and delivery to a location designated by the consumer of tangible personal property or a service, including transportation, shipping, postage, handling, crating, and packing are taxable.

Medicines (including tonics), vitamin preparations and other non-prescription products are taxable.

Bottled water, distilled water, mineral water, ice and carbonated water sold for ingestion by humans are considered food. Food items consumed off premises are not taxable. Water that contains natural or artificial sweeteners is a “soft drink” under R.C. 5739.01(EEE)(2)(c) and excluded from the definition of food. Please refer to the information release titled “Food Definition Change” on our website for additional information.

Vendors will receive a letter from the Department of Taxation concerning their filing schedule (monthly, semiannually, or EFT) shortly after obtaining a vendor's license. Returns must be filed when due even if no sales are made and/or no tax is due. Filing schedules are set according to the vendor's anticipated tax liability or their business activity. The tax return must be filed and received (not postmarked) by the Department of Taxation on or before the due date indicated on the return. Vendors who timely file and pay all tax due are entitled to a discount (see your tax return filing instructions sheet for the amount of the discount). Remittance must be made payable to the Treasurer of State.

If your pre-identified returns have been lost, destroyed or misplaced, you may contact the Department of Taxation to obtain replacement returns. You must specify the reporting period and indicate your vendor's license number on the return. Returns are available on the Ohio Department of Taxation's Web site under “Tax Forms.” We urge you to make a photocopy of any return and/or supporting schedule filed with the Department of Taxation for your records.

Yes, log onto www.ohio.gov and click the icon “Ohio Business Gateway” or Visit tax.ohio.gov and click the icon "Ohio Business Gateway". You may also go directly to the Ohio Business Gateway (OBG) Web site at obg.ohio.gov. Only form UST-1 can be filed on the OBG.

If you feel sufficient time has passed and your check has not cleared your bank, we would recommend that you contact your bank and request a stop payment be issued. You should then send a replacement check for the tax liability amount (discount not allowed) along with a copy of your tax return or a return facsimile. A note should be attached indicating that you have submitted a replacement check for the original lost check.

NOTE: If you originally filed a facsimile or altered return with your payment, this may cause a delay in processing. Please allow a little more time before you issue a stop payment order and a replacement check.

You should immediately contact us at 1-888-297-3540.

Some vendors may be required to remit sales tax by EFT. These vendors will be notified of this requirement prior to the first required payment.

Vendors who wish to voluntarily remit by EFT must contact the Treasurer of State, EFT Unit, for remittance procedures at 1-877-338-6446 (toll free).

Sales tax returns and all supporting schedules must continue to be filed in accordance with established EFT procedures.

Your tax returns will be periodically reviewed by the Department of Taxation to determine if a change in filing method is needed. Vendors are notified if changes are necessary. The Department of Taxation will consider your request for a change in filing frequency.

Cumulative Return Authority is available for reporting two or more regular county vendor licenses. You may request this authority through the Department of Taxation's Central Registration Unit (1-888-405-4039) or by filing an application, ST-26 which is available on our Web site. If granted, you will file one sales tax return each month, reporting your total Ohio sales and tax activity for all Ohio locations in the upper portion of the tax return and provide a county-by-county breakdown of your taxable sales and tax liability in the supporting schedule portion of the tax return. The Tax Commissioner may require this method of filing if it is determined that it is necessary for the efficient administration of the tax.

• An additional charge up to $50 or 10% of the tax required to be paid, whichever is greater, may be levied on every tax return not filed on time and/or when the tax liability is not paid in full.
   

• For not paying collected taxes, or not filing a tax return, a penalty up to 50% of the tax due may be assessed.
   

• A $50 fee is charged for every returned check. Interest may be due on any taxes found due and not paid in a timely manner.

A vendor may recover sales tax paid to the State on a sale that becomes a bad debt. The debt must be uncollected for at least six months and written off for federal income tax purposes. The amount of the bad debt and tax previously paid should be deducted from the vendor's sales tax return for the filing period during which the bad debt is written off.

If a customer returns merchandise and the vendor refunds the entire purchase price, including sales tax before the return is filed, the vendor should not report the sale on their tax return. If the tax has already been reported and paid, the vendor may file a refund claim or adjust the current tax return.

NOTE: In no case should you make an adjustment to your return that causes your taxable sales and tax liability to fall below zero. If an adjustment for a period exceeds your taxable sales and tax liability for a reporting period, you must apply for a refund on Form ST-AR.

Anyone who overpays sales tax can get a refund by applying to the Tax Commissioner. In no case may applications be filed later than 4 years from the date of the payment. All refund claims must be filed using the proper form (ST-AR) provided by the Department.

Interest may be paid on a paid assessment when it is determined that it was issued in error. Interest may be paid when it is determined that sales taxes have been paid in error.

Sales tax must be charged on all retail sales unless the purchaser provides a properly completed exemption certificate stating the statutory reason for claiming exemption. The vendor must retain the certificate as proof of nontaxable sales. Exemption certificates are prescribed by the Tax Commissioner and can be obtained from a local printer or office supply store. Sample forms are available on our Web site.

Exemption certificates are not needed when the item sold is never taxable, such as prescription drugs and food sold for off-premises consumption. Certificates are not needed when the purchaser is clearly identified on the invoice as an entity that is always exempt, such as the federal government, the State of Ohio, or any local government of this state.

The State of Ohio does not issue a sales tax exemption number. A vendor’s license number is NOT a sales tax exemption number. To claim exemption, you must provide a properly completed exemption certificate to your supplier.

Farmers are entitled to claim exemption on the purchase of items of tangible personal property used directly in the production of a product for sale. This would include, but is not limited to: seeds, fertilizers, insecticides, pesticides, field tiles, tractors, plows, combines, and specially designed motor vehicles with PTO applicator units that travel from farm to farm to apply chemicals and fertilizers. This would not include: almost all motor vehicles licensed to operate on the highway [passenger cars; pick-up trucks; larger trucks and trailers that are primarily used to haul people, animals, raw materials (seeds, fertilizers, insecticides and pesticides) to the farm and finished goods (corn, wheat, soy beans, cattle, hogs, etc.) from the farm to market], lawn mowers, weed eaters, items used to maintain set-a-side fields, chain saws, all purposes vehicles that are primarily used for recreation, and home garden equipment.

To claim exemption, a properly completed exemption certificate must be given to your supplier.

• Copyrighted motion picture films for exhibition purposes unless solely used for advertising. The rental or sale of films or tapes to individuals is taxable.
• The refundable deposit paid on returnable beverage containers, cartons, and cases.
• Food for human consumption off the premises where sold (food does not include alcoholic beverages, dietary supplements, soft drinks, or tobacco).
• Food sold to students in a dormitory, school cafeteria, fraternity or sorority house.
• Food served without charge to employees as part of their compensation.
• Items purchased with food stamps.
• Newspapers (including community newspapers and national newspapers, such as the Wall Street Journal, USA Today, and other unbound publications.).
• Magazine subscriptions.
• Sales by churches and nonprofit charitable organizations (excluding sales of motor vehicles, titled watercraft, titled outboard motors, off-highway motorcycles, all-purpose vehicles and personal watercraft) not exceeding six days in any calendar year.
• Sales to nonprofit organizations operated exclusively in Ohio for certain charitable purposes as defined in sales tax law as follows: "Charitable purposes" means the relief of poverty; the improvement of health through the alleviation of illness, disease, or injury; the operation of an organization exclusively for the provision of professional, laundry, printing, and purchasing services to hospitals or charitable institutions; the operation of a home for the aged, as defined in section 5701.13 of the Revised Code; the operation of a radio or television broadcasting station that is licensed by the federal communications commission as a noncommercial educational radio or television station; the operation of a nonprofit animal adoption service or a county humane society; the promotion of education by an institution of learning that maintains a faculty of qualified instructors, teaches regular continuous courses of study, and confers a recognized diploma upon completion of a specific curriculum; the operation of a parent teacher association, booster group, or similar organization primarily engaged in the promotion and support of the curricular or extracurricular activities of a primary or secondary school; the operation of a community or area center in which presentations in music, dramatics, the arts, and related fields are made in order to foster public interest and education therein; the production of performances in music, dramatics, and the arts; or the promotion of education by an organization engaged in carrying on research in, or the dissemination of, scientific and technological knowledge and information primarily for the public.
• Sales to churches.
• Sales to organizations that have been granted and have maintained 501(c)(3) status by the Internal Revenue Service.
• Sales of personal computers, computer monitors, computer keyboards, modems, and other peripheral computer equipment to an individual who is licensed or certified to teach in an elementary or a secondary school in this state for use by that individual in preparation for teaching elementary or secondary school students.
• Sales to a veterans' organization state headquarters.
• Sales of animals by nonprofit animal shelters and county humane societies.
• Sales to U.S. government agencies.
• Sales to the State of Ohio or any of its political subdivisions.
• Sales to other states and their political subdivisions if they exempt sales to the State of Ohio and any of its political subdivisions.
• Casual sales except sales of motor vehicles, boats and outboard motors that are required to be titled, snowmobiles, documented boats, all-purpose vehicles, off-highway motorcycles and personal watercraft.
• Transportation of property.
• Motor vehicles sold in Ohio to nonresidents where their home state; 1. Provides a nonresident motor vehicle exemption from their sales and use tax law under which Ohio residents can purchase a vehicle and not be required to pay sales or use tax, 2. Does not give credit against their sales, use or similar tax for Ohio sales and use tax paid, or 3. Does not have a sales, use or similar tax that applies to sales of motor vehicles.
• Drugs that are or are intended to be distributed free of charge to a practitioner licensed to prescribe, dispense, and administer drugs to a human being in the course of a professional practice and that by law may be dispensed only by or upon the order of such a practitioner.
• Motor vehicle fuel that is subject to the State motor fuel tax.
• Motor vehicles and parts used for transporting tangible personal property by persons engaged in highway transportation for hire.
• Emergency and fire protection vehicles and equipment used by nonprofit organizations in providing emergency and fire-protection services for political subdivisions.
• Sales of used manufactured homes and used mobile homes, as defined in section 5739.0210 of the Revised Code, made on or after January 1, 2000;
• Sales of tangible personal property and services to a provider of electricity used or consumed directly and primarily in generating, transmitting, or distributing electricity for use by others, including property that is or is to be incorporated into and will become a part of the consumer’s production, transmission, or distribution system and that retains its classification as tangible personal property after incorporation; fuel or power used in the production, transmission, or distribution of electricity; and tangible personal property and services used in the repair and maintenance of the production, transmission, or distribution system, including only those motor vehicles as are specially designed and equipped for such use. The exemption provided in this division shall be in lieu of all other exemptions in division (B)(42)(a) of section 5739.02 of the Revised Code to which a provider of electricity may otherwise be entitled based on the use of the tangible personal property or service purchased in generating, transmitting, or distributing electricity.
• Sales to a professional racing team of any of the following:
  • Motor racing vehicles;
  • Repair services of motor racing vehicles;
• Items of property that are attached to or incorporated in motor racing vehicles, including engines, chassis, and all other components of the vehicles, and all spare, replacement, and rebuilt parts or components of the vehicles; except not including tires, consumable fluids, paint, and accessories consisting of instrumentation sensors and related items added to the vehicle to collect and transmit data by means of telemetry and other forms of communication.
• Things used or consumed primarily in storing, transporting, mailing or otherwise handling purchased sales inventory in a warehouse, distribution center or similar facility when the inventory is primarily distributed outside this state to retail stores of the person who owns or controls the warehouse, distribution center, or similar facility.
• Things used or consumed by a warrantor in fulfilling a warranty on tangible personal property.
• Sales of drugs for a human being, dispensed pursuant to a prescription; insulin as recognized in the official United States pharmacopoeia; urine and blood testing materials when used by diabetics or persons with hypoglycemia to test for glucose or acetone; hypodermic syringes and needles when used by diabetics for insulin injections; hospital beds when purchased by hospitals, nursing homes and other medical facilities; and medical oxygen – dispensing equipment. The purchase of durable medical equipment for home use, or mobility enhancing equipment, when made pursuant to a prescription and when such devices or equipment are for use by a human being.
• Tangible personal property used in air, noise or water pollution control facilities by holders of pollution control certificates.
• Tangible personal property to be resold in the form received.
• Tangible personal property used or consumed in commercial fishing.
• Gas, water, steam, and electricity delivered through pipes, conduits, or wires and sold by a public utility.
• Bulk water for residential use.
• Tangible personal property incorporated into an energy conversion facility, solid waste energy conversion facility, or a thermal efficiency improvement facility by holders of the appropriate certificate.
• Telecommunications service to call centers. (No longer an exemption of the sale of 800, WATS, or private communications services).
• Sales of property for used directly in agricultural production.
• Property used in the preparation of eggs for sale.
• Sale and installation of agricultural land tile.
• Sale and construction of portable grain bins to farmers.
• Sales to persons licensed to conduct a food service operation of tangible personal property primarily used directly: to prepare food for human consumption for sale; to preserve food which has been or will be prepared for human consumption for sale by the food service operator, not including tangible personal property used to display food for selection by the consumer; and to clean tangible personal property used to prepare or serve food for human consumption for sale.
• Ships or vessels or rail rolling stock used in interstate or foreign commerce and material used for repairing, altering, or propelling them.
• Material, machinery, equipment and other items used in packaging property for sale by a manufacturer or retailer.
• Building and construction material sold to contractors for incorporation into real property of federal, state, or local governments; religious and charitable institutions; sports facility under section 307.696 of the Revised Code; or outside this state if exempt by that state.
• Building and construction materials sold to construction contractors or persons engaged in the business of horticulture or producing livestock for incorporation into a horticulture or livestock structure.
• Building materials and services sold to a construction contractor for incorporation into a building under a construction contract with an organization exempt from taxation under section 501(c)(3) of the Internal Revenue Code of 1986 when the building is to be used exclusively for the organization’s exempt purposes.
• Property manufactured in Ohio and immediately shipped outside the State for use in the retail business, if sold by the manufacturer to the retailer and shipped in vehicles owned by the retailer.
• Material incorporated as part of tangible personal property produced for sale by manufacturing, assembling, processing, or refining.
• Tangible personal property used or consumed in a manufacturing operation.
• Sales where the purpose of the consumer is to use or consume the things transferred in making retail sales and consisting of newspaper inserts, catalogues, coupons, flyers, gift certificates, or other advertising material which prices and describes tangible personal property offered for retail sale.
• Sales to direct marketing vendors of preliminary materials such as photographs, artwork, and typesetting that will be used in printing advertising material; of printed matter that offers free merchandise or chances to win sweepstakes prizes and that is mailed to potential customers with advertising material described in section 5739.02 (B) (35) (a) of the Revised Code; and of equipment such as telephones, computers, facsimile machines, and similar tangible personal property primarily used to accept orders for direct marketing retail sales.
• To use tangible personal property to perform a service listed in division (B) (3) of section 5739.01 of the Ohio Revised Code (repair; installation; towing, washing, cleaning, waxing, polishing or painting motor vehicles; transportation of persons, within Ohio, except by public transit systems or commercial airlines; laundry and dry cleaning (except coin operated); automatic data processing, computer service and electronic information service; telecommunications; satellite broadcasting service (audio and video); landscaping and lawn care; snow removal; private investigation and security; 900 information; personal care service, including skin care, application of cosmetics, manicures, pedicures, hair removal, tattoos, body piercing, tanning, massage and other similar services (not including hair care such as cutting, coloring, and styling); building maintenance and janitorial; employment; employment placement; exterminating; physical fitness facility; recreation and sports club) if the property is or is to be permanently transferred to the consumer of the service as an integral part of the performance of the service.
• Parts and services used in repairing and maintaining aircraft with fractional share ownership (private aircraft whose ownership is shared by a group of people).
• "Direct use" exemptions:
  
  • Material used or consumed directly in mining, farming, agriculture, horticulture, floriculture, or used in the production of and exploration for crude oil and natural gas. Motor vehicles titled and registered to operate on the highways generally do not qualify for exemption.
  • Tangible personal property used directly in rendering a public utility service.
  • Tangible personal property used or consumed in the preparation for sale of printed material.
  • Sales to organizations described in division (D) of section 5709.12 of the Revised Code.

NOTE: This list of exemptions is merely an abbreviation of the law. The statutes and rules concerning sales tax exemptions are very long and complicated. Also there are hundreds of court decisions which affect the application of these exemptions. If you have any questions regarding a particular situation, please contact the Department of Taxation.

 

Soft drinks, alcoholic beverages, dietary supplements, and tobacco. Beverages that do qualify as food include milk or milk products, soy, rice, or similar milk substitutes, or items that contain greater than fifty- percent vegetable or fruit juice by volume.

Aside from collecting sales tax on all sales of alcoholic beverages, you must also possess a liquor permit granted by the Division of Liquor Control. You must obtain a vendor's license in the same name as that appearing on the liquor permit. However, if you are selling alcoholic beverages under a liquor permit owned by another vendor while trying to get the permit transferred, you must report all of your sales and tax activity under the vendor's license held by the liquor permit holder. Once the liquor permit transfers to your name, you should begin reporting sales and tax activity under your vendor's license number.

If you intend to transfer your liquor permit, Ohio law requires the Department of Taxation to review your account for any delinquent or unpaid sales or withholding tax returns, unpaid assessments, or any other discrepancies that may exist. After any problems are resolved, the Tax Commissioner will recommend to the Division of Liquor Control to proceed with the transfer.

Liquor permits must be renewed annually. The Department must review all permits eligible for renewal for sales/withholding tax discrepancies. Upon resolution of any problems, the Department of Taxation will recommend to the Division of Liquor Control that your permit be renewed

Under Ohio law, you can be held liable for any outstanding sales tax liability of any business you acquire. This is known as successor liability. Ohio law requires that, during the acquisition process, you establish an escrow account. The escrow account should hold a sufficient amount of the purchase price to cover any outstanding debt. You should request that the seller provide a tax release certificate from the Department of Taxation before the escrow funds are released.

A tax release will be issued by the Department of Taxation after:
 

• The business has been sold and the seller has filed the final sales tax return (final return should be sent directly to the Central Office, Tax Release Group, with guaranteed funds);
   

• The Department has reviewed the seller's account and found that:
   a) All sales tax returns have been filed,
   b) all reported tax, interest and penalties have been paid,
   c) all filing and reporting requirements have been met.

YES. Individuals can be held personally liable for the sales tax debts of a corporation. Those individuals, corporate officers or trustees having control or supervision of, or charged with the responsibility of filing returns, making payments, or executing the corporation's or business trust's fiscal responsibilities can be personally assessed for the outstanding trust tax debts of the corporation. Individuals can also be held personally liable for a company’s failure to file and pay tax due under direct pay permit authority. The dissolution, termination or bankruptcy of a corporation or business trust will not discharge a responsible officer, employee's or trustee's liability.

Yes, items that become a part of real property are taxable unless the contractee is:

• the State of Ohio or one of its political subdivisions,

• the federal government,

• a house of worship or religious education,

• a non-profit organization operated for certain charitable purposes as defined in the sales tax law,

• contracting for the original construction of a sports facility under section 307.696 of the Revised Code,

• contracting for a hospital facility entitled to exemption under section 140.08 of the Revised Code,

• contracting for real property located in another state when the materials are not subject to tax in that state,

• contracting for a horticulture or livestock structure for a person engaged in the business of horticulture or producing livestock.

Also, building and construction materials sold to a construction contractor for incorporation into real property outside this state are not subject to Ohio sales or use tax if such materials would be exempt from tax when sold to the contractor in the other state. The contractee’s exemption does not apply to the contractor’s tools, equipment, rentals of personal property, form lumber, temporary items such fencing, lighting, etc., and any other purchases of tangible personal property, or taxable services, not incorporated into real property.

There is a special Contractor's Exemption Certificate and a Construction Contract Exemption Certificate prescribed by the Tax Commissioner for claiming exemption. A copy of each form is available on our Web site.

Floormats, area rugs and other types of unattached floor coverings are sales or rentals of tangible personal property and are subject to the sales tax. Also, the outright purchase of carpet, vinyl flooring and tiles to be installed by the consumer or a third party are taxable.

The sale and installation of carpeting is a retail sale and taxable on material and labor. Labor charges to install carpeting supplied by others are taxable.

The sale and installation of all other types of floor coverings (wood, vinyl, tile, etc.) is considered a construction contract; the contractor is required to pay tax on all material and equipment used or consumed in the installation.

There are several tax rules that cover particular tax issues. To obtain a copy of any rule, you may consult the Ohio Administrative Code at your local library, or visit our Web site for a link to Administrative Rules.

Certain types of businesses require other licenses or permits. They include, but are not limited to:

• Motor Vehicle Sales -- You must obtain proper permits from the Bureau of Motor Vehicles to sell new and/or used motor vehicles and to lease motor vehicles. Call 1-614-752-7637.

• Watercraft/Outboard Motor Sales -- Before you can allow a trade-in allowance to reduce the tax base on the sale of a watercraft or outboard motor, you must be licensed as a watercraft dealer through the Ohio Department of Natural Resources, Watercraft Division. Call 1-800-448-2030.

• Liquor Sales -- You must obtain the proper type of liquor permit from the Department of Commerce, Division of Liquor Control before you make sales of alcoholic beverages.

• Food Sales -- You must obtain a food service operation license from the Department of Health before you can sell prepared food in a restaurant or similar facility.

• Cigarette Sales -- You must obtain a cigarette license from the County Auditor in the county in which cigarette sales are to be made.

More information may be obtained through the One Stop Business Permit Center by calling 1-800-248-4040 in Ohio, or 1-800-848-1300 outside Ohio.

If a vendor stops making taxable retail sales, a final return must be filed and all taxes must be paid within fifteen days of the final sale. Vendors must complete the space provided on the final return, indicating the last day of business.