The purpose of this release is to reiterate the Department of Taxation's position on the taxability of transactions with government employees.
Purchases of tangible personal property and selected services made by federal, state, or local government employees (who will later seek reimbursement from their government employer) are subject to the Ohio sales or use tax, since the employee is considered the purchaser not the government. For example, government employees who travel on official government business and seek reimbursement for lodging, meals, or other travel expenses; office supplies; etc. must pay sales tax on these purchases and seek recovery of the amounts paid, including the sales tax.
Purchases made by and charged to a federal, state, or local government account are considered sales to the government entity. Sales to the federal government, the State of Ohio or any of its political subdivisions, or to any other state or its political subdivisions that grant a similar exemption to the State of Ohio or any of its political subdivisions are not subject to the Ohio sales or use tax even though the goods or services are picked-up or used by a government employee. The invoice or bill of sale must clearly indicate that the sale was to the government entity.
Some federal employees have been given special credit cards for the purpose of purchasing selected goods or services for official federal business purposes. These special credit cards are embossed with "U S GOVT TAX EXEMPT" and the employee's name. Additionally, these special credit cards contain specific codes within the card number (for the "fleet" and "purchase" cards, the first four digits will be 4486, 4716, 5568, or 8699 and for the "travel" cards, the first four digits will be 4486, 4716 or 5568, with the sixth digit being 0, 6, 7, 8 or 9) which identify the purchase as one made by the Federal Government. Since the Federal Government (and not the employee) is considered to be the purchaser, purchases made with the special credit card are not subject to the Ohio sales/use tax.
If you have any questions regarding this matter, you should call us at 1-888-405-4039.
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