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Tax Expired January 1, 2003
ST 2002-01 - Federal Luxury Tax - Revised January, 2002
Effective January 1, 1991, the Federal government imposed an excise tax on certain "luxury" goods. The rate of tax was 10% of the amount of the price that exceeded a specified threshold amount. Originally, this excise tax was imposed on the sale of jewelry, furs, passenger vehicles, watercraft, and aircraft. With the passage of the Omnibus Budget Reconciliation Act of 1993 (effective August 10, 1993), this federal excise tax was repealed on all luxury items except passenger vehicles. The passage of the Small Business Job Protection Act (effective August 29, 1996) then reduced the luxury tax rate and made the threshold amount and tax rate adjustable over the next several years.
The federal excise tax, which is levied on the seller when the first retail sale or lease of a luxury passenger vehicle occurs, will be calculated using the following rates and threshold amounts for the periods specified:
PERIODS TAX RATES THRESHOLD AMOUNTS
January 1, 1991 thru December 31, 1992 10% $30,000.00
January 1, 1993 thru August 28, 1996 10% $32,000.00
August 29, 1996 thru December 31, 1996 9% $34,000.00
January 1, 1997 thru December 31, 1997 8% $36,000.00
January 1, 1998 thru December 31, 1998 7% $36,000.00
January 1, 1999 thru December 31, 1999 6% $36,000.00
January 1, 2000 thru December 31, 2000 5% $38,000.00
January 1, 2001 thru December 31, 2001 4% $38,000.00
On or after January 1, 2002 3% $40,000.00
You are advised to contact the Internal Revenue Service (IRS) regarding future changes to the tax rate, the threshold amount or other federal luxury tax issues.
STATE AND LOCAL SALES & USE TAXES
Since the luxury tax is levied on the vendor, it becomes part of the vendor's cost of doing business. The vendor may choose to recover all or part of this tax from the consumer much like any other expense. That portion of the luxury tax that is passed on to the consumer by the vendor becomes part of the "price" for calculating sales and use tax, even if it is separately stated on the consumer's bill.
If you have any questions regarding the application of the Ohio sales tax, please contact our nearest taxpayer service centers or call toll free 1-888-405-4039.