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. Consumers may also remit use taxes due on their personal income tax return (Form IT-1040).
Any Ohio vendor who makes taxable sales that are delivered to purchasers in another state should register with that state and collect that state’s use tax. If the vendor has nexus with that state, the vendor is subject to its tax laws, including possible audit and assessment. Even if the vendor does not have nexus with the other state, the Ohio Department of Taxation may audit the vendor's records and provide information on interstate sales to the other state. That state will then bill the purchasers for the appropriate use tax. Other states’ tax department Web sites can be accessed through the link Other States' Tax Departments on our Web site.
A business is no different than any other Ohio consumer when it comes to possible use tax liability. For example, if a business buys a taxable item from out-of-state, such as office equipment or supplies, the business owes use tax. The tax must be paid to the seller, if charged, or directly to the State of Ohio on a voluntary payment form (VP USE) is available on our Web site at Tax Forms.
Yes. If an inventory item is temporarily taken out of inventory and used in a taxable manner, you owe use tax on the value of the temporary use. The consumer is to determine this value but it is subject to redetermination by the Tax Commissioner.
Counties and regional transit authorities may each levy sales tax in multiples of .05 percent up to 3 percent. The total combined rate - state, county and transit authority - may not exceed 8 3/4 percent.
Anyone who overpays sales or use tax may be entitled to a refund by applying to the Tax Commissioner. In no case may applications be filed later than four years from the date of the payment. All refund claims must be filed using the proper form (ST-AR), which is available on our Web site at Tax Forms.
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 taxes have been paid in error.
The discount rate is .75 of 1% (0.0075) of the tax liability reported on line 6 of the Universal Sales Tax (UST-1) return. The discount only applies if the UST-1 return and full payment are received by the Ohio Department of Taxation on or before the due date.
A use tax is similar to a sales tax in its application. Use tax is imposed on the "storage, use or other consumption" of all tangible personal property and the receipt of certain services that are subject to sales tax. Purchases that are properly exempt from sales tax are also exempt from the use tax. Use tax must be paid on all purchases made by Ohio residents and businesses if the proper amount of sales tax has not been paid to the vendor, seller, or service provider. The use tax rate is equal to the sales tax rate in effect in the county where the property is used or benefit of the service is received by the purchaser.
The most common situation that gives rise to a use tax liability is when an Ohio customer makes a mail order purchase from an out-of-state seller. Use tax is also due when the purchaser improperly claims exemption from the sales tax or if the sales tax paid is less than the total use tax in effect in the county where the item is used or benefit of the service is received.
One of the main reasons for the use tax is to protect Ohio vendors from unfair competition from out-of-state sellers, since the in-state merchant is required to collect sales tax when selling to an Ohio resident or business. All states that have a sales tax have a use tax.
Sellers should collect the use tax on sales they make to Ohio residents. If an out-of-state seller has sufficient contact with the state (nexus), the seller is required to abide by Ohio's tax laws. Sellers who have nexus with Ohio are legally required to register, collect, and remit use tax, in the same way that the Ohio-based vendor collects and remits sales tax. Examples of activities that create nexus are: regularly having employees or other individuals operating in the state; making regular deliveries of tangible personal property into this state; or any other physical presence in Ohio. Effective August 1, 2019, Ohio enacted substantial nexus statutes when a seller has at least 200 transactions or $100,000 or more in gross sales into Ohio. With this change in statutes, a seller making sales into Ohio may have a requirement to collect Ohio (seller's) use tax without a physical presence in this state. See Ohio Revised Code 5741.01(I).
A large number of sellers who may not have nexus with Ohio register voluntarily, because they realize the collection of Ohio tax is a convenience and service to their customers, who otherwise would have to pay the tax directly to the state or risk formal assessment of the tax, penalties, and interest.
Many out-of-state sellers are registered with the State of Ohio for the collection and remittance of the use tax. However, if the proper amount of sales or use tax is not collected at the time of purchase, the amount of tax due can be paid directly by the consumer to the State of Ohio. A consumer who makes regular purchases upon which the proper amount of sales or use tax is not collected by the seller should apply for a consumer's use tax account with the Department of Taxation and begin filing use tax returns. If the purchases are isolated, the consumer should make a voluntary payment of the tax by sending a payment of the amount due to the Ohio Department of Taxation along with a description of the purchases made and the date of purchase. Use tax on purchases can also be paid on the Ohio income tax return. A voluntary payment form (VP USE) is available on our Web site at Tax Forms.