Registering with the Ohio Department of Taxation May 20, 2020 | Agency Sales Tax If you are starting a business where you will be making sales of tangible personal property, a vendor's license is needed. Tangible personal property (TPP) is personal property that can be seen, weighed, measured, felt, or touched, or that is in any other manner perceptible to the senses. Examples of TPP are computers, shoes, clothes, DVD’s, just to name a few. For more information on taxable and exempt sales, click here. If you are starting a business that will be providing a service, a vendor’s license may be needed. Not all services are taxable, only certain services defined by the Ohio Revised Code. Examples of taxable services, are landscaping and lawn care, computer services, building maintenance & janitorial services and private investigation, to name a few. For more information on taxable services click here. Once determined that a vendor’s license is needed, the next step is to choose what type of vendor’s license you will need. For more information about these individual licenses, please visit our Vendor's License section. Contact Information for Sales Tax Ohio Department of Taxation Phone: (888) 405-4089 http://www.tax.ohio.gov/ Ohio Income Tax Withholding An Ohio income tax withholding account is needed by any business that will have employees in Ohio. This account allows an employer to withhold Ohio income taxes from the employee’s paycheck and submit it to Ohio. Every employer maintaining an office or transacting business in Ohio, that pays compensation to an employee, is required to deduct and withhold Ohio income tax from the compensation paid to the employee. Along with Ohio income tax withholding, employers are also required to withhold school district, taxes and submit to Ohio on the employee’s behalf. School district taxes are based on the residence of the employee. Depending on their residence, the employee may or may not live in a taxing school district. If you need assistance determining if an employee lives in a taxing school district please use The Finder. Employers must register within 15 days from the date that withholding liability begins. Registration is free. There are three ways to register: By paper: Complete and file Form IT 1, Application for Registration as an Ohio Withholding Agent and mail the completed form to us. The completed form can be mailed to Ohio Department of Taxation, P.O. Box 182215, Columbus, OH 43218. The paper registration form, IT 1, is available on our website at Tax Forms. By internet: Register electronically through the Ohio Business Gateway; follow the instructions for ODT Business Tax Registrations, or By telephone: Call 1-888-405-4089; listen for the message and then press 2 to connect with an examiner. Commercial Activity Tax (CAT) The Commercial Activity Tax is an annual tax imposed on an entity for the privilege of doing business in Ohio, measured by taxable gross receipts from most business activities. Most receipts generated in the ordinary course of business are subject to the CAT. The CAT only applies to those gross receipts that are sitused (sourced) to Ohio. The CAT applies to most businesses including but not limited to retail, wholesale, service, manufacturing and other general businesses regardless of the type of business organization. For example, sole proprietorships, partnerships, LLCs, S corporations, C corporations, disregarded entities, trusts, and all other type of associations with taxable gross receipts of more than $150,000 in the calendar year are subject to the CAT. Electronic registration is available online through the Ohio Business Gateway. The paper registration form, CAT 1, can be downloaded at Tax Forms or requested by calling 1-800-282-1782. Contact Information for CAT Telephone: 1-888-722-8829 Fax: 1-206-666-4462 http://www.tax.ohio.gov Use Tax A use tax is similar to sales tax in its application. Use tax is imposed when sales tax is not collected at the time the transaction occurs. Use tax is applicable to transactions involving the "storage, use or other consumption" of all tangible personal property and the receipt of certain services that are subject to sales tax. There are two types of Use Tax: Seller's Use Tax and Consumer's Use Tax. Seller’s Use Tax Is collected by out-of-state sellers making taxable sales or services into Ohio. A business is required to get a seller's use tax account with Ohio if that company has nexus with Ohio. 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). Consumer's Use Tax Use tax is required to be paid when an individual or business makes a purchase and the proper amount of sales tax is not collected by the seller. A business that purchases their office supplies tax exempt would owe use tax when they consume those products. Use tax would be paid directly to the State of Ohio through a consumer’s use tax account. For additional information on use tax, click here. 911 Effective January 1, 2014, all sales of prepaid wireless calling service are subject to a wireless 9-1-1 charge to be collected at the point of sale. R.C. 128.42(B) imposes a charge of five tenths of one percent (0.005) of the sale price on the retail sale of prepaid wireless calling service. Retailers must collect the wireless 9-1-1 charge from the customer and list the wireless 9-1-1 charge separately on the customer’s receipt. Further, retailers must first electronically register their company and then file their monthly returns electronically via the Ohio Business Gateway. The return is due on or before the 23rd of the following month (same as Sales Tax). The first return will be due February 23, 2014, and monthly thereafter. Retailers may retain 3% of the total wireless 9-1-1 charges as a collection fee. Retailers that do not sell prepaid wireless calling service are not affected by the wireless 9-1-1 charge and should disregard this notification. For more information on the wireless 9-1-1 charge, visit tax.ohio.gov (see FAQs: Sales and Use – 9-1-1 Charge) or call the Ohio Department of Taxation at (888) 405-4039.