Ohio Offers Sales Tax Amnesty– December 16, 2013 by Karen Raghanti

State becomes full member of Streamlined Sales Tax Project

Federal law does not require a business to collect and remit sales tax if it does not have a physical presence (a building or a sales force) in the state. These “remote sellers,” such as online or mail-order businesses, are not surprisingly often more appealing to consumers than brick-and-mortar businesses that must collect the tax.

In an effort to level the playing field, a cooperative effort of 44 states created the Streamlined Sales Tax Project (SSTP). The goal is to simplify and unify the rules for sales and use tax, making it easier for businesses to comply and, therefore, encouraging even remote sellers to voluntarily register, collect and remit sales tax in each of the member states.

Ohio is one of the 24 states that has adopted the SSTP agreement. Ohio has been an associate member of SSTP since 2005 and, beginning January 1, 2014, will become a full member. While this new status will not change any of the requirements for Ohio vendors or consumers, it will require Ohio to offer a sale tax amnesty program for both taxpayers that newly register for SSTP in 2014 and for those currently registered who may not be compliant.

Next Steps

Any type of business may register for SSTP and, importantly, may benefit from its simplified structure of collecting and remitting sales tax, such as a single centralized tax ID registration number used for filing returns and paying sales tax in all SSTP states. Be mindful, however, that once a business registers it will need to collect and remit sales tax for all member states of SSTP, regardless of whether there is a physical presence in the state.

If you are not currently registered but would like to be, or if you are registered but have not been compliant with collecting and remitting sales tax, and are not eligible for a voluntary disclosure program, now is the time to act. The amnesty program offered throughout 2014 can offer relief via minimized penalties and a limited lookback period.

If you are already registered under SSTP and anticipate making sales in Ohio in 2014, it’s business as usual, beginning with the tax return due January 1, 2014.

If you are already registered and do not anticipate making any sales in Ohio (and are not a Model 1 Seller, which is a seller that has selected a Certified Service Provider as its agent to perform its sales and use tax functions), you will need to change your account to indicate that you do not anticipate making any Ohio sales. If you do not update your account, Ohio will expect a return to be filed starting with the reporting period January 1, 2014.

We want to hear from you! We encourage you to comment below on this blog post, share it on social media or contact Karen Raghanti at kraghanti@cohencpa.com or a member of your service team for further discussion.

This communication is for information only, and any action should only be taken after a detailed review of the specific situation and appropriate consultation.

Notwithstanding that these materials do not constitute legal, accounting or other professional advice, as may be required by United States Treasury Regulations and IRS Circular 230, you should be advised that these materials are not intended or written to be used, and cannot be used by you or any other person, for the purpose of avoiding penalties that may be imposed under federal tax laws. No written statement contained in these materials may be used by any person to support the promotion or marketing of or to recommend any federal tax transaction(s) or matter(s) addressed in these materials, and any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor with respect to any such federal tax transaction matter.