Reminder: Ohio Use Tax Amnesty Program Ends May 1st– March 15, 2013 by Jenny Tapia

Time is running out for businesses that have exposure to use tax (and are not paying it) to take advantage of the Ohio Department of Taxation’s (ODT) Use Tax Amnesty Program. The program is scheduled to end on May 1, 2013.

Use tax is the compliment to sales tax and is levied at the same rate as sales tax. Use tax comes into play when a taxable purchase is made but no sales tax is collected. The purchaser must then self-assess use tax on the transaction.

In early 2011, ODT began an initiative to identify all businesses that are registered with the Ohio Secretary of State but do not have a use tax account. Whether or not your business is actually subject to the use tax does not matter. Even having tax-exempt status does not matter. If you do not have an account, you may be audited and could face significant tax liabilities, interest and penalties.

Businesses can apply for amnesty as long as they have not received an assessment for Consumer’s Use Tax. Under amnesty, the business must pay the use tax liability from January 1, 2009 through the present. There will be no penalties due and no interest as long as the business did not register for a use tax account prior to June 1, 2011. Businesses that registered for an account prior to June 1 will owe interest on the use tax liability remitted.

If you are not registered for a use tax account, it could make sense to set up an account even if you do not take advantage of the Use Tax Amnesty Program. By registering and filing quarterly use tax returns, even if they are zero returns, the statute of limitations starts running and, upon audit, the ODT would be limited to a look-back period of four years rather than an unlimited period.

Additionally, after the amnesty program wraps up, the ODT will begin looking more closely at businesses that have not taken advantage of the amnesty program and that still do not have a use tax account with the state.

Make it a priority to determine if your business has a use tax account and if it is consistently filing use tax returns with the state.

If you do not have an account or are not regularly filing, contact Jen Tapia at jtapia@cohencpa.com.

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.