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1. What must I do to make taxable retail sales in Ohio?
Every Ohio retailer (vendor) and certain service providers making taxable retail sales must obtain a vendor's license, collect the proper amount of sales tax, file tax returns with payment of tax collected, and maintain complete records of transactions.
2. Are there different vendor's licenses for different types of businesses?
Yes, all vendors must obtain one or more of the following licenses depending on the nature of their business.
3. Are vendor's licenses transferable?
You must have an active regular vendor’s license for each fixed place of business from which taxable retail sales are made.
A regular vendor’s license, which is issued by the County Auditor to cover a fixed place of business, may be transferred from one existing business location to another when you move an existing business to a new location within the same county. If the business location is being moved to a different county, a new regular vendor’s license must be obtained from the County Auditor of the different county. A vendor, who is moving an existing business to a new location within the same county and wishes to transfer the existing regular vendor’s license, must submit a transfer application to the Department of Taxation requesting transfer of the license to the new location. See form ST-3TL or contact your local County Auditor’ Office or call 1-800-282-1782 or visit this site at Tax Forms. If approved, the Department of Taxation will update its file, issue a transfer license, and advise the County Auditor. There is NO FEE for transferring a regular vendor’s license from one location to another within the same county.
If you hold a permit issued by the Division of Liquor Control, the vendor’s license and permit must have the identical name and be for the identical address as shown on the permit. If you move to a new location within the same county, you must contact the Division of Liquor Control to have the permit transferred to the new location address. The Department of Taxation will not issue a Transfer License until we have been notified by the Division of Liquor Control that the permit has been transferred.
Any change in ownership (sole proprietor to partnership, partnership to corporation, corporation to sole proprietor, partnership to sole proprietor, etc.) requires a new license.
A change in your mailing address does not require a new license.
If you are required to obtain a new vendor’s license due to a change in ownership or location, a final return must be filed within 15 days of the last day of business under the original vendor’s license.
If you have any questions regarding the transfer of an existing license or the requirement to obtain a new vendor’s license, please call Tax Registration at 1-888-405-4089.
4. Can my vendor's license be suspended or revoked?
SUSPENSION: Your vendor’s license may be suspended if you fail to file sales tax returns when due or you fail to pay the tax due thereon. If your vendor’s license is suspended, no retail sales may be made until the license is reinstated. To have a suspended license reinstated, you would be required to file complete and correct returns for all periods and pay the full amount of tax, penalties, and other charges due on those returns. You may also be required to furnish security in an amount equal to your average tax liability for one year.
REVOCATION: Your vendor’s license may be revoked if the Tax Commissioner ascertains that you have no need for the license because you are not engaged in making taxable retail sales.
5. When a county's sales tax rate increases, will I be reimbursed for the cost of programming my cash registers?
The county auditor will reimburse vendors for the cost of reprogramming computer cash registers when a county or transit authority imposes or increases the sales tax. Vendors must apply within six months of the increase on a form provided by the County Auditor.
6. How and when is the tax collected?
Vendors must charge and collect the sales tax at the rate in effect in the county where the sale is made or obtain valid documentation detailing why the sale is exempt from tax. Tax on titled motor vehicles, off-highway motorcycles, all-purpose vehicles, personal watercraft, titled watercraft and titled outboard motors is paid to the county Clerk of Courts at the rate in effect in the purchaser's county of residence. Telecommunication services are taxed at the rate in effect in the county of the billable telephone number. Most other areas listed under services are taxed at the county rate where the service is received.
The tax applies when the sale is made, not at some future date when payment is received. For example, if a vendor makes a sale on credit in January, but the money is not received until February, the tax must be reported and paid with January's return.
Vendors must charge the tax on every sale unless the customer provides a properly completed exemption certificate or the sale is exempt by law. Tax must be paid to the state on every taxable sale, even if the price is not collected from the customer. Vendors who fail to send in collected taxes, make sales without a license, or make sales with a suspended or revoked license, are subject to assessments, fines, and criminal penalties.
Vendors are required to keep complete records of daily sales, tax charged and exemption certificates. All records of daily sales and tax charged must be retained for four years and must be open for inspection by agents of the Tax Commissioner. Blanket exemption certificates must be maintained for at least four years after the final sale is made to the purchaser who issued the certificate. The Tax Commissioner may allow the records to be destroyed early or may request that they be kept longer.
Restaurateurs and other food service operators, licensed under section 3732.03 of the Ohio Revised Code, are allowed to maintain records for only 14 days per calendar quarter. The specific dates for which records must be kept are determined by the Tax Commissioner four times a year.
Tax must be charged on the total price billed to the customer. This includes delivery charges, charges for set-up, assembly, installation, preparation, engraving, and all other costs that make up the total amount charged.
9. When do I file a tax return?
Vendors will receive a letter from the Department of Taxation concerning their filing schedule (monthly, semiannually, or EFT) shortly after obtaining a vendor's license. Returns must be filed when due even if no sales are made and/or no tax is due. Filing schedules are set according to the vendor's anticipated tax liability or their business activity. The tax return must be filed and received by the Department of Taxation on or before the due date indicated on the return. Monthly returns are due on the 23rd of the month, following the reporting period of the prior month; semi-annual returns are due on Jan. 23 and July 23 for the previous six-month filing periods.
Sales tax returns are required to be filed electronically. For more information and a comparison of filing options, see Sales Tax Electronic Filing.
10. Can I file my return via the Internet?
Yes, log on to tax.ohio.gov and click on the cash register icon to be taken to a menu of electronic filing options.
11. What do I do if my check has not cleared my bank?
If you feel sufficient time has passed and your check has not cleared your bank, we would recommend that you contact your bank and request a stop payment be issued. You should then send a replacement check for the tax liability amount (discount not allowed) along with a copy of your tax return or a return facsimile. A note should be attached indicating that you have submitted a replacement check for the original lost check.
Note: If you originally filed a facsimile or altered return with your payment, this may cause a delay in processing. Please allow a little more time before you issue a stop payment order and a replacement check.
12. What if my bank does not honor my check?
You should immediately contact us at 1-888-297-3540.
13. Can sales tax be remitted by electronic funds transfer (EFT)?
Some vendors may be required to remit sales tax by EFT. These vendors will be notified of this requirement prior to the first required payment.
Vendors who wish to voluntarily remit by EFT must contact the Treasurer of State, EFT Unit, for remittance procedures at 1-877-338-6446 (toll free).
Sales tax returns and all supporting schedules must continue to be filed in accordance with established EFT procedures.
14. Can my filing frequency ever be changed?
Your tax returns will be periodically reviewed by the Department of Taxation to determine if a change in filing method is needed. Vendors are notified if changes are necessary. The Department of Taxation will consider your request for a change in filing frequency.
15. Can I report two or more licenses on the same return?
Cumulative return authority is available for reporting two or more regular county vendor licenses. You may request this authority through the Department of Taxation's Central Registration Unit (1-888-405-4039) or by filing an application, form ST 26, which is available on our Web site at Tax Forms. If granted, you will file one sales tax return each month, reporting your total Ohio sales and tax activity for all Ohio locations in the upper portion of the tax return and provide a county-by-county breakdown of your taxable sales and tax liability in the supporting schedule portion of the tax return. The Tax Commissioner may require this method of filing if it is determined that it is necessary for the efficient administration of the tax.
16. What are the penalties for not filing tax returns on time and/or not paying collected taxes?
17. How do I handle bad debts and returned merchandise?
A vendor may recover sales tax paid to the state on a sale that becomes a bad debt. The debt must be uncollected for at least six months and written off for federal income tax purposes. The amount of the bad debt and tax previously paid should be deducted from the vendor's sales tax return for the filing period during which the bad debt is written off.
If a customer returns merchandise and the vendor refunds the entire purchase price, including sales tax before the return is filed, the vendor should not report the sale on their tax return. If the tax has already been reported and paid, the vendor may file a refund claim or adjust the current tax return.
Note: In no case should you make an adjustment to your return that causes your taxable sales and tax liability to fall below zero. If an adjustment for a period exceeds your taxable sales and tax liability for a reporting period, you must apply for a refund on form ST-AR, which is available on our Web site at Tax Forms.
18. How will I know if a sale is exempt from tax?
Sales tax must be charged on all retail sales unless the purchaser provides a properly completed exemption certificate stating the statutory reason for claiming exemption. The vendor must retain the certificate as proof of nontaxable sales. Exemption certificates are prescribed by the Tax Commissioner and can be obtained from a local printer or office supply store. Sample forms are available on our Web site by searching Tax Forms.
Exemption certificates are not needed when the item sold is never taxable, such as prescription drugs and food sold for off-premises consumption. Certificates are not needed when the purchaser is clearly identified on the invoice as an entity that is always exempt, such as the federal government, the State of Ohio, or any local government of this state.
19. How do I obtain a sales tax exemption number?
The State of Ohio does not issue a sales tax exemption number. A vendor’s license number is NOT a sales tax exemption number. To claim exemption, you must provide a properly completed exemption certificate to your supplier.
20. What are my responsibilities when selling alcoholic beverages?
Aside from collecting sales tax on all sales of alcoholic beverages, you must also possess a liquor permit granted by the Division of Liquor Control. You must obtain a vendor's license in the same name as that appearing on the liquor permit. However, if you are selling alcoholic beverages under a liquor permit owned by another vendor while trying to get the permit transferred, you must report all of your sales and tax activity under the vendor's license held by the liquor permit holder. Once the liquor permit transfers to your name, you should begin reporting sales and tax activity under your vendor's license number.
21. Can my liquor permit be transferred if sales/withholding tax is owed?
If you intend to transfer your liquor permit, Ohio law requires the Department of Taxation to review your account for any delinquent or unpaid sales or withholding tax returns, unpaid assessments, or any other discrepancies that may exist. After any problems are resolved, the Tax Commissioner will recommend to the Division of Liquor Control to proceed with the transfer.
22. Can my liquor permit be renewed if I owe sales/withholding tax?
Liquor permits must be renewed annually. The department must review all permits eligible for renewal for sales/withholding tax discrepancies. Upon resolution of any problems, the Department of Taxation will recommend to the Division of Liquor Control that your permit be renewed.
23. What is successor liability?
Under Ohio law, you can be held liable for any outstanding sales tax liability of any business you acquire. This is known as successor liability. Ohio law requires that, during the acquisition process, you establish an escrow account. The escrow account should hold a sufficient amount of the purchase price to cover any outstanding debt. You should request that the seller provide a tax release certificate from the Department of Taxation before the escrow funds are released.
A tax release will be issued by the Department of Taxation after:
24. Can I be held responsible for the debts of a corporation?
Yes. Individuals can be held personally liable for the sales tax debts of a corporation. Those individuals, corporate officers or trustees having control or supervision of, or charged with the responsibility of filing returns, making payments, or executing the corporation's or business trust's fiscal responsibilities can be personally assessed for the outstanding trust tax debts of the corporation. Individuals can also be held personally liable for a company’s failure to file and pay tax due under direct pay permit authority. The dissolution, termination or bankruptcy of a corporation or business trust will not discharge a responsible officer, employee's or trustee's liability.
25. Are there any rules that cover particular tax issues and how can they be obtained?
There are several tax rules that cover particular tax issues. To obtain a copy of any rule, you may consult the Ohio Administrative Code at your local library, or visit this site for a link to Tax Rules.
26. Must I obtain other licenses or permits to conduct retail sales?
Certain types of businesses require other licenses or permits. They include, but are not limited to:
More information may be obtained through the One Stop Business Permit Center by calling 1-800-248-4040 in Ohio, or 1-800-848-1300 outside Ohio.
27. How is a vendor's license canceled?
If a vendor stops making taxable retail sales, a final return must be filed and all taxes must be paid within 15 days of the final sale. Vendors must complete the space provided on the final return, indicating the last day of business.
