Taxability & Exemptions

TAX EXEMPTIONS – DETAILED EXPLANATIONS

AP All-purpose vehicle purchased prior to July 1, 1999, which is when the requirement to title these vehicles came into effect.  Prior to this, sales tax was paid directly to the Treasurer of State, not the local Clerk of Courts title office. All-purpose vehicles R.C. 5739.02(B)(8) are subject to tax, H.B. 611 effective 7/1/99 requires them to be registered. The definition of motor vehicle includes all-purpose vehicles. R.C. 4517.01(B).

CF Commercial fishing – this is for watercraft that are being used by licensed commercial fishermen. R.C. 5739.02(B)(42)(d)

CH Church – can be used when the motor vehicle is titled in the church’s name when it is operating as a nonprofit organization. OAC 5703-9-10 (A)

CM Conversion (Military) – The transfer of title to a motor vehicle that was purchased outside of Ohio for use outside of Ohio by a member of the Armed Forces. The title holder must be able to establish the fact that the vehicle has been or will be used outside of Ohio for at least six months after it is acquired.

CO Court Order - The transfer of title to a motor vehicle pursuant to a court order when there is no consideration given. R.C. 5739.01(H)(1)(a), no consideration section R.C. 4505.10

CS Consolidation - The transfer of title to a motor vehicle as an asset of a corporation to the surviving corporation as a result of a merger or to a new corporation as a result of a consolidation. R.C. 4503.12(A)(1)

CV Conversion – The transfer of an out of state title to an Ohio title when the vehicle was purchased more than six months ago in another state.

DF Direct Use – Farming – This exemption is for motor vehicles that are being used primarily in the production of goods by farming, agriculture, horticulture, or floriculture, or rendering services for those producers.  R.C. 5739.02(B)(17), OAC 5703-9-23

DM Direct Use, Mining – This exemption is for motor vehicles used directly in the production or extraction of substances classified geologically as minerals for sale by mining. The exemption also applies to vehicles used to transport the minerals from the excavation or extraction area to a plant, factory or tipple where the substance extracted is to be processed by the person conducting such mining operation. OAC 5703-9-22

DO Direct Use, Oil and Gas - Sale to a purchaser who uses the motor vehicle directly in exploration for or production of crude oil or natural gas. R.C. 5739.02(B)(42)(a)

DP Direct Pay - A direct pay permit holder, in which case the direct pay permit number (98-xxxxxxx) will be recorded on the title. R.C. 5739.031

DR Research and Development - This exemption applies when a motor vehicle is purchased for use in researching and/or developing a new product that may or may not be added to future motor vehicles as either optional or standard equipment. R.C. 5739.02(B)(42)(i)

DS Dissolution to Stockholder with no Consideration – This applies when a title of a motor vehicle is transferred from a corporation to one of its stockholders upon dissolution of the corporation.

DV Divorce – This exemption applies for the transfer of title pursuant to a divorce decree with no consideration given. R.C. 4505.10

FA Federal Agency – Sales of motor vehicles to the Federal Government or its agencies are exempt from sales tax. R.C. 5739.02(B)(22)

FD Foreign Diplomat - A foreign diplomat holding an exemption card issued by the U.S. Department of State may purchase a motor vehicle exempt from Ohio sales or use tax. The exemption card indicates the extent of the exemption granted.

HE Historical –This exemption code is used for the transfer of a pre-ATPS (gold) title to an ATPS title without change of ownership.

IC Resale, Insurance Claim – An insurance company may claim exemption when taking title of a vehicle as a result of a claim settlement. NOTE: The Clerk must retain the evidence (i.e. court documents, Highway Patrol inspection report, etc.) in the evidence file. R.C. 4505.11(C)(1) 

IH Inheritance with no Consideration – This applies on the transfer of title to a beneficiary, including a surviving spouse, through inheritance in the administration of an estate by Probate Court. R.C. 4505.10

IP Individual to Partnership – An exemption may be claimed for the transfer of title from an individual to a partnership, of which the individual is a member, only if no consideration is given by the partnership for the transfer. R.C. 4503.12(A)(1)

IS Interstate commerce – An exemption may be claimed for a motor vehicle being transferred to a purchaser where the seller will arrange for delivery of the vehicle outside of Ohio. Exemption form STEC IC or STEC WCIC needs to be completed when claiming this exemption. R.C. 4505.06(F)(3)OAC 5703-9-10(B)  

MB Manufacturer Buy Back per Lemon Law – This applies when the manufacturer, as a result of non-conformity to the warranty, buys a motor vehicle back from the consumer.  R.C. 1345.71, 4505.06

MH Manufactured Home – This applies to used manufactured homes sold on or after January 1, 2000.  R.C. 5739.02 (B)(39)

MO Manufacturing Operation – This applies when the purchaser of a motor vehicle is using the vehicle (through a power take-off unit) in the production of a product for sale by manufacturing, processing, or refining. An example is a cement mixer where the mixing unit is operated through a power take-off unit instead of a separate power source.  Definitions found in R.C. 5739.011, exemption found in R.C. 5739.02, further clarification found in OAC 5703-9-21.

MR Corporate Merger with no Consideration – An exemption is allowed if the transfer of an asset of a corporation to the surviving corporation as a result of a merger or to a new corporation with no consideration given.  R.C. 4505.06

NC Corporate Name Change – An exemption may be used if the transfer of title is due to a corporate name change only.  R.C. 4505.06

NP Non-Profit Charitable - Sales to an organization that has been granted and maintains 501 (c) (3) status by the Internal Revenue Service or a not-for-profit organization, operated exclusively for charitable purposes in this state. NOTE: The sales tax exemption would not apply if the vehicle was purchased by a for profit subsidiary of the non-profit organization.  R.C. 5739.02

NR Non-Resident Affidavit – Sales to non-residents of Ohio where the purchaser takes possession of the vehicle in Ohio, but states the vehicle will be immediately removed and titled outside of Ohio, are generally exempt from sales tax.   The purchaser will submit an affidavit (STEC NR) as documentation of this transaction.   R.C. 5739.029, 5739.027, and OAC 5703-9-10

OD Sale of a motor vehicle or watercraft to an out-of-state dealer – An exemption applies to sales made to an out of state motor vehicle or watercraft dealer.  The dealer must supply a completed form STEC IC or STEC WCICR.C. 5739.02

OH Off-Highway Motorcycle – An exemption applies to off-highway motorcycles purchased prior to July 1, 1999, which is when the requirement to title these vehicles came into effect.  Prior to this, sales tax was paid directly to the Treasurer of State, not the local Clerk of Courts title office.

PD Partnership, Dissolution with no Consideration – The exemption from sales tax applies when the transfer of title from a partnership (business) to a partner (individual) occurs upon dissolution of the partnership. R.C. 4505.06

PT Non-Licensed, Production Transportation – An exemption applies to a sale of a motor vehicle that is being used as transportation equipment to transport items in the process of production for sale by manufacturing, processing, assembling or refining within a plant. These vehicles may not be licensed to operate on public highways. OAC 5703-9-21

PU Direct Use in a Public Utility Service – An exemption applies if a motor vehicle is purchased for use in rendering a public utility service, such as taxicabs, limousines, and ambulances.  A PUCO and vendor’s license must be supplied on the exemption certificate.  NOTE: This exemption code should be used if the purchaser is a business entity.  If an individual is purchasing the vehicle for this reason, use exemption code TS. R.C. 5739.02

RD Resale, Demonstrator – An exemption is available when a motor vehicle dealer (new, used, leasing, salvage, or out-of-state) obtains title for resale. The Clerk of Courts will record on the title the current dealer’s permit number and/or vendor’s license number.  R.C. 5739.02

RF Resale, Financial Institution – An exemption applies when a finance company or bank obtains title to protect the loan (i.e., repossession), R.C. 5739.02.  This code is also used by pawnbrokers, R.C. 4505.102.

RI Resale, Implement/Equipment Dealer – An exemption may apply when a farm implement or construction equipment dealer acquires a trailer with a gross weight in excess of four thousand pounds, which requires a motor vehicle certificate of title. Those dealers not licensed by the Bureau of Motor Vehicles may use this exemption code in order to resell the trailer.  R.C. 5739.02(B)(15)

RL Resale, Leasing - A motor vehicle dealer (new, used, leasing, salvage, or out-of-state) obtaining title for resale may use this exemption. A dealer’s permit number and/or vendor’s license number is required.  R.C. 5739.02(B)(15)

RM Re-manufacturing – An exemption will apply when a manufacturer obtains title to a chassis which will become part of a manufactured item that will be titled as a motor vehicle when sold to the end user.  R.C. 5739.02(B)(39)(a)

RN Resale, New/Used Dealer - A motor vehicle dealer (new, used, leasing, salvage, or out-of-state) obtaining title for resale may use this exemption. The Clerk of Courts will record on the title the current dealer’s permit number and/or vendor’s license number.  R.C. 5739.02(B)(15)

RO Resale – Out-of-State Leasing - A motor vehicle dealer (new, used, leasing, salvage, or out-of-state) obtaining title for resale may use this exemption.  The Clerk of Courts will record on the title the out of state seller’s use license, which must begin with 99xxxxxx.  R.C. 5739.02(B)(21)

RP Redeemed, Repossession – An exemption is allowed when a mortgagor makes arrangement to regain possession of a titled vehicle after it was previously repossessed by the financial institution holding the mortgage.  R.C. 4505.06(F)(2)

RR Resale, Daily Rental - A motor vehicle rental company who takes title to a motor vehicle that they will be using as a rental vehicle may claim this exemption.  They must hold an active vendor’s license.  R.C. 5739.02(B)(15)

RS Redeemed, Return Sale - An exemption is allowed when a trade-in vehicle is transferred back to the original mortgagor due to the sale of another motor vehicle not being completed by a motor vehicle dealer.  R.C. 4505.06 (F)(2)

RV Resale, Watercraft – A watercraft dealer (new, used, leasing, salvage, or out-of-state) obtaining title for resale may use this exemption. A dealer’s permit number and/or watercraft vendor’s license number is required.  R.C. 5739.02(B)(15)

RW Resale, Wholesale Only - This exemption is allowed for financial institutions (GMAC, Ford Motor Credit, Chrysler Credit, etc.) who will take title to motor vehicles only for the purpose of selling these vehicles to licensed used motor vehicle dealers.

Effective Aug. 12, 1996, the use of this exemption code also covers those individuals who purchase a watercraft and/or outboard motor for the sole purpose of renting/leasing it (under contract) to a person, corporation or club who will then rent or lease the watercraft and/or outboard motor to others. A copy of the contract that exists between the purchaser and the other individual, corporation or club that will be leasing/renting the watercraft and/or outboard motor must be obtained at the time of titling. The purchaser must provide a properly completed exemption certificate. R.C. 5739.02(B)(15)

SA Self–Assembled – An exemption is allowed on a self-assembled motor vehicle that has been certified as road worthy by the Highway Patrol.  R.C. 4505.06(F)(2)

SP State/Political Subdivision - The State of Ohio or any political subdivision thereof is exempt from sales tax on motor vehicles.  R.C. 5739.02(B)(1)

SR Salvage, Resale – A salvage dealer taking a salvage title to a vehicle that is to be dismantled and sold as parts may claim an exemption from sales tax. A Salvage Dealer Permit and Vendor License are required.  R.C. 5739.02(B)(15)

TD Transfer on Death – If a sole owner of a vehicle passes away and has designated a transfer-on-death beneficiary on the title, an exemption for sales tax is allowed at the time of the title transfer.  The exemption applies whether a lien exists on the deceased owner’s title or not.  R.C. 2131.13

TH Highway Transportation for Hire - Purchases of motor vehicles may be exempt from paying sales tax when the motor vehicle is primarily used in transporting tangible personal property for others.  R.C. 5739.02(B)(32)

TS Transportation Services - An exemption applies if a motor vehicle is purchased for use in rendering a public utility service, such as taxicabs, limousines, and ambulances.  A PUCO and vendor’s license must be supplied on the exemption certificate.  NOTE: This exemption code should be used if the purchaser is an individual.  If a business is purchasing the vehicle for this reason, use exemption code PU. R.C. 5739.02(B)(41)

UC Unclaimed Vehicle by Affidavit – The repair garage or place of storage may claim an exemption when transferring the title to an unclaimed motor vehicle when the proper affidavit has been executed.  R.C. 4505.101

UM Undisturbed Mortgage - An exemption certificate is required when a vehicle with a lien is transferred to another person, but the original lien remains on the vehicle and the original owner remains liable for the debt and no consideration is given. Examples of this are when a title transfers from two names to only one of the original names and the mortgage remains in both names, or when the title transfers from two names to only one of the original names and the mortgage also changes from two names to only one of the original names.  R.C. 4505.06(F)(2)

VF Volunteer Fire Department - Sales of emergency and fire protection vehicles to volunteer fire departments that are under contract with a political subdivision of this state (county, township, or municipality) to provide fire protection and emergency services are exempt from sales tax.  R.C. 5739.02(B)(20)

WH Warehousing - Sales of a motor vehicle which will be used as a “yard truck” to transport purchased inventory in a warehouse, distribution center, or similar facility are exempt from the sales tax as long as the vehicle is not licensed for highway use. The inventory must be primarily distributed outside this state to retail stores of the person who owns or controls the warehouse, distribution center, or similar facility.  R.C. 5739.02(B)(42)(j)