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What must I do to make taxable retail sales
in Ohio?
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Are there different vendor's licenses for
different types of businesses?
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Are vendor's licenses transferable?
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Can my vendor's license be suspended or
revoked?
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When a county's sales tax rate increases,
will I be reimbursed for the cost of programming my cash
registers?
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How and when is the tax collected?
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What records must be kept?
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What is the tax base?
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When do I file a tax return?
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Can I file my return via the Internet?
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What do I do if my check has not cleared my
bank?
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What if my bank does not honor my check?
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Can sales tax be remitted by electronic
funds transfer (EFT)?
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Can my filing frequency ever be changed?
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Can I report two or more licenses on the
same return?
-
What are the penalties for not filing tax
returns on time and/or not paying collected taxes?
-
How do I handle bad debts and returned
merchandise?
-
How will I know if a sale is exempt from
tax?
-
How do I obtain a sales tax exemption
number?
-
What are my responsibilities when selling
alcoholic beverages?
-
Can my liquor permit be transferred if
sales/withholding tax is owed?
-
Can my liquor permit be renewed if I owe
sales/withholding tax?
-
What is successor liability?
-
Can I be held responsible for the debts of a
corporation?
-
Are there any rules that cover particular
tax issues and how can they be obtained?
-
Must I obtain other licenses or permits to
conduct retail sales?
-
How is a vendor's license canceled?
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.
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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.
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Regular vendor's license (ST-1) –- Issued
by the County Auditor to vendors with a fixed place of
business in Ohio. Vendors of tangible personal property and
certain services must have one regular vendor's license for
each fixed sales location.
Application Fee $25
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Delivery vendor's license (ST-1D) –-
Issued by the Department of Taxation to vendors who make
sales based on delivery of tangible personal property and
certain services at the consumer's location.
Application Fee $25
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Transient vendor's license (ST-1T) –-
Issued by the Department of Taxation to vendors who
transport stocks of goods to temporary places of business
or exhibits in a county where they have no fixed place of
business in order to make sales or lease motor
vehicles.
Application Fee $25
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Service vendor's license (ST-1S) –- Issued
by the Department of Taxation to vendors providing
automatic data processing, computer services or electronic
information services; taxable telecommunications service;
landscaping and lawn care service; private investigation
and security service; information service (1-900 telephone
calls); exterminating service; building maintenance and
janitorial service; employment service; employment
placement service; satellite broadcasting service; and snow
removal service (mechanical).
Application Fee $25
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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.
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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.
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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.
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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.
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7. What records must be
kept?
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.
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8. What is the tax
base?
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.
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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.
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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.
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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.
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12. What if my bank does
not honor my check?
You should immediately contact us at 1-888-297-3540.
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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.
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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.
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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.
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16. What are the penalties
for not filing tax returns on time and/or not paying
collected taxes?
- An additional charge up to $50 or 10 percent of the tax
required to be paid, whichever is greater, may be levied on
every tax return not filed on time and/or when the tax
liability is not paid in full.
- For not paying collected taxes, or not filing a tax
return, a penalty up to 50 percent of the tax due may be
assessed.
- A $50 fee is charged for every returned check. Interest
may be due on any taxes found due and not paid in a timely
manner.
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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.
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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.
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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.
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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.
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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.
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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.
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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:
- The business has been sold and the seller has filed the
final sales tax return (final return should be sent directly
to the Central Office, Tax Release Group, with guaranteed
funds)
- The department has reviewed the seller's account and
found that:
(a) All sales tax returns have been filed,
(b) all reported tax, interest and penalties have
been paid,
(c) all filing and reporting requirements have been
met.
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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.
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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.
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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:
- Motor vehicle sales – You must obtain proper permits from
the Bureau of Motor Vehicles to sell new and/or used motor
vehicles and to lease motor vehicles. Call 1-614-752-7637.
- Watercraft/outboard motor sales – Before you can allow a
trade-in allowance to reduce the tax base on the sale of a
watercraft or outboard motor, you must be licensed as a
watercraft dealer through the Ohio Department of Natural
Resources, Watercraft Division. Call 1-800-448-2030.
- Liquor sales – You must obtain the proper type of liquor
permit from the Department of Commerce, Division of Liquor
Control before you make sales of alcoholic beverages.
- Food sales – You must obtain a food service operation
license from the Department of Health before you can sell
prepared food in a restaurant or similar facility.
- Cigarette sales – You must obtain a cigarette license
from the county auditor in the county in which cigarette
sales are to be made.
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.
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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.
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