ST 1995-05 - "Price" for Calculating Sales or or Use
Tax - Issued March, 1995; Revised February, 2007
The Federal government and the State of Ohio impose excise
taxes which, depending on their nature, may or may not be
included in the total amount (price) subject to Ohio sales or
use tax. The revision of this release eliminates reference to
the federal luxury tax, which ended January 1, 2003.
EXCISE TAXES INCLUDED IN "PRICE"
Assuming that the item sold is subject to Ohio sales or use
tax, the amount attributed to an excise tax imposed on the
manufacturer, distributor, wholesaler, or retailer (someone
other than the final consumer) by the Federal government or
the State of Ohio is part of the "price" used for calculating
sales or use tax. This applies even if the tax is separately
stated on the invoice.
For example, the State of Ohio imposes an excise tax on
cigarettes. This tax is required to be paid by the wholesaler
before the cigarettes can be sold to retailers. This tax is
then passed on to the retailers and the retailers pass it on
to the final consumer. Each pack of cigarettes upon which the
tax has been paid by the wholesaler is marked with a tax
stamp. Because this tax is imposed on the wholesaler and not
directly on the consumer, it becomes part of the "price" for
calculating sales or use tax.
Other taxes that must be included in "price" include, but are
not limited to, Ohio's personal property tax on leased
equipment, federal and state excise taxes on alcoholic
beverages, and federal excise taxes on tires. This holds true
even if the tax is separately stated on the bill of sale or
EXCISE TAXES NOT INCLUDED IN "PRICE"
When an excise tax is imposed on the final consumer (i.e. the
retailer must collect it from the consumer), it is not to be
included in the "price" for calculating sales or use tax.
For example, the Federal government imposes a 12% federal
retail excise tax on the consumer of heavy trucks. Retailers
of heavy trucks are required to collect this tax from the
consumer when the trucks are sold. Since this is a tax levied
directly on the consumer, it is not to be included in "price"
when calculating sales or use tax. However, in order to be
excluded from the tax base, this federal retail excise tax
must be separately stated on the invoice.
If you have any questions regarding this matter, you should
call us at 1-888-405-4039.
OHIO RELAY SERVICES FOR
THE HEARING OR SPEECH IMPAIRED