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ST 1995-05 - "Price" for Calculating Sales or Use Tax -
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
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.
Another example is the federal luxury tax imposed on the
retailer of luxury passenger vehicles. This tax is required
to be paid by retailers when the first retail sale or lease
of a luxury passenger vehicle occurs. The retailer can elect
to pass all or part of the cost of the tax on to the
consumer. Since this tax is imposed on the retailer and not
the consumer, any amount of the Federal luxury tax that is
passed on to the customer becomes part of the "price" for
calculating sales or use tax. This is true even if the tax is
separately stated on the invoice.
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
If you have any questions regarding this matter, you should
direct your questions to one of our district offices or call
OHIO RELAY SERVICES FOR
THE HEARING OR SPEECH IMPAIRED