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ST 2001-02 - Manufactured Homes, Mobile Homes and
Industrialized Units - Revised January 1, 2001
Senate Bill 142 made several tax law and title law changes
effective January 1,
2000. Some of the changes affect the tax
liability on manufactured and mobile homes and the method of
paying sales and use tax.
Manufactured Homes or Mobile Homes
A new manufactured home or new mobile home begins life with a
Manufacturer’s Statement of Origin (MSO) and must be titled
as a motor vehicle under Ohio motor vehicle title law. A used
manufactured home or used mobile home is one that has been or
should have been previously titled in the name of the
ultimate consumer (someone other than a new motor vehicle
dealer licensed to sell new manufactured and/or mobile
homes). A selling dealer must obtain title in the purchaser’s
name in the purchaser’s county of residence.
New
Manufactured Homes or Mobile Homes
- Dealers are considered to be the consumer of all
new
manufactured or mobile homes sold to the ultimate consumer.
For sales and use tax purposes, the "ultimate consumer" is
someone other than a new motor vehicle dealer licensed to
sell new manufactured and/or mobile homes.
- Dealers will no
longer collect sales and use tax from their customer
as they did prior to January 1, 2000. Dealers, however, now
owe sales and use tax based on their cost
of the
new manufactured or mobile home based
on the total tax rate in effect in the county where titled to
the purchaser (purchaser’s county of residence,
regardless of where the new manufactured or mobile home
will be located). Dealers become liable for the tax when
they sell a new
manufactured home or mobile home to the ultimate consumer.
This occurs when the ultimate consumer takes delivery of
the manufactured home, when the dealer receives payment for
the manufactured home or when the customer receives
financing for the manufactured home,
whichever is
earliest.
SPECIAL NOTE
Use tax does not apply when a new manufactured home or
mobile home is being sold to the United States government
or to the State of Ohio or any of its political
subdivisions.
- While dealers cannot charge sales or use tax to the
purchaser, they may recover the taxes paid by them by
increasing the "price" charged the purchaser for the new
manufactured home or mobile home. For example, if a dealer
purchases a unit for $50,000 and sells it to a customer who
lives in Cuyahoga County (7%), the dealer’s base cost is now
$53,500. Therefore, the dealer would determine the selling
price using $53,500 as the base cost of the unit.
- A dealer’s tax liability is not be
paid to the Clerks of Courts when title is obtained for the
customer but it will be paid directly to the Treasurer of
State of Ohio with the filing of a consumer’s use tax return
(Form UT 1014). Consumer’s use tax returns are filed on a
monthly or quarterly basis with the return and tax payment
due (received by the
Treasurer of State) by the twenty-third day of the month
following the reporting period. If a dealer does not already
have a consumer’s use tax account with the Department of
Taxation, the dealer must complete and submit an application
(Form UT 1008) which can be obtained from any office of the
Department of Taxation or off the website http://tax.ohio.gov/.
Used
Manufactured Homes or Mobile Homes
If a dealer sells a used
manufactured home or mobile home, the dealer does not owe
sales or use tax on the acquisition cost of the
used
manufactured home or mobile home and sales and use tax would
not be charged on the sale. The transfer of ownership of a
used
manufactured home or mobile home may be subject to a transfer
tax. Please contact the purchaser’s County Auditor for more
details.
Accessories
- If a dealer includes skirting, awnings, interior
cabinetry, dishwasher, trash compactor, range, refrigerator
and/or other accessories and attachments that are
permanently
attached to or incorporated as part of the new manufactured
or mobile home that is being sold, the dealer is the
consumer of these items and would owe tax on the dealer’s
cost. If the tax is not paid to the supplier at the time
the items are purchased, the tax must be paid along with
the tax on the new manufactured or mobile home.
If a dealer is also selling other accessories (i.e., beds,
couches, chairs, tables, lamps) that are not permanently
attached to or incorporated as part of the new manufactured
or mobile home, the dealer is a vendor/seller of these
items and must collect sales or use tax based on the tax
rate in the county where the sale is consummated. This tax
is to be reported and paid to the Treasurer of State under
a vendor’s license.
- If a dealer is separately charged a deposit by the
manufacturer, re-manufacturer, distributor or other new
manufactured home dealer for wheels and axles used in the
transportation of the home that are to be returned to the
manufacturer, re-manufacturer, distributor or other new
manufactured home dealer, the deposit amount is not subject
to use tax to the extent that the deposit actually is
refunded. The deposit amount must be
separately stated on the invoice or billing rendered to the
dealer.
Repairs
- A person performing repairs or improvements to a
manufactured or mobile home or to the permanently attached
accessories on or after January 1, 2000 is considered the
consumer of all property used in the performance of the
repairs or improvements. Sales and use tax is be due on the
cost of these items and, if not paid to the supplier at the
time of purchase, must be paid on a consumer’s use tax
return. Tools, equipment and/or miscellaneous supplies used
in making repairs are also subject to the sales or use
tax.
- A person performing repairs to accessories (i.e., beds,
couches, chairs, tables, lamps, TV’s, stereos) that are
not permanently
attached to the manufactured or mobile home is making retail
sales and must charge/collect sales tax on the repair parts
and labor. This tax is to be reported and paid on a sales tax
return. Again, tools, equipment and/or miscellaneous supplies
used in making repairs are subject to the sales or use tax.
Installation
Charges
- Effective January 1, 2000, charges for installing new or
used manufactured homes or mobile homes sold on or after
January 1, 2000 or for the installation of permanently
attached accessories are not subject to Ohio sales or use
tax. If a dealer or subcontractor purchases accessories that
that will be permanently attached to real property or a
manufactured or mobile home, the dealer or the subcontractor
is considered the consumer of these items and would owe Ohio
sales or use tax on the purchase price. Tools, equipment
and/or miscellaneous supplies used in installing manufactured
or mobile homes and/or permanently attached accessories are
subject to the sales or use tax.
- Charges for installing items that are
not
permanently attached accessories continue to be subject to
Ohio sales or use tax. Again, tools, equipment and/or
miscellaneous supplies used in installing manufactured or
mobile homes and/or permanently attached accessories
continue to be subject to the sales or use tax.
Out-of-State
Dealers/Sellers
If an out-of-state dealer sells new manufactured and/or
mobile homes and delivers these homes to an Ohio location for
set-up, the dealer is the consumer of these homes (plus any
permanently attached accessories) and would owe Ohio use tax
on the cost of the homes and/or permanently attached
accessories. The out-of-state dealer would report and pay
this tax under an Ohio consumer’s use tax account as
previously described in this release.If an out-of-state
dealer has nexus with Ohio and sells accessories that are not
permanently attached to the manufactured or mobile home, the
dealer would be required to collect and remit Ohio use tax on
the sale of these accessories. The tax base would be the
selling price and the dealer would collect tax at the rate in
effect in the customer’s county. Any out-of-state dealer with
nexus with Ohio must be registered as an out-of-state seller
with the State of Ohio, Department of Taxation.
If an out-of-state dealer makes repairs to
manufactured/mobile homes, permanently attached accessories
and/or accessories that are not permanently attached, the
dealer would owe (or be required to collect and remit) tax as
previously described in this release under the "repairs"
section.
Industrialized
Units
(Modular Home)
An "industrialized unit" does not start
out with a Manufacturer's Statement of Origin (MSO);
therefore, it is not titled as a motor vehicle. The
installation of this type of unit is always
considered a construction contract and the "contractor" is
liable for payment of the sales or use tax on the purchase
price of the unit.
- If a manufacturer of an industrialized unit is acting as
a seller and installer of industrialized units (no "dealer"
involved), the manufacturer is considered a construction
contractor and owes Ohio sales/use tax on the cost of
materials used to produce the unit.
If a manufacturer of industrialized units sells units to
dealers who never
install (or never
arrange for installation of) the units, the manufacturer
should obtain exemption certificates from the dealers
indicating "resale" as the dealers' claim for exception
from payment of sales or use tax. The dealer will then be
responsible for collecting and remitting sales or use tax
when the units are sold to contractors who install (or
arrange for installation of) the units.
If a manufacturer of industrialized units sells units to
dealers who always sell and
install (or arrange for installation of) the units, the
manufacturer should collect sales or use tax from the
dealer based on the selling price of the units. The dealers
do not "collect and remit" sales tax from purchasers, but
the dealers recover the taxes paid by incorporating the
taxes paid in the amount charged for the installed
units.
If a manufacturer of industrialized units sells units to
dealers who may or may
not install (or
may
or may not arrange for installation
of) the units, the manufacturer should collect sales or use
tax unless the manufacturer is given exemption certificates
from the dealers indicating "resale" as the claim for
exemption. The dealers collect and remit sales or use tax
on those units when the dealers do not install (or arrange
for installation of) the units or the dealers would remit
use tax on the purchase price of those units that the
dealers install (or arrange for installation).
If a dealer enters into a contract with the buyer to
incorporate an industrialized unit into real property, the
dealer has entered into a construction contract. If the
dealer purchases (accepts ownership of) the industrialized
unit before or during installation, the dealer owes
sales/use tax to the supplier (manufacturer or another
dealer) on the dealer's acquisition cost. If the dealer
sub-contracts the provision and
installation of the industrialized
unit to the manufacturer (dealer never accepts ownership of
the industrialized unit), the dealer is acting as a prime
contractor and the manufacturer is acting as a
sub-contractor. In this case, the manufacturer owes
sales/use tax on the cost of materials used to produce the
unit if the unit is custom built for the job
or the
produced cost if the unit is taken from an inventory that
was previously produced for sale.
If the dealer sells an industrialized unit to an individual
who will install or sub-contract installation of the unit
onto a foundation, the dealer may claim the "resale"
exception on the purchase of the unit. The dealer then
collects sales or use tax from the purchaser (based on the
selling price) and remits this tax directly to the State of
Ohio under a vendor's license. If the dealer is located
outside of Ohio and is registered with Ohio as a collector
of use tax, the dealer would collect use tax (based on the
rate in effect where the unit is delivered to the
purchaser) from the purchaser and remit the tax directly to
Ohio under a seller's use tax account. If a dealer is
located outside of Ohio and is not registered as a
collector of Ohio use tax, the purchaser of the unit
(typically the contractor) would owe use tax (based on
where delivery of the unit is taken) and this tax would be
paid directly to Ohio under a consumer's use tax
account.
- If the dealer is selling and installing (or arranging for
installation of) an industrialized unit from an inventory of
purchased units, the dealer is acting as a construction
contractor and owes tax on the dealer's acquisition cost. The
dealer should pay the tax to the supplier if the dealer is
purchasing the unit specifically for installation or the
dealer can remit use tax directly to the State of Ohio (based
on the rate in effect in the county where delivery is taken
or where the unit is installed, whichever is greater) if the
unit is taken out of inventory, which is being held for sale.
If you have any questions regarding this matter, please feel
free to contact us by calling 1-888-405-4039.
OHIO RELAY FOR HEARING OR SPEECH IMPAIRED
Phone: 1-800-750-0750
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