ST 2007-06 - Sales and Use Tax: Accelerated and Electronic
Sales and Use Tax Payments – Issued December 2007
The purpose of this information release is to explain recent
changes to state law and new procedures for taxpayers who are
required to pay sales and use tax by electronic funds
transfer (EFT) and therefore make accelerated payments of the
sales and use tax.
Taxpayers whose liability exceeds $75,000 in any calendar
year are required to pay sales and use tax by electronic
funds transfer (EFT) and to make accelerated payments for the
second ensuing and each succeeding year.
These basic requirements haven’t changed. But in an effort to
simplify compliance for taxpayers required to make
accelerated payments, language enacted last June by the Ohio
General Assembly has changed the accelerated payment schedule
so that only one accelerated payment is due each month.
Understanding the new accelerated payment
For taxpayers required to make accelerated payments, the
payment must be made by the 23rd day of the month for which
the tax is due. This is the same day on which the previous
month’s tax return is also due. The remaining tax due for the
month must be paid when the tax return for that month is
filed by the 23rd day of the following month.
For example, during the month of March, an accelerated
payment is due on or before March 23, when the February tax
return is due. The balance of the tax due for March is to be
filed and paid on or before April 23, when the March tax
return is due. To calculate the remaining balance due,
subtract the amount of the accelerated payment made on or
before March 23 from the tax due. The resulting “Balance Due”
is paid on or before April 23.
Note: If the due date of any payment and/or
return falls on a weekend or a holiday, then the due date is
the next banking day.
Accelerated payment requirements
An accelerated payment must be equal to at least 75 percent
of the anticipated tax liability for that month. If a
taxpayer makes a payment that is less than 75 percent of the
actual liability for that month, the commissioner
may impose an additional charge not to exceed 5
percent of the unpaid amount. This charge, which is intended
to encourage taxpayer compliance, is unlikely to be applied
to taxpayers that are attempting to comply with accelerated
payment requirements. This subject is discussed in greater
Taxpayers have the option to make just one payment per month
that includes both the accelerated payment, and the balance
due for the previous month’s return. An additional line will
be added to tax returns beginning with the return for January
2008 to show such accelerated payments. For example, a
March 2008 return, filed and paid on or before April 23, can
include the amount of the April accelerated payment (which
would be shown on the new line on the return) and paid
together with the balance of the tax due for March in one
payment. The Department of Taxation will credit the amount
designated by the taxpayer on the accelerated payment line to
the next return period.
Taxpayers may also continue to make accelerated payments
separate from the return payment. A taxpayer who
chooses to do this should leave blank the new line on the tax
return designated for “Accelerated payment for next reporting
Accelerated payments, if not paid with the tax return, can be
made separately through the Treasurer of State, the Ohio
Business Gateway, and Ohio Telefile.
Electronic payment options
Taxpayers have the following EFT payment options:
Treasurer of State – Taxpayers have the
option to make Automated Clearing House (ACH) Debit or ACH
Credit payments. To make ACH Debit or ACH Credit payments,
the taxpayer must register with the Treasurer of State of
Ohio. An application to register for ACH payments may be
obtained from the Web site of the Treasurer of State:
should be faxed or mailed to the Treasurer of
State. The sales or use tax returns, UST-1 and UUT-1,
must be filed separately if payments are made through this
Ohio Business Gateway –
Electronic payments can be made online through the Ohio
Business Gateway, located at business.ohio.gov.
The electronic payment options through the OBG are ACH
Debit or credit card. A convenience fee is charged for
credit card payments. The sales tax return, UST-1, can be
filed and paid at the same time through the Gateway..
Ohio Telefile – This is a push-button,
telephone response system that may be used to make a ACH
Debit or credit card payments, and for limited use in
filing the UST-1. To use, call (800) 697-0440. Telefile
users should have their account number, reporting period,
bank routing number and bank account number ready before
making the call. Note: A convenience fee is charged for
credit card payments.
Note: Dates need to be entered carefully
when making electronic payments. When an electronic payment
only includes the accelerated payment, the taxpayer
should enter the 23rd day of the month for which the
accelerated payment is intended in the date field requested
by the system. When making the tax return payment – which may
or may not include an accelerated payment – the taxpayer
should use the last day of the month of the tax return period
as the period end date.
Accelerated Payments: Additional Charges
As stated above, the commissioner may impose an additional
charge not to exceed 5 percent of the unpaid amount of an
accelerated payment. However, state law provides that no
additional charge will be imposed on the underpaid amount as
long as the accelerated payment is equal to or greater than
75 percent of the reported liability for the same month in
the immediately preceding calendar year.
The purpose of the additional charge is to encourage taxpayer
compliance with the accelerated payment provisions in the
Ohio Revised Code. The additional charge is
discretionary and will likely not be applied to taxpayers
that are attempting to comply with the statute. The
additional charge will be imposed when:
- the accelerated payment is substantially less than 75
percent of the actual liability for the month,
- the accelerated payment does not meet the safe harbor
amount of at least 75 percent of the reported liability for
the same month in the immediately preceding calendar year,
- there have been repeated instances of understatement of
the anticipated tax liability by a taxpayer.
In a case where the additional charge is imposed, the
additional charge will be waived if the underpayment can be
shown to have resulted from a substantial unanticipated
fluctuation in the taxpayer’s sales.
The additional charge will be imposed on taxpayers that are
required to make payments by electronic funds transfer and
who regularly and/or intentionally do not comply with the
accelerated payment requirements outlined above.
If you have any questions regarding this information release,
please contact Taxpayer Services at (888) 405-4039, or e-mail
us through our Web site: tax.ohio.gov.
OHIO RELAY SERVICES FOR THE
HEARING AND SPEECH IMPAIRED
Telephone: (800) 750-0750
Addendum: Accelerated payments, electronic payments
and the Ohio Revised Code
Three sections of the Ohio Revised Code provide for the
requirement to pay sales and use tax by EFT and make
accelerated payments. The provisions are essentially the
same; the only difference is the type of taxpayer involved.
- R.C. 5739.032 for Direct Payment Permit Holders
- R.C. 5739.122 for Vendors
- R.C. 5741.121 for Out of State Sellers and In-State
R.C. 5739.122, as amended by Am. Sub. H.B. 119 of the 127th
Ohio General Assembly provides, in pertinent part:
(A) If the total amount of tax required to be paid by a
vendor under section 5739.12 of the Revised Code for any
calendar year equals or exceeds seventy-five thousand
dollars, the vendor shall remit each monthly tax payment in
the second ensuing and each succeeding tax year by electronic
funds transfer as prescribed by divisions (B) and (C) of this
(B) Vendors required by division (A) of this section to remit
payments by electronic funds transfer shall remit such
payments to the treasurer of state in the manner prescribed
by this section and rules adopted by the treasurer of state
under section 113.061 of the Revised Code, and as follows:
(1) On or before the twenty-third day of each month, a vendor
shall remit an amount equal to seventy-five per cent of the
anticipated tax liability for that month.
(2) On or before the twenty-third day of each month, a vendor
shall report the taxes collected for the previous month and
shall remit that amount, less any amounts paid for that month
as required by division (B)(1) of this section.
The payment of taxes by electronic funds transfer does not
affect a vendor's obligation to file the monthly return as
required under section 5739.12 of the Revised Code.
(C) A vendor required by this section to remit taxes by
electronic funds transfer may apply to the treasurer of state
in the manner prescribed by the treasurer of state to be
excused from that requirement. The treasurer of state may
excuse the vendor from remittance by electronic funds
transfer for good cause shown for the period of time
requested by the vendor or for a portion of that period. The
treasurer of state shall notify the tax commissioner and the
vendor of the treasurer of state's decision as soon as is
(D)(1)(a) If a vendor that is required to remit payments
under division (B) of this section fails to make a payment,
or makes a payment under division (B)(1) of this section that
is less than seventy-five per cent of the actual liability
for that month, the commissioner may impose an additional
charge not to exceed five per cent of that unpaid amount.
(b) Division (D)(1)(a) of this section does not apply if the
vendor's payment under division (B)(1) of this section is
equal to or greater than seventy-five per cent of the
vendor's reported liability for the same month in the
immediately preceding calendar year.