Teens and Taxes Home  Teens and Everyday Taxes  Ohio Income Tax  Starting a Buesiness  Tax History

 

Use Tax and Businesses

descriptionWhat is Use Tax?
Use tax is similar to a sales tax in its application. Use tax is imposed on the "storage, use or other consumption" of all tangible personal property and the receipt of certain services that are subject to sales tax.

Purchases that are properly exempt from sales tax are also exempt from the use tax. Use tax must be paid on all purchases made by Ohio residents and businesses if the proper amount of sales tax has not been paid to the vendor, seller, or service provider. The use tax rate is equal to the sales tax rate in effect in the county where the property is used or the benefit of the service is received by the purchaser.

The most common situation that gives rise to a use tax liability is when an Ohio customer makes a mail order or online purchase from an out-of-state seller. Use tax is also due when the purchaser improperly claims exemption from the sales tax or if the sales tax paid is less than the total use tax in effect in the county where the item is used or the benefit of the service is received.

One of the main reasons for the use tax is to protect Ohio vendors from unfair competition from out-of-state sellers, since the in-state merchant is required to collect sales tax when selling to an Ohio resident or business. All states that have a sales tax have a use tax.

How is Use Tax paid?
Many out-of-state sellers are registered with the State of Ohio for the collection and remittance of the use tax. However, if the proper amount of sales or use tax is not collected at the time of purchase, the amount of tax due can be paid directly by the consumer to the State of Ohio. A consumer who makes regular purchases upon which the proper amount of sales or use tax is not collected by the seller should apply for a consumer's use tax account with the Department of Taxation and begin filing use tax returns. If the purchases are isolated, the consumer should make a voluntary payment of the tax by sending a payment of the amount due to the Ohio Department of Taxation along with a description of the purchases made and the date of purchase. Use tax on purchases can also be paid on the Ohio income tax return. A voluntary payment form (VP USE) is available on our Web site at Tax Forms.

Do businesses need to be concerned with Use Tax?
Many out-of-state sellers are registered with the State of Ohio for the collection and remittance of the use tax. However, if the proper amount of sales or use tax is not collected at the time of purchase, the amount of tax due can be paid directly by the consumer to the State of Ohio. A consumer who makes regular purchases upon which the proper amount of sales or use tax is not collected by the seller should apply for a consumer's use tax account with the Department of Taxation and begin filing use tax returns. If the purchases are isolated, the consumer should make a voluntary payment of the tax by sending a payment of the amount due to the Ohio Department of Taxation along with a description of the purchases made and the date of purchase. Use tax on purchases can also be paid on the Ohio income tax return. A voluntary payment form (VP USE) is available on our Web site at Tax Forms.

What is subject to Use Tax?
Ohio law provides that all tangible personal property stored, used or otherwise consumed in Ohio along with certain taxable services used in Ohio are subject to use tax unless: (1) Ohio sales tax has been paid or (2) there is an exception or exemption that applies to the transaction.

In general, the following are examples of tangible personal property subject to use tax:
.
The above lists are not all-inclusive and provide only a basic knowledge of what items are subject to use tax. Depending on your business, various other purchases of tangible personal property and services may also be subject to use tax.

 

Use Tax Publications

A series of fact sheets has been developed to further explain the use tax generally, and how use tax commonly applies in certain businesses including construction contracting, manufacturing, retailing and various service-related enterprises. Please select from one of the links below to see the fact sheet most pertinent to your interests.

  

 

How Use Tax applies to certain businesses

Cosmetology
Items that may be subject to use tax in the cosmetology industry:

  • Scissors, combs/brushes, salon chairs, mirrors, hair coloring materials, office supplies, furniture, razors, shavers, tanning beds, massage tables

Construction Contract
Items that may be subject to use tax in the construction contract industry:           

  • Tools and equipment, office supplies, items of tangible property installed into real property

 Landscaping/Lawn Care
Items that may be subject to use tax in the landscaping/lawn care industry:

  • Trimmers, mowers, blowers, saws, trailers, pruners, office supplies

Computer Service
Items that may be subject to use tax in the computer service industry.

  • Computers, monitors, printers, scanners, fax machines, staplers, paper, tape, furniture, desk, chairs, tables

Building Maintenance & Janitorial Services
Items that may be subject to use tax in the building maintence and janitorial service

  • Vacuum cleaners, floor polishers, tools, mops, brooms, cleansers, paper towels, gloves, buckets