Can you provide an updated list of sales tax exception/exemption codes that may be available for motor vehicles/watercraft?
AP All-purpose vehicle purchased prior to July 1, 1999 (See Note E)
CF Commercial fishing – watercraft – commercial fishing license required
CM Conversion – military (purchased out-of-state for use out-of-state)
CO Court-ordered transfer with no consideration
CU Casual Sale - under-speed utility vehicle and mini-trucks (See Note L)
DF Direct use – farming
DM Direct use – mining
DO Direct use – oil and gas
DP Direct pay (permit number required “98-XXXXXX”)
DR Research and development
DS Dissolution to stockholder with no consideration
DV Divorce – court-ordered transfer with no consideration
FA Federal agency
FD Foreign diplomat – Motor Vehicle Tax-Exemption Letter issued from the Department Office of Foreign Missions (OFM) is required
HE Historical – converted yellow to ATPS title, no change of ownership
IC Resale – insurance claim
IH Inheritance with no consideration, includes surviving spouse
IP Individual to partnership with no consideration
IS Sale of a motor vehicle as interstate commerce
MB Manufacturer buy-back – lemon law
MH Manufactured homes or mobile homes sold on or after January 1, 2000 (See Note G)
MO Manufacturing operation – i.e., cement mixer
MR Corporate merger with no consideration
NC Corporate name change
NP Nonprofit, charitable or 501(c)(3) organization
NR Nonresident affidavit, immediate removal
OD Sale of a motor vehicle/watercraft to an out-of-state dealer
OH Off-highway motorcycle purchased prior to July 1, 1999 (See Note E)
PD Partnership, dissolution with no consideration
PT Non licensed production transportation
PU Direct use in a public utility service (See Note J)
RD Resale – demonstrator (dealer permit and VL required)
RE Resale – repossession (effective through June 8, 2000)
RF Resale – financial institution (effective June 9, 2000 – See Note H)
RI Resale – implement/equipment dealer (See Note D)
RL Resale – leasing (dealer permit and VL required)
RM Remanufacturing – chassis or part
RN Resale – new/used dealer (dealer permit and VL required)
RO Resale – out-state leasing (account number required “99-XXXXXX”)
RP Redeemed – repossession
RR Resale – daily rental (VL required)
RS Redeemed – return sale
RV Resale – watercraft (VL required)
RW Resale – wholesale only (See Note A)
SP State/political subdivision
SR Salvage – resale (dealer permit and VL required)
TD Transfer on death beneficiary (See Note I)
TH Highway transportation for hire (PUCO or ICC permit required)
TS Transportation service (VL required) (See Note J)
UC Unclaimed vehicle by affidavit
UM Undisturbed mortgage
VF Volunteer fire department – contract basis
WH Warehousing – not licensed for highway use (See Note C)
WP Watercraft, personal – if purchased prior to January 1, 2000 (See Note F)
**** Special Notes ****
(A) On June 24, 1994, the Department of Taxation made an exemption code available “RW: Resale – wholesale only.”
This exemption code was inserted for the purpose of allowing financial institutions (GMAC, Ford Motor Credit, Chrysler Credit, etc.) to take title to motor vehicles only for the purposes of selling these vehicles to licensed used motor vehicle dealers.
Effective Aug. 12, 1996, the use of this exemption code was again expanded to cover those individuals who purchase a watercraft and/or outboard motor for the sole purpose of renting/leasing it (under contract) to a person, corporation or club who will then rent or lease the watercraft and/or outboard motor to others. The Department of Taxation would also recommend that the local Clerk of Courts obtain a copy of the contract that exists between the purchaser and the other individual, corporation or club that will be leasing/renting the watercraft and/or outboard motor. The purchaser must provide a properly completed exemption certificate.
(B) On Aug. 1, 1994, the Department of Taxation discontinued the use of the exemption code “TG: True gift with no consideration.”
If a person is trying to obtain a certificate of title and say they received the motor vehicle, watercraft or outboard motor as a “gift,” the transaction should be processed as a sale with a purchase price of $0.00. The system will then issue a title reflecting a purchase price of $0.00 and taxes paid of $0.00. This transaction will then be audited by the Department of Taxation's computerized audit program. If tax is found to be due, we will collect the tax or issue an assessment, with applicable penalty, against the new titleholder.
(C) On Jan. 30, 1996, the Department of Taxation authorized the use of the exemption code “WH: Warehousing – not licensed for highway use.”
Section 5739.02 (B)(42)(j) of the Ohio Revised Code provides for a warehousing exemption for items used in a warehouse, distribution center or similar facility when it is used to transport purchased inventory that is primarily distributed outside this state to retail stores owned or controlled by the operator of the warehouse, distribution center or similar facility.
(D) On June 3, 1996, the Department of Taxation authorized the use of the exemption code “RI: Resale – implement/equipment dealer.”
Farm implement or construction equipment dealers will occasionally acquire a horse, utility or equipment “trailer” with a gross weight in excess of 4,000 pounds, which requires a motor vehicle certificate of title. If the implement or construction equipment dealer is in the business of regularly selling trailers that are required to be titled, they will be licensed as a motor vehicle dealer by the Bureau of Motor Vehicles. Those that only occasionally sell trailers that are required to be titled will not be licensed as a motor vehicle dealer by the Bureau of Motor Vehicles. Nevertheless, the implement or equipment dealer must have a vendor’s license as they are making retail sales. Under sales and use tax law, these implement or equipment dealers are entitled to claim the resale exemption on these trailers, so long as they are being acquired for the purposes of resale. These implement or equipment dealers MUST submit an exemption certificate with the application for certificate of title using the term “Resale – implement/equipment dealer.”
Special Note: This exemption reason does not apply to trailers that are acquired for use by the business in transporting other items (tractors, plows, disc harrows, fertilizer spreaders, combines, bulldozers, backhoes, etc.) that are sold by the dealer or other motor vehicles (passenger vehicles, trucks, vans, etc.).
(E) Effective July 1, 1999, House Bill 611 changed the status of off-highway motorcycles (OHM’s) and all-purpose vehicles (APV’s). All OHM’s and APV’s sold on or after July 1, 1999 are required to be titled, and sales/use tax is required to be paid to the local Clerk of Courts unless the purchaser is entitled to claim exception or exemption. Dealer sales of OHM’s and APV’s prior to July 1, 1999 were subject to Ohio sales/use tax, and the tax was required to be collected by the dealer and remitted directly to the Treasurer of State, not to the Clerks of Courts. Non-dealer sales of APV’s made prior to July 1, 1999 were also subject to the sales/use tax, but again, the tax was to be paid to the directly Treasurer of State, not to the Clerks of Courts.
Therefore, no tax should be collected by the Clerks of Courts on OHM’s and APV’s purchased prior to July 1, 1999. Titles issued on OHM’s and APV’s purchased prior to July 1, 1999 should be issued using the appropriate ATPS exemption code (OH for OHM’s or AP for APV’s).
(F) Effective Jan. 1, 2000, the status of personal watercraft changed. All personal watercraft sold on or after January 1, 2000 are required to be titled and sales/use tax is required to be paid to the local Clerk of Courts, unless the purchaser is entitled to claim exception or exemption. Dealer sales of personal watercraft prior to January 1, 2000 were subject to Ohio sales/use tax, and the tax was required to be collected by the dealer and remitted directly to the Treasurer of State, not to the Clerk of Courts. Non-dealer sales of personal watercraft made prior to Jan. 1, 2000 were not subject to the sales/use tax since they were not required to be titled and they qualified for the “casual sale” sales and use tax exemption.
Therefore, the Clerks of Courts should collect no tax on personal watercraft purchased prior to Jan. 1, 2000. Titles issued on personal watercraft purchased prior to Jan. 1, 2000 should be issued using the appropriate ATPS exemption code “WP: Watercraft, personal – purchased prior to Jan. 1, 2000.”
(G) Used manufactured homes and mobile homes sold on or after Jan. 1, 2000 are not subject to sales or use tax. New manufactured homes or mobile homes sold on or after Jan. 1, 2000 are subject to sales and use tax, but the tax base is the dealer’s cost and the tax is not paid to the local Clerk of Courts, it is paid directly to the State of Ohio. Therefore, the Clerks of Courts will issue titles without collecting tax if a new or used manufactured or mobile home is sold on or after January 1, 2000. The clerks will use the ATPS exemption code of “MH: Manufactured homes or mobile homes sold on or after January 1, 2000” on these title transactions.
Sales of new or used manufactured or mobile homes made prior to Jan. 1, 2000 are subject to sales and use tax and the tax must be collected by the Clerks of Courts when the title is issued in the purchaser’s name in the purchaser’s county of residence.
(H) On June 9, 2000, we authorized the use of the exemption code “RF: Resale – financial institution” to cover the issuance of a title in the name of a financial institution when: 1) the financial institution is the lien holder, 2) the financial institution is obtaining title to protect its loan, and 3) the financial institution will sell the vehicle to recover all or part of the loan amount. The exemption code RF can also be used by pawnbrokers and by those who finance titled watercraft and titled outboard motors (provided they comply with the three requirements listed above). This exemption code replaces RE.
(I) Effective July 23, 2002, House Bill 345 allowed the sole owner of a motor vehicle, watercraft or outboard motor to designate a transfer-on-death beneficiary or beneficiaries. The beneficiary could be an individual, corporation, trust or any other legal entity. Exemption code TD was established to transfer the title to the beneficiary without payment of the tax, whether a lien exists on the deceased owner’s title or not.
(J) Effective Aug. 1, 2003, House Bill 95 enacted a new exemption for transportation services under 5739.02 (B)(41). It states that the tax does not apply to “Sales to a person providing services under division (B)(3)(r) of section 5739.01 of the Revised Code of tangible personal property and services used directly and primarily in providing taxable services under that section.” The new exemption is available for purchases made on or after Aug. 1, 2003. Examples of the types of vehicles that should be using this code are taxis, limousines and charter buses. Taxis that are titled in the name of a person could use the TS code. Taxis in the name of the taxi company should continue to use the PU (public utility) code. The TS code should be used when you are provided a properly completed exemption certificate that states, “Used directly and primarily in providing taxable intrastate transportation services as provided in 5739.01 (B)(3)(r).” A vendor license number must be provided on the exemption certificate and in ATPS.
(K) Effective Aug. 1, 2007, sales to purchasers of motor vehicles that will be titled in certain states became subject to the tax. These states are: Arizona, California, Florida, Indiana, Massachusetts, Michigan, South Carolina, and Washington. (For more information, please see Information Release ST 2007-04, Sales of Motor Vehicles to Nonresidents of Ohio, issued August 2007.)
The exempt code NR was used to cover sales to all nonresidents, including sales to dealers of other states. Since using the NR code could result in a taxable transaction, a new code OD was created for use when a dealer of another state or country purchases a motor vehicle or watercraft for resale. A dealer permit number should be indicated on the exemption certificate completed by the dealer.
When a dealer will deliver a motor vehicle or watercraft to a point outside of Ohio, or to an interstate carrier, that is a sale in interstate commerce. Code IS should be used. The dealer will complete the exemption certificate, form STEC IC.
(L)Effective January 1, 2017,casual sales of under-speed vehicles and mini-trucks became exempt from sales and use taxes. A "casual sales" is a sale of TPP by a person note engaged in the business of selling tangible personal property. while most casual sales are exempt from sales tax under R.C. 5739.02(B)(8) if tax has been previously paid on a transaction, that provision specifically excludes the transfer or sale of some items, including motor vehicles, snowmobiles, and all-purpose vehicles. This means that a motor vehicle, all-purpose vehicle, etc. that is purchased in a casual sale is subject to sales or use tax, and the tax must be paid to the clerk of courts at the time of transfer regardless of how many times it transfers. However, with the changes to the definition of "motor vehicle" discussed in Information Release ST2017-01, subsequent sales of under-speed vehicles and mini-trucks from individuals other than a vendor are a casual sale.