Sales Tax Updates in Ohio

Tax Professionals' Resource
December 20, 2012 — 1,516 views  
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The following are some recent Ohio sales tax updates:

Proper Use of Exemption Certificates by Contractors

When a contractor installs a fixture, he or she must collect sales tax from the customer unless a legal exemption is available. A blanket exemption certificate or a unit exemption certificate will both suffice. Contractors can also choose to use the multi-state exemption certificate. To be considered valid, any exemption certificate must contain the exact information found in O.A.C. § 5703-9-03(G).

Display of Licenses

All vendors must display their vendor's license. Before September 6, 2012, only transient vendors were required to display their tax license.

Cancellation of License

Any vendor who changes addresses without notifying the department can have its license suspended.

For Here or To Go?

The Ohio constitution expressly prohibits sales tax on food not consumed on the vendor's premises. However, many quick service restaurants neglect to properly ascertain exactly where the food will be consumed and therefore do not charge sales tax when they should. Ohio taxing authorities are continuing to crack down on those establishments that do not properly identify food that should be taxed.

Amnesty Over

Although the Ohio tax amnesty program ended on June 15, 2012, delinquent taxpayers are still encouraged to come forward through the existing voluntary program. Some taxpayers have found that the current voluntary program is more beneficial than the actual tax amnesty plan was.

Job Creation Tax Credit

Ohio recently expanded its pilot job creation tax credit program to home businesses. This means that the benefit now applies to telecommunicating employees as long as they are paid at least 131 percent of the minimum wage.

Agriculture Exemption

Generally, Ohio exempts materials and personal property used or consumed in agricultural activities. However, property built into agricultural real estate is not exempt. An example of this would be aluminum silo pipes built into a barn. The department should be consulted directly if a taxpayer is unclear about the terms of this exemption.

Real Property vs. Fixtures

The debate concerning construction elements that become fixtures vs. those that become real property continues. The department suggests that parties who need clarification of policies first look to the Ohio Revised Code Section 5739.03(C) for guidance.

Sales Tax on Employment Agencies

During sales tax audits, leased employee arrangements often come under scrutiny. This situation can be avoided if the transactions have been properly documented to make sure that conditions for exemptions have been met satisfactorily.

Tax Professionals' Resource