Posted on Friday, February 25th, 2011 by Amanda Franz, CPA
Here is what you need to know:
Ohio Use Tax Education Program (UTEP)
Under the program, the Department plans to aggressively identify and contact use tax non-filers beginning in the second half of 2011, informing them of their responsibility to remit use tax. These businesses, once notified through the UTEP, will be able to: (1) register and begin remitting use tax prospectively; and (2) clear up past use tax liabilities by entering into an agreement to pay use tax plus applicable interest on untaxed purchases for up to the last four years, depending on when the business started in Ohio. In turn, the Department, in the absence of fraud, will waive use tax liability for all years beyond the look-back period and will not apply the 15% penalty applicable for the unpaid tax.
Why Should You Care
Many businesses are unaware of their responsibility to remit use tax to the State. Use tax is a complement to the sales tax. If you have not paid Ohio sales tax when you purchase an item, then you have a responsibility to remit Ohio use tax directly to the State.
Historically, when Ohio encountered non-filers of use tax they would apply a seven year look-back period for audit and assessed both penalties and interest. Under the UTEP program, Ohio is applying a four year look-back period and waiving all penalties.
Is There Another Option
In lieu of the UTEP, businesses can proactively enter into the Ohio voluntary disclosure agreement program. An additional advantage to using this program is that it limits the look-back period to three years instead of four.
If you have questions about your possible use tax obligations or which alternative would best fit your needs, please contact our State and Local Tax (SALT) Group at 440-449-6800.