Ohio Tax Commissioner Announces No-Interest Payment Plan for Use Tax: Declares Amnesty

Kegler Brown Business Tax Alert

On September 15, 2011, the Ohio Tax Commissioner announced that he would exercise authority given him by House Bill 153, which authorizes the Tax Commissioner to enter into a no-interest payment plan with a qualifying taxpayer who elects to participate in the consumer’s use tax amnesty.

In order to qualify for a consumer’s use tax amnesty payment plan: 1) as of June 1, 2011, the taxpayer must not be registered with the Ohio Department of Taxation; 2) the minimum amount of use tax otherwise due must exceed $1,000; 3) at least one corporate officer, LLC member, general partner or other guarantor must agree to the terms of the payment plan and accept personal liability for the entire indebtedness; 4) a second guarantor must also agree to accept personal liability (unless the taxpayer is a single member LLC); 5) both guarantors must provide a social security number to the Tax Commissioner; 6) the guarantors must agree that the Tax Commissioner is not required to pursue the taxpayer for the unpaid balance, including interest prior to the repayment by the guarantors; and, 7) the taxpayer must agree that the period in which the Tax Commissioner may assess unpaid consumer’s use tax will not expire until six months after the end of the payment plan.

The tax amnesty payment plan may not exceed payments over 84 months (7 years). There are also requirements that the taxpayer return a fully-executed amnesty payment plan within 15 days of its receipt, and, of course, make each payment timely on or before the first business day of each month. If a payment is missed or if there is a failure to return a fully-executed copy of the tax payment plan agreement, a default notice will be forthcoming from the Tax Commissioner and the taxpayer will thereafter have 15 days to provide documentation establishing that the disputed payment was made, the agreement was returned or that the taxpayer’s current with all Ohio tax obligations. If that documentation is not provided, the Tax Commissioner may assess the taxpayer and each guarantor for the entire outstanding use tax balance, including interest, calculated from the date the tax was required to be paid. Each guarantor, of course, is personally liable for the unpaid balance.

Use taxes are established by Ohio Revised Code Chapter 5741 and are assessed at same rates as sales taxes. Typically, sales tax liability arises in a consumer transaction where goods are purchased outside of Ohio, but transported into Ohio for use. For example, purchasing furniture outside of Ohio by an Ohio resident typically will not require the Ohio resident to pay sales taxes in that state. However, Ohio law provides for use tax in the amount of the Ohio Sales Tax for the Ohio resident.

For more information, contact Dan Ritter at (614) 462-5442 or Ken Cookson at (614) 462-5445.