Everyone is familiar with sales tax. We see it on every receipt of every taxable purchase we make in Ohio. If you operate a business in the state, you are also familiar with calculating the amount of sales tax you must charge your customers and remit to the Ohio Department of Taxation.
But do you know what Ohio’s Use Tax is? And have you ever considered paying it? If you file income taxes in Ohio, you won’t have any choice but to consider it, as the Department of Taxation has added a new box on the income tax form that requires you to enter an amount of sales and use tax due for out-of-state purchases, or certify that you made no such purchases.
Historically, the amount of use tax collected has been low. The most recent figures show that about 1 percent, or about 50,000 returns included use tax payments, which amounted to about $3 million in tax revenue. The department estimated Ohio is probably owed about $400 million in these taxes.
Because Ohio does not have the relevant “contact” with businesses in other states, it cannot require those businesses collect tax from sales made to Ohio residents. The issue has been before Congress for the last few years, but Congress has refused to change the law and require the collection of state taxes for internet sales.
The Department of Taxation is not planning on increasing its enforcement of use taxes, but you should remember that if you certify that you made no out-of-state internet purchases, and you were audited, you could be facing a perjury charge should your records point to such purchases.
Dispatch.com, “Box on Ohio tax form meant to nudge online shoppers,” Catherine Candisky, March 30, 2015