Ohio Sales and Use Tax

Ohio State Bar Association Sales/Use Tax Subcommittee Report For September 24, 2010

Click here for a brief summary of recent Ohio sales/use tax discussions Steve is presenting as Chair of the Ohio State Bar Association Sales/Use Tax Subcommittee at the September, 2010 Ohio Bar Association Taxatoin Committee meeting.  Of particular interest are the following cases: Fruedenberg.  This decision highlights the broad definition of “consumer”, which includes a... Read More

Sales Tax Collection Obligations Concerning Drop Shipments

A drop shipment is when a vendor accepts an order from a consumer for a product it does not have in stock and directs its supplier (a manufacturer or wholesaler) to ship the product directly to the vendor’s customer. The supplier then delivers the product to the consumer via common carrier or in its own... Read More

Ohio Sales And Use Tax: Should Food Service Operators Discard Their Separate Beverage Coolers?

The Ohio Department of Taxation (“Department”) recently published an Information Release concerning the Ohio sales and use tax exemption under R.C. 5739.02(B)(27) for persons licensed to conduct  food service operations. Under this exemption, personal property primarily used for any of the following is exempt from tax: 1) to prepare food for human consumption, 2) to... Read More

Mr. Contractor: Are You Correctly Addressing Ohio Sales Tax On Your Construction Contracts? (Part I)

As the deemed consumer, a contractor must pay Ohio sales/use tax (“tax”) on its purchases of materials incorporated into real property, unless an exemption exists. The contactor’s related transaction with the property owner is characterized as a construction contract. Since tax was already paid on the contractor’s purchases, no sales tax needs to be collected... Read More

Maximizing the Manufacturing Exemption from Ohio Sales/Use Tax: Part 1 – The Commitment of Raw Materials

Generally, all property primarily used or consumed during the manufacturing operation is exempt from Ohio sales and use tax. Therefore, the scope of the manufacturing exemption is determined by the beginning and end of the taxpayer’s “manufacturing operation”. A manufacturing operation commences upon the commitment of raw materials, which occurs at the earliest point where:... Read More

When “Sales Tax Included” Is Not Actually Included…

Many contracts for the purchase of tangible personal property include a lump sum purchase price and a phrase such as “all tax included” or “includes applicable sales tax”. However, this language is not sufficient to protect a consumer from collection of unpaid sales tax by the Ohio Department of Taxation (the “Department”). The Department has... Read More

Using New Sourcing Rules to Minimize Ohio Sales Tax

As explained in a previous post, Ohio changed its sourcing rules effective January 1. Now, intrastate sales of tangible personal property (“TPP”) are generally sourced by origin (vendor’s location where order is received), and interstate sales are sourced generally by destination (consumer’s location).  More importantly, incremental use tax is not owed to the Ohio County... Read More

Ohio Sales and Use Tax Audits – What to Expect!

With the addition of 85 agents to the Ohio Department of Taxation’s (the “Department”) Audit Division (representing a 32% increase), half of which are assigned to sales and use tax, audits in this area are certain to substantially increase in the coming years. As Ohio attempts to capture revenue, you should understand the process and... Read More