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Ohio Sales and Use Tax and When to File

Ohio first adopted a general state sales tax 1n 1934. Since then, the sales tax has risen to 5.75%. Ohio allows local governments to charge a sales tax of up to 2.25%, which makes the total tax rate to range between 5.75% and 8%.

How to Pay Sales and Use Tax in Ohio

The Ohio Department of Taxation (ODT) administers the sales and use tax, and uses sellers as its tax agents. Sellers collect, file, and pay taxes they collect from buyers who reside in Ohio, irrespective of their own business location. The taxes collected, filed, and paid to the ODT.

Sales and Use Tax Nexus in Ohio

Ohio taxes businesses based on their economic and virtual connections to the state. As long as the seller, buyer, or user of the goods or services is located in Ohio, then the seller must pay sales or use tax. Moreover, Ohio considers the shipping charges as part of the cost of goods, and therefore charges a sales or use tax on the total cost of goods sold.

Sales and Use Tax Exempt Goods

In Ohio some consumer goods are exempt, others have special tax rates. In summary, clothing, prepared (ready to eat) foods and over-the-counter drugs have a special sales tax of 5.75%. Groceries and prescription drugs are sales tax exempt. In Ohio, candy IS considered a grocery, while soda is NOT considered a grocery. Other goods that are tax exempt include machinery, raw materials, and utilities and fuel used for manufacturing, as well as medical devices.

Sales Tax Exempt Buyers in Ohio

Buyers who are tax exempt must present the “Unit Exemption Certificate” or the “Blanket Exemption Certificate”. A buyer must present this certificate to a vendor, who must then verify its authenticity, before completing the tax-exempt sale. Sellers are responsible for paying taxes they exempted wrongfully. Examples of buyers exempted from sales tax are government agencies, some nonprofit organizations, construction companies, and merchants purchasing goods for resale.

Filing and Remitting Sales and Use Tax in Ohio

The filing process requires that you detail your total sales in Ohio, the amount of sales tax collected, and the location of each sale. It is mandatory for all sellers to file Ohio sales and use tax returns electronically. Ohio sales tax returns and payments must be remitted at the same time, as they both have the same due dates. Sellers get an early filing discount of 0.75 of 1% (0.0075) of the tax they reported. However, late filing attracts a fine of $50 or 10% of the tax due, whichever is higher. However, the fine should not exceed 50% of the total tax due. And each returned check also attracts a fine of $50, and interest may be added to the late tax payments.

Sales Tax Filing Frequency in Ohio

Ohio requires taxpayers to file monthly if their annual tax liability is $75,000 or more, quarterly if the quarterly tax liability is $1,200 to $15,000, and semi-annually if the half-year tax liability is between $0 to $1,200. Sellers must pay their sales tax on or before the 23rd of each month following the end of the returning period. If the 23rdfalls on a weekend or holiday, then the seller must pay it on the next immediate business day.

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