Ohio Business ALERT: Ohio Use Tax Announcement (UTEP)

CINCINNATI, Ohio, June 1, 2011:  VonLehman, a leading regional CPA and business advisory firm, announced today thatThe Ohio Department of Taxation has announced its intention to audit or send a tax bill to any Ohio Company that is not registered for Ohio use tax.  This process will begin this summer.  If your Company is already registered for Ohio use tax, you don't need to read any further!  Note that use tax is generally the flip side of sales tax.  If a Company was not charged sales tax (such as from out of state purchases, inventory used in a non-exempt way orginally purchased for resale, etc.) this could result in use tax due.  As the State knows there is virtually no buiness that is totally exempt from use tax.

The State of Ohio has combed their tax rolls for Ohio taxpayers registered for the CAT (Commercial Activity Tax), Ohio withholding tax, Ohio sales tax, etc. and found that there are 380,000 Ohio taxpayers who are not registered for Ohio use tax.  They intend to send out letters starting August 1, 2011 to these targeted businesses.  The letters will "encourage" the company to contact the Ohio Department of Taxation, self-assess the estimated use tax for the past four years and pay the use tax plus interest (no penalty) to the State.

If a company receives a letter and fails to respond, Ohio has said that they will audit the company or send a bill that estimates how much tax the company may owe and the company could be liable for up to seven years back tax plus penalty and interest.

The State of Ohio also has a voluntary disclosure program that a Company may avail itself of if they think they have use tax exposure.  This program allows self-assessment of estimated use tax for the past three years (versus four) and payment of the tax plus interest (no penalty to the State).  This program is available only if the Company has not been contacted.  Therefore a Company that is contacted in August can not use this program.  Between now and the date of contact, however, the voluntary disclosure program can be utilized.

Action Points:

1.  Determine if your Company is registered for Ohio use tax.  If so, you needn't do anything.
2. If your Company is not registered for Ohio use tax, review your potential exposure for the last four to seven years to determine if pre-emptive action is warranted.

We would be happy to assist and/or answer questions you may have regarding this forthcoming Ohio program.  Please contact Cheryl Rinaldi (CRinaldi@vlcpa.com) with any questions at (859)331-3300.

About VonLehman
Founded in 1946 and with offices in both Cincinnati and Northern Kentucky, VonLehman is a leading full-service CPA and business advisory firm. VonLehman provides forward-thinking accounting, tax and strategic business advice to closely-held businesses, not-for-profits and governmental entities throughout the Cincinnati and Northern Kentucky region.  Specializing in sectors that drive the tri-state economy – including manufacturing and distribution; construction and real estate development; professional services and healthcare, VonLehman provides clients with the depth of services and resources expected from larger national firms, but with an unmatched measure of personal care and attention.   See http://www.vlcpa.com for more information.

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