Shoppers Advised to Remember Sales and Use Tax Law

The Ohio Department of Taxation (ODT) is reminding shoppers on ‘Black Friday’, Cyber Monday and throughout this holiday season that if you buy something online or from a catalog, and the seller does not charge you sales tax, then Ohio law requires you to pay the tax directly to ODT. The tax you pay is the ‘use tax’, which has been around since 1936.

Tax Commissioner Joe Testa says more than 57,000 Ohioans made direct, use tax payments totaling more than $3-million on their untaxed purchases last year and he expects that number to grow.

“For convenience, selection and perhaps tax avoidance, the online and catalog markets keep getting bigger. That means more untaxed transactions and a growing need to raise awareness of the use tax obligation. Most people and a lot of businesses don’t know about or understand the tax but it’s an important tool to ensure that Ohio retailers can compete fairly with out-of-state companies that don’t charge tax.”

Even back in the 1930’s, people would drive across state lines to purchase untaxed goods. This practice created a disparity for local Ohio store and led to the passage of the Use tax by the state legislature.

Testa is encouraging people to keep track of untaxed purchases, total them up at the end of the year, and make a payment when they file their income tax return next year. Ohio added a line on its income tax return in the year 2000 that allows people to report and pay the ‘use’ tax. The use tax is a companion to the sales tax. It is applied at the same rate and in a similar way to sales tax but comes into play when a  seller is outside of Ohio and is not required to collect sales tax.

Testa says ODT is trying to make it as easy as possible for people to comply with Ohio law. The department has added a calculator to its web site – tax.ohio.gov – that determines how much tax is due on an untaxed purchase. The rate can vary depending on the county a person lives in.

States are developing a system to simplify the collection of tax by retailers in the online and catalog marketplace but until that system is more widespread, Testa says the responsibility rests with the consumer to report and pay use tax. He says the purchase invoice will show whether tax was charged.

For more information, check the ODT web site or contact the department at 1-800-282-1780.