Download - Ohio Use Tax Amnesty
Ohio Use Tax Amnesty:Ohio Use Tax Amnesty:How much can you save?
Smart Business Smart Business Thought Leadership Webinar Series September 8, 2011 Thought Leadership Webinar Series September 8, 2011
By:Chad Bice, CPA
Principal/Director of State & Local Tax
Agenda
Introduction to use tax
How use tax enforcement has changed
What is use tax amnesty
Applying for amnesty
What happens after you apply
Why you need amnesty
Don’t confuse with general amnesty
You May Have Use Tax Liability if…
You bought taxable goods and services, and didn’t pay sales tax.
96% of Ohio use tax audits result in use tax liability.
What’s Use Tax Anyway?
Sales tax companionEvery purchase should be taxed once unless
an exemption appliesNot all purchases have sales tax addedSales tax may not have to
be charged
When is Use Tax Due?
When no sales tax is charged on taxable goods or servicesInternet purchases Out of state purchasesIn state purchases
Sales tax is charged on the front-end by the seller.
Use tax is due on the back-end by the purchaser, when the sales tax collection process breaks down.
The use tax rate is equal to the sales tax rate.
Potentially Taxable Goods
Office Equipment – computers, software, monitors, printers, scanners, fax, staples, telephones
Office Supplies – Paper, tape, business cards, envelopes, folders
Furniture – Desks, chairs, tables, lamps, television
Cleaning Supplies – Mops, brooms, cleaners, paper towels
Freight on taxable tangible personal property
Postage meter rental charges
Advertising property – (t-shirts, posters, etc.)
Leases/rental of taxable tangible personal property
Safety supplies/equipment
Internet access charges for businesses
Decorations/Art work
Potentially Taxable Services
Installation of taxable tangible personal property
Repairs of taxable tangible personal property
Employment (temps)
Lawn care and landscaping
Exterminating
Automatic data processing
Snow removal
Janitorial
Storage (not inventory)
Maintenance contracts
Motor vehicle towing
Cleaning/detailing of motor vehicles (non-coin operated)
Laundry cleaning
Employment placement
Other
Enforcement Has Changed
Use Tax Education Program (UTEP)Data mining initiative.Help businesses understand use tax laws.Increase compliance, generate revenue.
The Ohio Department of Taxation will contact 380,000 businesses this summer!
VDA Program Suspended
Look back period limited to 33 years
Penalties waived
Interest charged
Conduct self audit
Submit in summary format
Register for use tax
How Amnesty & VDA Differ
Amnesty Includes full waiver of interest
Has a payment plan
Looks back to 1/1/09
Cannot be filed anonymously
Is completed all at once (no back and forth with the state)
Is conducted through Ohio Business Gateway
Use Tax Audits Suspended
Temporary situation
Will resume during the amnesty period
Can apply for amnesty even while under audit
The Use Tax Amnesty Program
No Amnesty = look back to Jan. 1, 2008 + interest & penalties
Self audit from Jan. 1, 2009 through application date
100% abatement of penalties & interest
Payment plan available
Runs from Oct. 1 to May 1, 2013
Who Qualifies for Amnesty?
Individuals and businesses who did not have a use tax assessment prior to Sept. 29, 2011
Note: Those who registered for a use tax account on or before June 1, 2011, can still participate, but interest will not be waived.
How Amnesty Works
1. Complete the spreadsheet available on Ohio Tax’s website to calculate liability Report the following:
» name and address of the supplier
» description of item or service
» price
» county where item used
How Amnesty Works - continued
2. Register for an Ohio Business Gateway (OBG) account (if don’t already have)
3. Register for a consumer use tax account (if don’t already have)
The application/return is accessible on OBG once registered
Those who had a use tax account on June 1, 2011, must call (or have representative call) to arrange amnesty
4. Complete and digitally sign the application & return
Enter the total liability calculated in step 1
5. Upload the spreadsheet completed in step 1
How Amnesty Works - continued
7. Submit payment in full, or the first month’s payment under a payment plan
You will receive a payment plan agreement, if requested
8. Complete the payment plan agreement and mail back, if applicable
How Amnesty Works - continued
How a Payment Plan Works
Liabilities greater than $1,000 pay $1,000/month until fully paidIf not evenly divisible by $1,000, then final
payment will be the balance
First payment is due with application
Interest free plan
Maximum of 7 years (84 months) to pay Example: If you owe $126,000, payment would be
$126,000/84 months = $1,500 per month
The catch…Two people must agree to personally guarantee
the entire debtOne can (but does not have to) be an officer,
member, or partner of the business Both must provide social
security numbers
How a Payment Plan Works - continued
Review of Submitted Information
Tax Commissioner has right to review application & supporting documentation before accepting
Applications that seem suspicious can be reviewed by auditors
Apply But Don’t Qualify?
Will be sent an assessment for the amount owed, plus interest Unclear if penalties will be added (probably
will be)No payment plan availableSubmitted payment will be applied - balance
due immediately
Ongoing Use Tax Reporting
Liability before Jan. 1, 2009, is forgiven
Now current with filing through participation date
New use tax returns must be filed on a go forward basis monthly or quarterly
No Use Tax Account? You NeedNeed Amnesty
Puts you in the drivers seat (self audit)
Limits liability
Less audit risk
Less penalties & interest
Less adversarial
How many years of tax liability will you save?
Don’t Just Open a Use Tax Account
State is wise to this approach
You can be audited back to Jan. 1, 2008 – and the statute of limitations never runs on those years
Post amnesty, a more aggressive audit & estimated tax due notice method of enforcement will resume
Post Amnesty
If the law changes and Amnesty no longer exists, anticipate increased look back period, interest & penalties
Aggressive audits
Estimated tax due notices – you will have to “prove it”
Third party collection agencies
Amnesty is a once in a lifetime opportunity!
A General Amnesty Program
Separate from use tax amnesty
Covers unreported & underreported tax delinquencies
Seller’s use tax vs. Consumer’s use tax
Not available on taxes assessed, billed or under audit
Available to both individual & business taxpayers
General Amnesty Details
Applies to state-collected taxes due before May 1, 2011
Runs from May 1-June 15, 2012
Waiver of full penalty & ½ interest amount
Returns must be filed
Payment must be in full
Questions?Questions?
ContactChad Bice, CPA
Principal/Director of State & Local Tax
Smart Business Smart Business Thought Leadership Webinar Series – September 8, 2011 Thought Leadership Webinar Series – September 8, 2011