In Ohio a tax is imposed on each retail sale of tangible personal property except for sales for resale or sales of property to be incorporated into tangible personal property to be produced for sale. The tax is also imposed on rentals of tangible personal property and on lodgings furnished to transient guests for less than 30 days. Ohio also charges sales tax on many services. For example, repairs of property and automatic data processing are taxable services.
Sales and use tax rate. The Ohio sales and use tax rate is 5.5 percent. Make sure you contact your local governments in Ohio because they are allowed to assess an additional sales and use tax.
Tax-exempt items. Ohio has many specific items that are exempt from sales tax for example, certain prescription medications are exempt from Ohio sales tax. You'll want to check and see if you are exempt from the sales tax.
Responsibility for paying sales tax. In Ohio the sales tax is to be paid by the consumer to the vendor. If a vendor collects the tax and fails to remit it, the vendor is personally responsible for the money. If the vendor fails to collect the tax, the state can collect the tax from either the vendor or the consumer. Both the vendor and consumer are personally liable for uncollected tax.
Sales tax on services. In Ohio, sales tax is imposed on the following services:
- repairs and installation of taxable property
- motor vehicle washing, waxing, painting
- industrial laundry cleaning services
- automatic data processing and computer services for business
- landscaping and lawn care services
- private investigation and security
- 900 telephone number calls
- building maintenance and janitorial services
- employment placement services
- exterminating services
- physical fitness, recreation, and sports club services
- producing or reproducing written or graphic matter
- production or fabrication of tangible personal property for a consideration for consumers who furnish the materials used
- some telecommunications services
- warranties, maintenance, or service contracts
Use tax. An excise tax (use tax) is levied on the storage, use, or other consumption in Ohio of tangible personal property purchased or on the benefit realized in Ohio of any service provided.
Responsibility for collecting use tax. The use tax is imposed on the consumer, measured by the purchase price of tangible personal property stored, used, or consumed in Ohio.
Obtaining tax permits in Ohio. In Ohio a license obtained from the Tax Commission is required for each place of business, including each vehicle from which sales are made. The original license fee is $25. The fee for a transient vendor's license is $25. A delivery vendor's license is $25.
Leases. Rentals or leases are considered sales in Ohio the tax is calculated and collected on each rental or lease payment. Price means the aggregate value in money of anything paid or delivered, in the complete performance of the rental or lease agreement. A lease that obligates the lessee to accept ownership and to pay for the property at a future time is a conditional sale, and the tax is due on the total price at the time of the sale.
In the case of the lease of any (1) motor vehicle designed by the manufacturer to carry a load of not more than one ton, (2) watercraft, (3) outboard motor, (4) aircraft, or (5) business equipment (other than motor vehicles designed to carry loads in excess of one ton), the vendor is required to calculate the Ohio sales or use tax due on the entire amount to be paid during the lease period, and to collect the tax due at the time the lease is consummated. Under prior law, the tax on these leased items was paid with each lease installment over the life of the lease. Otherwise, tax is generally collected on each installment paid for the use of the property involved.
The following discussions address additional sales and use tax issues that many small business owners face: