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Ohio Sales Tax Changes

At present, sales of licensed motor vehicles, boats and outboard motors are subject to the sales tax rate of the residence of the purchaser and the tax goes to that county.  All other taxable sales are subject to the sale tax rate of the location of the vendor's place of business and the tax goes to his county.

Starting January 1, 2004, there will be major changes to which rate and county will be used.

Sales of licensed automobiles, boats, and outboard motors will continue to use the rate of the county residence of the purchaser.  Single payment leases will also be treated this way.

Leases that require periodic payments of other property will use the rate and the county where the leased item is first used.

For all other sales, the following rules apply:

  1. If the customer receives the merchandise or service at the vendor's place of business, the rate and county of the place of business is to be used.

  2. If the customer does not receive the merchandise or service at the vendor's place of business, the rate and county where the customer receives the merchandise or service is to be used.

  3. If the location that the customer receives the merchandise or service is unknown, the rate and the county of the purchaser obtained from the vendor's business records is to be used as long as this does not constitute bad faith.

These changes will require most businesses to make major changes to their accounting systems to record taxable sales by the county of place of business for merchandise and services received at that location and by the county in which the merchandise and services are delivered.  Businesses will also be required to keep track of the sales tax rate of all 88 counties of Ohio and how much tax is collected for each county each month.  Contact our office if you need help with this area.

Consumers will be able to minimize sales tax by some simple steps.

  1. If you shop in a lower sales tax rate county, take delivery at the store in which you shop.

  2. If you shop in a higher sales tax rate county, have the store deliver the merchandise to your home or business, which ever has the lowest rate.

  3. If you lease items other than motor vehicles, boats, and outboard motors, try to use them for the first time in a county with the lowest sales tax rate.

We will be pleased to discuss these issues with you and plan to reduce your sales tax liability to the minimum amount due.

 

(November, 2003 Newsletter)

James E. Newland, CPA

939 Center Road

Eastlake, Ohio 44095

440-951-9799

Service@NewlandCPA.com

 

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