Ohio Offering Financial Incentives to Encourage Use Tax Compliance

State and Local Tax

By Cathleen Condrac

With an estimated 380,000 Ohio businesses potentially owing use tax, Ohio is implementing a Use Tax Education Program (UTEP) aimed at small and mid-sized companies in an effort to bring businesses into compliance through education and financial incentives. As part of its educational efforts, the Ohio Department of Taxation (“Department”) plans to present various business association meetings, seminars and workshops. The Department additionally intends to contact and investigate businesses registered within the state but not registered for use tax to make them aware of their use tax responsibility. Use tax publications are currently available on the Department’s website for contractors, manufacturers, retailers and service providers. These on-line publications provide valuable information, including examples of potential use tax exposure, such as:

  • Purchases from out-of-state vendors;
  • Storage, snow removal, maintenance contracts, lawn care and landscaping;
  • Employee safety shoes, gloves, hard hats and respirators; and
  • Display fixtures, shelving units, cash registers and furniture.

In order to participate through UTEP, a business must enter into a voluntary disclosure agreement to pay use tax on untaxed purchases plus applicable interest and agree to prospective compliance. Benefits include a limited look-back period of four years, and, in the absence of fraud, waiver of the standard 15 % penalty generally assessed on unpaid use tax. In addition, the Department will agree to waive any use tax liability for those years falling beyond the look-back period.

Should a business enter into a voluntary disclosure agreement prior to being contacted by the Department, the look-back period will be limited to three years.

Businesses failing to take advantage of the voluntary disclosure opportunity may be the subject of a Departmental audit, which typically encompasses the prior seven years.

Businesses concerned about Ohio sales and use tax liabilities should consult with their state and local tax professional to determine how best to resolve those liabilities. 

For further information, please contact Cathy Condrac, State and Local Tax Advisory Services.

Interested in receiving more timely articles like this one with topics that are relevant to your businessClick here to sign up for our weekly newsletters. 

Or, if you'd like more information on Schneider Downs State and Local Tax Advisory Group, visit our webpage.



Schneider Downs provides accountingtax, wealth management, technology and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH. 

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2019 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.