Ohio Approves Tax Amnesty Program

Ohio Governor John R. Kasich has signed legislation approving a tax amnesty program that will run from May 1, 2012 to June 15, 2012. The program will apply to taxes which were due and payable as of May 1, 2011. The amnesty program will apply to corporate franchise tax, commercial activity tax, estate tax, state and local taxes, including sales and use taxes, motor fuel taxes, cigarette taxes, school district income taxes, and tangible personal property taxes. Under the program, taxpayers will be allowed to pay certain overdue taxes including half of any accrued interest without incurring fines or civil or criminal penalties. Qualifying taxes do not include any tax for which a notice of assessment or audit has been issued, for which a bill has been issued relating to any tax period that ends after the effective date, or for which an audit has been conducted or is being conducted.

There will be a separate consumer’s use tax amnesty program that will run from October 1, 2011 to May 1, 2013. If a participating consumer pays all use tax for which they have an outstanding liability on or after January 1, 2009 during the program, all delinquent use tax owed by the consumer before January 1, 2009 will be waived or abated. In addition, all applicable penalties and interest accrued before and after January 1, 2009 will be waived or abated. Taxpayers may only apply once during the program. Taxpayers who don’t qualify for the amnesty program may still qualify for the department’s voluntary disclosure program.

A no-interest payment plan is available for businesses not registered for consumer’s use tax as of June 1, 2011. The amount of use tax due must exceed $1,000. A minimum payment of $1,000 per month is required, and the payment period must not exceed seven years. At least one corporate officer, LLC member, or other guarantor for the company must agree to the payment plan terms and accept personal liability for the debt. Any additional guarantors must also agree to accept personal liability for the debt. The statute of limitations for assessment of consumer’s use tax under the payment plan must be waived by the business.

If the Ohio Tax Commissioner has issued an assessment against a consumer on or before the effective date, the consumer is not eligible to participate in the program. Any consumer that has registered with the Commissioner for the use tax on or before June 1, 2011 is not eligible to have interest or penalties due on use tax paid waived. Any consumer who does not take advantage of the amnesty program could be assessed taxes on purchases beginning January 1, 2008 plus all penalties and interest. Details on the consumer’s use tax amnesty program can be found on the Ohio Department of Taxation website. The website has a step-by-step guide to requesting amnesty as well as fact sheets on the application of use tax to construction contractors, manufacturers, retailers, and service providers. (H.B. 153. Laws 2011, effective July 1, 2011, applicable as noted; Consumer’s Use Tax Amnesty Program, Ohio Department of Taxation, August 24, 2011)

Posted on September 12, 2011