Ohio Sales & Use Tax Information
Ohio Sales and Use Tax Information
1. What is a taxable sale?
A taxable sale includes any transaction in which title or possession of tangible personal property or the benefit of certain services is, or will be, transferred or provided for a price. All retail sales are subject to the tax unless they are specifically excepted or exempted in Ohio’s sales tax law.
2. What sales are exempt/excepted from sales tax?
Note: This list of exemptions is merely an abbreviation of the law. The statutes and rules concerning sales tax exemptions are very long and complicated. Also there are hundreds of court decisions which affect the application of these exemptions. If you have any questions regarding a particular situation, please contact the Department of Taxation.
3. What services are subject to the sales tax?
4. What services are not taxable?
Professional, personal, and insurance transactions are not taxable when any transfer of tangible personal property is a small item for which no separate charge is made.
5. Must I charge tax when I sell a prepaid authorization number or prepaid telephone calling card?
Yes. The sale of a prepaid authorization number and/or a prepaid telephone calling card is considered a sale subject to sales tax, unless the purchaser has a statutory basis for claiming exception or exemption.
“Prepaid authorization number” means a numeric or alphanumeric combination that represents a prepaid account that can be used by the account holder solely to obtain telecommunications service, and includes any renewals or increases in the prepaid account.
“Prepaid telephone calling card” means a tangible item that contains a prepaid authorization number that can be used solely to obtain telecommunications service, and includes any renewals or increases in the prepaid account.
6. Is the charge for Internet service taxable?
The charges for Internet service (on-line access to information stored in a computer) for use in business are subject to Ohio sales or use tax. The charges for Internet service for individuals are not subject to Ohio sales or use tax.
7. Is the charge for creating an Internet Web site taxable?
The charge for creating a Web site on an ISP’s server is a charge for personal service and it is not subject to sales or use tax.
8. Are warranties, maintenance agreements, or service contracts subject to the sales tax?
Basically, yes. However, warranties, extended warranties, maintenance agreements or service contracts covering exempt equipment would also be exempt.
9. How do I handle price discounts, manufacturers’ rebates, coupons, and trade-in allowances?
Note: The tax base is not reduced on the sale of a used motor vehicle when a trade-in is allowed.
Note: The tax base cannot be reduced when only a trailer is accepted in trade.
For all other sales, a trade-in allowance does not reduce the tax base.
10. What items are considered “food” for sales tax purposes?
“Food” means substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value. “Food” does not include alcoholic beverages, dietary supplements, soft drinks, or tobacco. Please refer to the information release Food Definition Change, ST 2004-01 for additional information.
11. Are there any items which can be eaten or drunk that are not considered food?
Yes, soft drinks, alcoholic beverages, dietary supplements, and tobacco. Beverages that do qualify as food include milk or milk products, soy, rice, or similar milk substitutes, or items that contain greater than 50-percent vegetable or fruit juice by volume.
12. Is water taxable?
Bottled water, distilled water, mineral water, ice and carbonated water sold for ingestion by humans are considered food. Food items consumed off premises are not taxable. Water that contains natural or artificial sweeteners is a “soft drink” under R.C. 5739.01(EEE)(2)(c) and excluded from the definition of food. Please refer to the information release titled Food Definition Change, ST 2004-01 for additional information.
13. Are non-prescription drugs taxable?
Medicines (including tonics), vitamin preparations and other non-prescription products are taxable.
14. Are items purchased with food stamps taxable?
Federal law prohibits states from imposing sales tax on items purchased with food stamps. This includes items, such as soft drinks, which are normally subject to Ohio sales tax.
15. What are my sales and use tax obligations for my catering business?
16. As a bed & breakfast, do I have any responsibility to collect and remit sales tax?
If your bed & breakfast has five or more rooms, you must charge sales tax on the total amount charged.
If your bed & breakfast has fewer than five rooms, you should separate the charges for the room from the charges for the food. You must collect sales tax on the amount charged for food. If you do not separate the room charges from food charges, you must collect sales tax on the total amount charged.
17. Are delivery costs taxable?
Yes. Effective Aug. 1, 2003 delivery charges by a vendor for preparation and delivery to a location designated by the consumer of tangible personal property or a service, including transportation, shipping, postage, handling, crating, and packing are taxable.
18. How are floor coverings taxed?
Floormats, area rugs and other types of unattached floor coverings are sales or rentals of tangible personal property and are subject to the sales tax. Also, the outright purchase of carpet, vinyl flooring and tiles to be installed by the consumer or a third party are taxable.
The sale and installation of carpeting is a retail sale and taxable on material and labor. Labor charges to install carpeting supplied by others are taxable.
The sale and installation of all other types of floor coverings (wood, vinyl, tile, etc.) is considered a construction contract; the contractor is required to pay tax on all material and equipment used or consumed in the installation.
19. Are building and construction materials taxable?
Yes, items that become a part of real property are taxable unless the contractee is:
20. Is there an exemption certificate that construction contractors need?
There is a special Contractor’s Exemption Certificate and a Construction Contract Exemption Certificate prescribed by the Tax Commissioner for claiming exemption. A copy of each form is available on this site by searching Tax Forms.
21. As a farmer, may I claim exemption on my purchases and how?
Farmers are entitled to claim exemption on the purchase of items of tangible personal property used directly in the production of a product for sale. This would include, but is not limited to: seeds, fertilizers, insecticides, pesticides, field tiles, tractors, plows, combines, and specially designed motor vehicles with PTO applicator units that travel from farm to farm to apply chemicals and fertilizers. This would not include: almost all motor vehicles licensed to operate on the highway [passenger cars; pick-up trucks; larger trucks and trailers that are primarily used to haul people, animals, raw materials (seeds, fertilizers, insecticides and pesticides) to the farm and finished goods (corn, wheat, soy beans, cattle, hogs, etc.) from the farm to market], lawn mowers, weed eaters, items used to maintain set-a-side fields, chain saws, all purposes vehicles that are primarily used for recreation, and home garden equipment.
To claim exemption, a properly completed exemption certificate must be given to your supplier; the certificate is available by searching Tax Forms.