OpenAccountants

openaccountants/skills/ohio-sales-tax.md

ohio-sales-tax.md357 lines12.8 KB

v20State

1	---
2	name: ohio-sales-tax
3	description: >
4	Use this skill whenever asked about Ohio sales and use tax, ODT filings, Ohio CAT, Ohio exemptions, Ohio nexus, or any request involving Ohio state sales and use tax compliance. Trigger on phrases like "Ohio sales tax", "OH sales tax", "ODT", "UST-1", "Ohio exemption certificate", "Streamlined Sales Tax Ohio", or any request involving Ohio sales and use tax classification, filing, or compliance. ALWAYS read this skill before touching any Ohio sales tax work.
5	version: 2.0
6	jurisdiction: US-OH
7	tax_year: 2025
8	category: us-states
9	depends_on:
10	- us-sales-tax
11	---
12
13	# Ohio Sales and Use Tax Skill v2.0
14
15	---
16
17	## Section 1 -- Quick Reference
18
19	\| Field \| Value \|
20	\|---\|---\|
21	\| State \| Ohio \|
22	\| Tax \| Sales and Use Tax (state + county) \|
23	\| State rate \| 5.75% \|
24	\| Local rates \| County only (0.75% to 2.25%) -- no city or district taxes \|
25	\| Maximum combined rate \| Approx. 8.00% (e.g. Cuyahoga County) \|
26	\| Sourcing \| Origin-based (intrastate); destination-based (remote/SST) \|
27	\| Primary legislation \| ORC Chapters 5739 (Sales) and 5741 (Use) \|
28	\| Tax authority \| Ohio Department of Taxation (ODT) \|
29	\| Filing portal \| https://tax.ohio.gov / Ohio Business Gateway \|
30	\| Return form \| UST-1 (Universal Sales Tax Return) \|
31	\| SST member \| Yes -- full member \|
32	\| Economic nexus \| $100,000 gross receipts OR 200 transactions (effective Aug 1, 2019) \|
33	\| Vendor license \| Required; $25/location/year; renew by February 28 \|
34	\| Contributor \| Open Accountants Community \|
35	\| Validated by \| Pending -- requires Ohio CPA or EA sign-off \|
36	\| Skill version \| 2.0 \|
37
38	### Key Combined Rates
39
40	\| County \| County Rate \| Combined Rate \|
41	\|---\|---\|---\|
42	\| Cuyahoga (Cleveland) \| 2.25% \| 8.00% \|
43	\| Franklin (Columbus) \| 1.75% \| 7.50% \|
44	\| Hamilton (Cincinnati) \| 1.80% \| 7.55% \|
45	\| Summit (Akron) \| 1.50% \| 7.25% \|
46	\| Montgomery (Dayton) \| 1.50% \| 7.25% \|
47	\| Lucas (Toledo) \| 1.50% \| 7.25% \|
48
49	### Taxability Quick Matrix
50
51	\| Item \| Taxable? \| Notes \|
52	\|---\|---\|---\|
53	\| Tangible personal property \| YES \| Default taxable \|
54	\| SaaS / cloud software \| YES \| Taxable as automatic data processing (ORC 5739.01(B)(3)(a)) \|
55	\| Grocery food \| NO \| Exempt (but candy without flour, soft drinks, dietary supplements are taxable) \|
56	\| Clothing \| YES \| Fully taxable -- no clothing exemption \|
57	\| General services \| NO \| Most services exempt unless specifically enumerated \|
58	\| Employment/staffing services \| YES \| ORC 5739.01(B)(3)(j) \|
59	\| Landscaping/lawn care \| YES \| ORC 5739.01(B)(3)(h) \|
60	\| Physical fitness services \| YES \| ORC 5739.01(B)(3)(k) \|
61	\| Digital products (audio, video, books) \| YES \| ORC 5739.01(BBB) \|
62	\| Manufacturing equipment \| NO \| Exempt with STEC-B certificate \|
63
64	### Conservative Defaults
65
66	\| Ambiguity \| Default \|
67	\|---\|---\|
68	\| Product taxability unknown \| Taxable \|
69	\| Service taxability unknown \| Exempt (unless enumerated) \|
70	\| Sourcing location unknown \| Seller's county (origin-based intrastate) \|
71	\| Candy vs food unclear \| Food (exempt) if contains flour \|
72	\| CAT obligation \| Escalate -- separate tax \|
73
74	---
75
76	## Section 2 -- Required Inputs and Refusal Catalogue
77
78	### Required Inputs
79
80	Minimum viable: Confirmation of Ohio nexus (physical or economic), vendor license status, filing frequency, and list of products/services sold.
81
82	Recommended: Sales by county, exemption certificates on file, prior period UST-1.
83
84	Ideal: Complete transaction log with ship-to addresses, exemption certificate register, CAT filing status.
85
86	### Refusal Catalogue
87
88	R-OH-1 -- CAT questions. "The Commercial Activity Tax (CAT) is a separate tax on gross receipts. CAT compliance is outside this skill scope. Escalate."
89
90	R-OH-2 -- Audit defense. "Responding to ODT audits or assessments requires specialist representation. Escalate."
91
92	R-OH-3 -- Complex bundled transactions. "Mixed transactions involving taxable and exempt components require specialist analysis. Escalate."
93
94	---
95
96	## Section 3 -- Transaction Pattern Library
97
98	### 3.1 Taxable Sales
99
100	\| Pattern \| Treatment \| Notes \|
101	\|---\|---\|---\|
102	\| Electronics / hardware sale \| Taxable at combined rate \| TPP \|
103	\| SaaS subscription / cloud CRM \| Taxable \| Automatic data processing \|
104	\| Staffing / temp agency \| Taxable \| Employment services \|
105	\| Landscaping invoice \| Taxable \| ORC 5739.01(B)(3)(h) \|
106	\| Gym membership \| Taxable \| Physical fitness service \|
107	\| Digital download (movie, music, ebook) \| Taxable \| Specified digital products \|
108	\| Furniture / office equipment \| Taxable \| TPP \|
109
110	### 3.2 Exempt Sales
111
112	\| Pattern \| Treatment \| Notes \|
113	\|---\|---\|---\|
114	\| Grocery food (bread, milk, produce) \| Exempt \| Not candy, soft drinks, supplements \|
115	\| Manufacturing equipment with STEC-B \| Exempt \| Must have valid certificate \|
116	\| Sale to government entity \| Exempt \| With proper documentation \|
117	\| Resale with valid certificate \| Exempt \| STEC-B or SST Certificate \|
118	\| Medical equipment (certain) \| Exempt \| Check specific exemption \|
119
120	### 3.3 Candy/Food Classification (SST Standard)
121
122	\| Item \| Classification \| Rationale \|
123	\|---\|---\|---\|
124	\| Chocolate bar (no flour) \| Candy -- TAXABLE \| No flour ingredient \|
125	\| Chocolate-covered pretzels \| Food -- EXEMPT \| Contains flour \|
126	\| Soft drinks \| TAXABLE \| Specifically enumerated \|
127	\| Dietary supplements \| TAXABLE \| Specifically enumerated \|
128	\| Fresh produce \| EXEMPT \| Grocery food \|
129
130	---
131
132	## Section 4 -- Worked Examples
133
134	### Example 1 -- Basic Taxable Sale in Columbus
135
136	Input: Retailer in Columbus (Franklin County) sells electronics for $800. Combined rate: 7.50%.
137
138	Reasoning: Electronics are TPP, taxable. Columbus is Franklin County: 5.75% state + 1.75% county = 7.50%.
139
140	Classification: Sales tax = $60.00. Total = $860.00.
141
142	### Example 2 -- SaaS Subscription in Cuyahoga County
143
144	Input: Ohio business subscribes to cloud-based CRM. $300/month. Business in Cuyahoga County (8.00%).
145
146	Reasoning: SaaS is taxable as automatic data processing service in Ohio.
147
148	Classification: Sales tax = $24.00/month.
149
150	### Example 3 -- Vendor Discount
151
152	Input: Vendor timely files and pays $20,000 in Ohio sales tax.
153
154	Reasoning: Ohio offers 0.75% vendor discount for timely filing and payment. No cap.
155
156	Classification: Discount = $150.00. Net remittance = $19,850.00.
157
158	### Example 4 -- Origin-Based Intrastate Sourcing
159
160	Input: Columbus-based seller ships goods to customer in Cleveland (Cuyahoga County).
161
162	Reasoning: Intrastate Ohio sales use origin-based sourcing. Seller charges Franklin County rate (7.50%), not Cuyahoga (8.00%).
163
164	Classification: Rate = 7.50% (seller's county).
165
166	---
167
168	## Section 5 -- Tier 1 Rules (When Data Is Clear)
169
170	### 5.1 Rate Structure
171
172	State rate: 5.75%. County permissive taxes: 0.75% to 2.25%. No city or special district taxes.
173
174	### 5.2 Sourcing (ORC 5739.033)
175
176	Origin-based for intrastate (both seller and buyer in Ohio). Destination-based for remote sellers (SST compliant).
177
178	### 5.3 Filing (ORC 5739.12)
179
180	\| Frequency \| Criteria \| Due Date \|
181	\|---\|---\|---\|
182	\| Monthly \| Tax liability > $600/month \| 23rd of following month \|
183	\| Semi-annual \| Tax liability $600 or less/month \| July 23 / January 23 \|
184
185	### 5.4 Vendor Discount
186
187	0.75% of tax collected for timely filing and payment. No cap. ORC 5739.12(B).
188
189	### 5.5 Economic Nexus (ORC 5741.01(I)(2))
190
191	$100,000 gross receipts OR 200 transactions in current or preceding calendar year. Effective August 1, 2019.
192
193	### 5.6 Marketplace Facilitator (ORC 5739.01(Q))
194
195	Required to collect and remit. Effective January 1, 2020. Marketplace sellers relieved for facilitated sales.
196
197	### 5.7 Exemption Certificates
198
199	STEC-B (blanket), STEC-U (unit), STEC-CO (construction). Ohio accepts SST Certificate and MTC Uniform Certificate.
200
201	### 5.8 Use Tax
202
203	Applies when Ohio purchaser acquires TPP/services without Ohio tax collected. Rate = combined state + county at location of use. Report on UST-1 (vendors) or IT-1040 (individuals).
204
205	### 5.9 Penalties (ORC 5739.13)
206
207	\| Penalty \| Rate \|
208	\|---\|---\|
209	\| Late filing/payment \| Greater of 10% of tax due or $50 \|
210	\| Fraud \| 50% of deficiency \|
211	\| Interest \| Federal short-term rate + 5% \|
212
213	---
214
215	## Section 6 -- Tier 2 Catalogue (Reviewer Judgement Required)
216
217	### 6.1 Data Processing vs Consulting
218
219	Cloud analytics may be taxable as automatic data processing. However, consulting services using technology incidentally may not qualify. Flag for reviewer.
220
221	### 6.2 CAT Interaction
222
223	Ohio imposes BOTH sales tax (customer-collected) and CAT (seller's gross receipts). They are separate. Escalate CAT questions.
224
225	### 6.3 Complex Bundled Transactions
226
227	When taxable and exempt items are sold together, bundling rules determine treatment. Flag for reviewer.
228
229	---
230
231	## Section 7 -- Working Paper Template
232
233	```
234	OHIO SALES TAX WORKING PAPER (UST-1)
235	Business: _______________ Vendor License: ___________
236	Period: ___________ Filing Frequency: Monthly / Semi-Annual
237
238	A. GROSS SALES
239	A1. Total gross sales ___________
240	A2. Exempt sales (with certificates) ___________
241	A3. Taxable sales (A1 - A2) ___________
242
243	B. TAX COMPUTATION
244	B1. State tax (A3 x 5.75%) ___________
245	B2. County tax (A3 x county rate ___%) ___________
246	B3. Total tax collected ___________
247
248	C. VENDOR DISCOUNT
249	C1. Discount (B3 x 0.75% if timely) ___________
250	C2. Net remittance (B3 - C1) ___________
251
252	D. USE TAX
253	D1. Purchases without Ohio tax ___________
254	D2. Use tax due ___________
255
256	REVIEWER FLAGS:
257	[ ] Vendor license current (renewed by Feb 28)?
258	[ ] Origin-based sourcing applied for intrastate?
259	[ ] SST/MTC certificates accepted?
260	[ ] Candy/food classification verified?
261	[ ] CAT obligation flagged separately?
262	```
263
264	---
265
266	## Section 8 -- Bank Statement Reading Guide
267
268	### Common Ohio Business Narrations
269
270	\| Narration \| Meaning \| Classification Hint \|
271	\|---\|---\|---\|
272	\| ODT / OHIO DEPT OF TAXATION \| Tax payment \| Exclude \|
273	\| AMAZON / ETSY / SHOPIFY \| Marketplace settlement \| Check if facilitator collected \|
274	\| SQUARE / STRIPE / PAYPAL \| Payment processor \| Business income \|
275	\| OHIO BWC \| Workers comp \| Exclude \|
276
277	---
278
279	## Section 9 -- Onboarding Fallback
280
281	Present these questions:
282
283	```
284	ONBOARDING QUESTIONS -- OHIO SALES TAX
285	1. Do you have an Ohio vendor license? License number?
286	2. What is your filing frequency (monthly / semi-annual)?
287	3. What is your nexus type (physical, economic, or both)?
288	4. Are you a marketplace seller?
289	5. What types of products or services do you sell in Ohio?
290	6. Do you sell to exempt entities?
291	7. Do you have locations, employees, or inventory in Ohio?
292	8. Which Ohio counties do you sell into?
293	```
294
295	---
296
297	## Section 10 -- Reference Material
298
299	### Key Legislation
300
301	\| Topic \| Reference \|
302	\|---\|---\|
303	\| Sales tax imposition \| ORC 5739.02 \|
304	\| Use tax \| ORC Chapter 5741 \|
305	\| Sourcing \| ORC 5739.033 \|
306	\| Vendor license \| ORC 5739.17 \|
307	\| Economic nexus \| ORC 5741.01(I)(2) \|
308	\| Marketplace facilitator \| ORC 5739.01(Q) \|
309	\| Vendor discount \| ORC 5739.12(B) \|
310	\| Penalties \| ORC 5739.13 \|
311	\| CAT (separate) \| ORC Chapter 5751 \|
312
313	### Known Gaps / Out of Scope
314
315	- Commercial Activity Tax (CAT)
316	- Audit defense
317	- Complex bundled transactions
318	- ODT private letter rulings
319
320	### Changelog
321
322	\| Version \| Date \| Change \|
323	\|---\|---\|---\|
324	\| 2.0 \| April 2026 \| Full rewrite to v2.0 10-section structure; taxability matrix; worked examples; origin-based sourcing detail \|
325	\| 1.0 \| 2025 \| Initial version \|
326
327	### Self-Check
328
329	- [ ] Vendor license current?
330	- [ ] Correct sourcing applied (origin intrastate, destination remote)?
331	- [ ] Candy/food distinction applied correctly?
332	- [ ] SaaS classified as taxable?
333	- [ ] Vendor discount applied if timely?
334	- [ ] CAT flagged as separate obligation?
335
336	---
337
338	## PROHIBITIONS
339
340	- NEVER apply a clothing exemption in Ohio -- clothing is fully taxable
341	- NEVER forget that Ohio's vendor license must be renewed annually ($25/location/year)
342	- NEVER treat grocery food as taxable -- grocery food is exempt (but candy, soft drinks, dietary supplements are taxable)
343	- NEVER confuse the CAT with sales tax -- they are separate taxes
344	- NEVER use destination-based sourcing for intrastate Ohio sales -- Ohio is origin-based for intrastate
345	- NEVER forget the 0.75% vendor discount for timely filing -- no cap
346	- NEVER treat SaaS as nontaxable -- SaaS is taxable as automatic data processing
347	- NEVER refuse SST Certificate -- Ohio is an SST member
348	- NEVER present calculations as definitive -- always label as estimated and direct client to a qualified Ohio CPA or EA
349
350	---
351
352	## Disclaimer
353
354	This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, EA, or tax attorney) before filing or acting upon.
355
356	The most up-to-date, verified version of this skill is maintained at [openaccountants.com](https://openaccountants.com). Log in to access the latest version, request a professional review from a licensed accountant, and track updates as tax law changes.
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Use this skill whenever asked about Ohio sales and use tax, ODT filings, Ohio CAT, Ohio exemptions, Ohio nexus, or any request involving Ohio state sales and use tax compliance. Trigger on phrases like "Ohio sales tax", "OH sales tax", "ODT", "UST-1", "Ohio exemption certificate", "Streamlined Sales Tax Ohio", or any request involving Ohio sales and use tax classification, filing, or compliance. ALWAYS read this skill before touching any Ohio sales tax work.

US-OHty-2025

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