Ohio Sales and Use Tax Skill v2.0

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Section 1 -- Quick Reference

Field	Value
State	Ohio
Tax	Sales and Use Tax (state + county)
State rate	5.75%
Local rates	County only (0.75% to 2.25%) -- no city or district taxes
Maximum combined rate	Approx. 8.00% (e.g. Cuyahoga County)
Sourcing	Origin-based (intrastate); destination-based (remote/SST)
Primary legislation	ORC Chapters 5739 (Sales) and 5741 (Use)
Tax authority	Ohio Department of Taxation (ODT)
Filing portal	https://tax.ohio.gov / Ohio Business Gateway
Return form	UST-1 (Universal Sales Tax Return)
SST member	Yes -- full member
Economic nexus	$100,000 gross receipts OR 200 transactions (effective Aug 1, 2019)
Vendor license	Required; $25/location/year; renew by February 28
Contributor	Open Accountants Community
Validated by	Pending -- requires Ohio CPA or EA sign-off
Skill version	2.0

Key Combined Rates

County	County Rate	Combined Rate
Cuyahoga (Cleveland)	2.25%	8.00%
Franklin (Columbus)	1.75%	7.50%
Hamilton (Cincinnati)	1.80%	7.55%
Summit (Akron)	1.50%	7.25%
Montgomery (Dayton)	1.50%	7.25%
Lucas (Toledo)	1.50%	7.25%

Taxability Quick Matrix

Item	Taxable?	Notes
Tangible personal property	YES	Default taxable
SaaS / cloud software	YES	Taxable as automatic data processing (ORC 5739.01(B)(3)(a))
Grocery food	NO	Exempt (but candy without flour, soft drinks, dietary supplements are taxable)
Clothing	YES	Fully taxable -- no clothing exemption
General services	NO	Most services exempt unless specifically enumerated
Employment/staffing services	YES	ORC 5739.01(B)(3)(j)
Landscaping/lawn care	YES	ORC 5739.01(B)(3)(h)
Physical fitness services	YES	ORC 5739.01(B)(3)(k)
Digital products (audio, video, books)	YES	ORC 5739.01(BBB)
Manufacturing equipment	NO	Exempt with STEC-B certificate

Conservative Defaults

Ambiguity	Default
Product taxability unknown	Taxable
Service taxability unknown	Exempt (unless enumerated)
Sourcing location unknown	Seller's county (origin-based intrastate)
Candy vs food unclear	Food (exempt) if contains flour
CAT obligation	Escalate -- separate tax

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Section 2 -- Required Inputs and Refusal Catalogue

Required Inputs

Minimum viable: Confirmation of Ohio nexus (physical or economic), vendor license status, filing frequency, and list of products/services sold.

Recommended: Sales by county, exemption certificates on file, prior period UST-1.

Ideal: Complete transaction log with ship-to addresses, exemption certificate register, CAT filing status.

Refusal Catalogue

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."

R-OH-2 -- Audit defense. "Responding to ODT audits or assessments requires specialist representation. Escalate."

R-OH-3 -- Complex bundled transactions. "Mixed transactions involving taxable and exempt components require specialist analysis. Escalate."

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Section 3 -- Transaction Pattern Library

3.1 Taxable Sales

Pattern	Treatment	Notes
Electronics / hardware sale	Taxable at combined rate	TPP
SaaS subscription / cloud CRM	Taxable	Automatic data processing
Staffing / temp agency	Taxable	Employment services
Landscaping invoice	Taxable	ORC 5739.01(B)(3)(h)
Gym membership	Taxable	Physical fitness service
Digital download (movie, music, ebook)	Taxable	Specified digital products
Furniture / office equipment	Taxable	TPP

3.2 Exempt Sales

Pattern	Treatment	Notes
Grocery food (bread, milk, produce)	Exempt	Not candy, soft drinks, supplements
Manufacturing equipment with STEC-B	Exempt	Must have valid certificate
Sale to government entity	Exempt	With proper documentation
Resale with valid certificate	Exempt	STEC-B or SST Certificate
Medical equipment (certain)	Exempt	Check specific exemption

3.3 Candy/Food Classification (SST Standard)

Item	Classification	Rationale
Chocolate bar (no flour)	Candy -- TAXABLE	No flour ingredient
Chocolate-covered pretzels	Food -- EXEMPT	Contains flour
Soft drinks	TAXABLE	Specifically enumerated
Dietary supplements	TAXABLE	Specifically enumerated
Fresh produce	EXEMPT	Grocery food

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Section 4 -- Worked Examples

Example 1 -- Basic Taxable Sale in Columbus

Input: Retailer in Columbus (Franklin County) sells electronics for $800. Combined rate: 7.50%.

Reasoning: Electronics are TPP, taxable. Columbus is Franklin County: 5.75% state + 1.75% county = 7.50%.

Classification: Sales tax = $60.00. Total = $860.00.

Example 2 -- SaaS Subscription in Cuyahoga County

Input: Ohio business subscribes to cloud-based CRM. $300/month. Business in Cuyahoga County (8.00%).

Reasoning: SaaS is taxable as automatic data processing service in Ohio.

Classification: Sales tax = $24.00/month.

Example 3 -- Vendor Discount

Input: Vendor timely files and pays $20,000 in Ohio sales tax.

Reasoning: Ohio offers 0.75% vendor discount for timely filing and payment. No cap.

Classification: Discount = $150.00. Net remittance = $19,850.00.

Example 4 -- Origin-Based Intrastate Sourcing

Input: Columbus-based seller ships goods to customer in Cleveland (Cuyahoga County).

Reasoning: Intrastate Ohio sales use origin-based sourcing. Seller charges Franklin County rate (7.50%), not Cuyahoga (8.00%).

Classification: Rate = 7.50% (seller's county).

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Section 5 -- Tier 1 Rules (When Data Is Clear)

5.1 Rate Structure

State rate: 5.75%. County permissive taxes: 0.75% to 2.25%. No city or special district taxes.

5.2 Sourcing (ORC 5739.033)

Origin-based for intrastate (both seller and buyer in Ohio). Destination-based for remote sellers (SST compliant).

5.3 Filing (ORC 5739.12)

Frequency	Criteria	Due Date
Monthly	Tax liability > $600/month	23rd of following month
Semi-annual	Tax liability $600 or less/month	July 23 / January 23

5.4 Vendor Discount

0.75% of tax collected for timely filing and payment. No cap. ORC 5739.12(B).

5.5 Economic Nexus (ORC 5741.01(I)(2))

$100,000 gross receipts OR 200 transactions in current or preceding calendar year. Effective August 1, 2019.

5.6 Marketplace Facilitator (ORC 5739.01(Q))

Required to collect and remit. Effective January 1, 2020. Marketplace sellers relieved for facilitated sales.

5.7 Exemption Certificates

STEC-B (blanket), STEC-U (unit), STEC-CO (construction). Ohio accepts SST Certificate and MTC Uniform Certificate.

5.8 Use Tax

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).

5.9 Penalties (ORC 5739.13)

Penalty	Rate
Late filing/payment	Greater of 10% of tax due or $50
Fraud	50% of deficiency
Interest	Federal short-term rate + 5%

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Section 6 -- Tier 2 Catalogue (Reviewer Judgement Required)

6.1 Data Processing vs Consulting

Cloud analytics may be taxable as automatic data processing. However, consulting services using technology incidentally may not qualify. Flag for reviewer.

6.2 CAT Interaction

Ohio imposes BOTH sales tax (customer-collected) and CAT (seller's gross receipts). They are separate. Escalate CAT questions.

6.3 Complex Bundled Transactions

When taxable and exempt items are sold together, bundling rules determine treatment. Flag for reviewer.

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Section 7 -- Working Paper Template

OHIO SALES TAX WORKING PAPER (UST-1)
Business: _______________  Vendor License: ___________
Period: ___________  Filing Frequency: Monthly / Semi-Annual

A. GROSS SALES
  A1. Total gross sales                          ___________
  A2. Exempt sales (with certificates)           ___________
  A3. Taxable sales (A1 - A2)                   ___________

B. TAX COMPUTATION
  B1. State tax (A3 x 5.75%)                    ___________
  B2. County tax (A3 x county rate ___%)         ___________
  B3. Total tax collected                        ___________

C. VENDOR DISCOUNT
  C1. Discount (B3 x 0.75% if timely)           ___________
  C2. Net remittance (B3 - C1)                  ___________

D. USE TAX
  D1. Purchases without Ohio tax                 ___________
  D2. Use tax due                                ___________

REVIEWER FLAGS:
  [ ] Vendor license current (renewed by Feb 28)?
  [ ] Origin-based sourcing applied for intrastate?
  [ ] SST/MTC certificates accepted?
  [ ] Candy/food classification verified?
  [ ] CAT obligation flagged separately?

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Section 8 -- Bank Statement Reading Guide

Common Ohio Business Narrations

Narration	Meaning	Classification Hint
ODT / OHIO DEPT OF TAXATION	Tax payment	Exclude
AMAZON / ETSY / SHOPIFY	Marketplace settlement	Check if facilitator collected
SQUARE / STRIPE / PAYPAL	Payment processor	Business income
OHIO BWC	Workers comp	Exclude

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Section 9 -- Onboarding Fallback

Present these questions:

ONBOARDING QUESTIONS -- OHIO SALES TAX
1. Do you have an Ohio vendor license? License number?
2. What is your filing frequency (monthly / semi-annual)?
3. What is your nexus type (physical, economic, or both)?
4. Are you a marketplace seller?
5. What types of products or services do you sell in Ohio?
6. Do you sell to exempt entities?
7. Do you have locations, employees, or inventory in Ohio?
8. Which Ohio counties do you sell into?

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Section 10 -- Reference Material

Key Legislation

Topic	Reference
Sales tax imposition	ORC 5739.02
Use tax	ORC Chapter 5741
Sourcing	ORC 5739.033
Vendor license	ORC 5739.17
Economic nexus	ORC 5741.01(I)(2)
Marketplace facilitator	ORC 5739.01(Q)
Vendor discount	ORC 5739.12(B)
Penalties	ORC 5739.13
CAT (separate)	ORC Chapter 5751

Known Gaps / Out of Scope

• Commercial Activity Tax (CAT)
• Audit defense
• Complex bundled transactions
• ODT private letter rulings

Changelog

Version	Date	Change
2.0	April 2026	Full rewrite to v2.0 10-section structure; taxability matrix; worked examples; origin-based sourcing detail
1.0	2025	Initial version

Self-Check

• Vendor license current?
• Correct sourcing applied (origin intrastate, destination remote)?
• Candy/food distinction applied correctly?
• SaaS classified as taxable?
• Vendor discount applied if timely?
• CAT flagged as separate obligation?

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PROHIBITIONS

• NEVER apply a clothing exemption in Ohio -- clothing is fully taxable
• NEVER forget that Ohio's vendor license must be renewed annually ($25/location/year)
• NEVER treat grocery food as taxable -- grocery food is exempt (but candy, soft drinks, dietary supplements are taxable)
• NEVER confuse the CAT with sales tax -- they are separate taxes
• NEVER use destination-based sourcing for intrastate Ohio sales -- Ohio is origin-based for intrastate
• NEVER forget the 0.75% vendor discount for timely filing -- no cap
• NEVER treat SaaS as nontaxable -- SaaS is taxable as automatic data processing
• NEVER refuse SST Certificate -- Ohio is an SST member
• NEVER present calculations as definitive -- always label as estimated and direct client to a qualified Ohio CPA or EA

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Disclaimer

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.

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