What’s Up with the Sales & Use Tax?
When you work with a tax service provider in the states of Ohio or West Virginia, and possibly other states, you will be asked to certify your sales & use tax. But, what’s that mean? We get this question often.
The Sales & Use Tax is a tax levied upon customers when a retailer, or service provider (where applicable) fails to collect sales tax on goods and services sold.
In many states, citizens are required to pay sales tax on goods and services at the time of purchase. Most often, when purchases they are done are made physically in a retail store, or directly from a service provider. Then the retailer collects the sales tax and they are responsible for submitting the collected taxes to the state.
However, there may be times when the retailer or business service provider fails to collect the required tax. In those cases the responsibility of paying the taxes due lies with the purchaser.
Additionally, when a citizen makes a purchase of an item from within the state but the retailer is selling from another location, the citizen is required to pay the sales & use tax for the purchases made because they reside in and use the item within the state, thus, the sales and use tax.
Getting Tripped Up by the Sales & Use Tax
Here’s the part that trips up many people. If you make an out-of-state purchase, you may still be required to pay the use tax on the item(s) depending upon the laws of your state. Much is dependent upon where you were when you made the purchase. If you were at home, ordering from a catalogue or online, then you may be required to pay the tax. If you were on vacation and paid the sales tax at the register, then, you are most likely not required to pay an additional tax in your home state.
If, however, you make a large purchase out-of-state and bring it into the state for use, such as a vehicle, or other large-ticket item, you may very well be responsible to pay the use tax, even if you paid a sales tax in the place of purchase.
Examples of When Sales & Use Tax
May need to be Paid by the Consumer
- Catalogue Sales
- Internet Sales
- Independent Contractor Services
- Pass Through Entities that set up vendor stalls, such as craft shows, carnivals, or other vendor types sale.
- Potentially, Sales of Large Ticket Items, such as cars, trucks, boats, and motorcycles, factory built homes, recreational vehicles, and the like, even when they may be purchased out-of-state.
Each state has different laws concerning the sales & use tax. So, it’s a good idea for you to know the laws for your individual state. I’ll be discussing the requirements for the states of Ohio & West Virginia because those are the service areas that Cowdery Tax deals with most often.
Ohio Sales & Use Tax
Ohio citizens are required to pay sales and use tax on retail sales, leases, when applicable, and rental of tangible personal property, and the sale of select services. Any transaction where sales tax was due, as required by the Ohio tax code, but the tax was not collected by the vendor or seller, then the consumer would be responsible to pay the tax equal to the amount that should have been collected on those sales and services.
In Ohio the state sales & use tax is 5.75% of the total sale amount. However, each county or region may levy additional sales & use taxes. So be sure to check your local county, city, or township sales tax in addition to the Ohio sales tax.
Tools for determining your Ohio Sales & Use Tax
- Ohio Sales Tax Rates by County/Region
- Sales Tax Calculator (per item or sale amount.)
West Virginia Sales & Use Tax
In West Virginia, sales of goods and services are subject to Sales & Use Tax unless an exemption is clearly provided within the state tax code. The sales tax is levied on the sale of goods and services by the at the time of purchase by and collected by the retailer, or service provider. Whn the applicable sales tax is not paid at the time of purchase, the use tax is imposed on the use of goods and service in West Virginia. Therefore, the purchaser of the product is responsible to pay the use tax. This tax applies to the WV State sales tax plus any tax levied by local municipalities, such as, counties or cities.
The West Virginia State sales tax rate is currently 6%. However, local municipalities may also impose sales & use tax so the total tax rate can be as high as 7% depending upon where purchases are made.
For more infomation about the West Virginia Sales & Use tax visit West Virginia State Tax Department online.
How To Manage your Sales & Use Tax Responsibility
While it may seem unfair, the reality is the Sales & Use Tax is law in many states. That means the responsibility lies with the consumer, the citizen to track unpaid sales tax and submit an amount equal to what is owed. This can be done at the time of filing your income tax return.
To manage this tax you can keep a simple log of sales where you have not paid the state sales tax.
- Watch your receipts at the time of purchase to see if sales tax was added. If it was, then your tax is paid, and you are under no further obligation.
- If it was not. Keep the receipt.
- Log the amount of the sale, calculate the tax owed based upon the sales tax for your state and region, document the amount owed.
- Keep a running log of the amounts.
- At the end of the year add your totals together, this is the amount you will owe for your sales & use tax.
To make this easier you can download this form to your computer, and then track your sales & use tax. Print the form each year to bring to your tax preparation appointment.
At Cowdery Tax & Business Solutions we are required to ask if you owe sales and use tax, and for you to certify, legally speaking, if you do not.
As always, Cowdery Tax is here to help. Give us a call to schedule your appointment: 740•374•6942
This information is not intended as legal or tax advice. Cowdery Tax and its representatives does not offer legal or tax advice. We offer services for business bookkeeping, payroll, tax payments, and personal tax filings. We share information that is publicly available. Tax laws may change with or without notice that may alter or change the information contained in this publication.
