Ohio sales tax debt: assessments, personal liability and collection

The Ohio Department of Taxation administers sales tax on retail sales, leases and rentals of tangible personal property and some selected services, and use tax where sales tax wasn't collected. The state rate is 5.75%; counties and transit authorities add their own, and the Department publishes quarterly rate tables by county (combined rates commonly run from about 6.5% to 8%). Vendors need a vendor's license to sell.

If a vendor doesn't file or pay, or an audit finds underreported sales, the Department issues an assessment including tax, penalty and interest. Ohio's penalty on assessments can be substantial; the amount appears on the notice, and the Department may remit penalty for reasonable cause on request.

A distinctive feature of Ohio: unpaid tax assessments are certified to the Ohio Attorney General's office for collection. Once certified, collection fees are added and payment arrangements are negotiated with the AG's collections section, not the Department of Taxation. The state can also file a judgment lien and levy assets. If you're at the "notice" stage, resolving it with the Department before certification avoids the added fees.

Ohio Revised Code section 5739.33 makes employees, officers and trustees of a corporation or LLC who are responsible for filing returns and paying sales tax personally liable for unpaid tax, interest and penalties when the business fails to remit. Like the federal Trust Fund Recovery Penalty, this can be assessed after the business has closed.

To dispute an assessment, file a petition for reassessment with the Tax Commissioner within the deadline on the notice (generally 60 days). The Commissioner's final determination can be appealed to the Ohio Board of Tax Appeals. Missing the petition deadline makes the assessment final. Before you decide, run the free business tax relief assessment.