Ohio's "Use Tax Education Program" in Effect! (Amnesty??)

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The Ohio Department of Taxation (DOT) started its "Use Tax Education Program," or UTEP in 2011.  Very simply, the goal of the program is get businesses who are required to pay use tax to Ohio, to do so. 

According to Ohio's website, the Ohio DOT has a goal of contacting and working with an estimated 380,000 small and mid-sized businesses in Ohio with potential use tax liabilities.

UTEP Advantages

Taxpayers who are contacted and take advantage of the UTEP will obtain a "limited look-back period and no penalty."  Initially, businesses that should be registered for use tax but are not will be notified by UTEP that they should register. These businesses will be able to register and begin remitting use tax on future purchases.

UTEP will also allow a business to enter into an agreement to clear up past unpaid use tax liability. In general terms, through UTEP a business will agree to:

  • Register and remit use tax prospectively;
  • And pay use tax plus applicable interest on untaxed purchases for the last four years or less, depending on when the business started.

Note: By law, the business could owe use tax for up to 10 years. The Department’s general practice is to audit for the last seven years.  The Department agrees, in the absence of fraud, to waive the use tax liability for all years beyond the look back period; and the Department agrees not to apply the 15% penalty applicable for the unpaid use tax.

Voluntary Disclosure Agreement Program (VDA)

According to the Ohio DOT, the Department will accept a request for a voluntary disclosure agreement prior to the contact through UTEP. 

Under the regular Ohio VDA program, a taxpayer could limit the look-back period to only three years instead of four years under UTEP.

Once the Department has contacted a business through UTEP, the business will be required to conduct an agreement under the terms allowed by UTEP.

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