Concerning racking we are purchasing to hold finished goods inventory that will be resold—is use tax due in Ohio on this?

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It appears to depend on whether your inventory is primarily sold to retailers out of state or within the state.  The Ohio Department of Taxation says a taxable sale includes “any transaction in which title or possession of tangible personal property or the benefit of certain services is, or will be, transferred or provided for a price. All retail sales are subject to the tax unless they are specifically excepted or exempted in Ohio's sales tax law.”

Exemptions are raw materials and inventory; but typically if the tangible good is one you use or consume yourself in your business, it would be taxable. However, in Ohio, exemptions include: “Things used or consumed primarily in storing, transporting, mailing or otherwise handling purchased sales inventory in a warehouse, distribution center or similar facility when the inventory is primarily distributed outside this state to retail stores of the person who owns or controls the warehouse, distribution center, or similar facility.”

See the Ohio Department of Taxation’s FAQs on its web site. Note the disclaimer at the bottom of the exemptions list. You might want to contact the Department directly to confirm whether or not the racks are subject tax. You can reach them via an email form on the site, or by calling (888) 405-4039.

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