Ohio Construction Contract Sales Tax

Ohio Construction Contract Sales Tax: What You Need to Know

If you`re in the construction industry in Ohio, it`s important to understand the state`s sales tax laws. In particular, there is a specific tax that applies to construction contracts: the Ohio construction contract sales tax. In this article, we`ll take a look at what this tax entails and how it may affect your business.

What is the Ohio construction contract sales tax?

The Ohio construction contract sales tax is a tax that applies to certain construction contracts. Specifically, it applies to contracts for the construction, alteration, or repair of a building, structure, or other real property. The tax is levied on the total contract price, including labor, materials, and other expenses.

The tax rate varies depending on the location of the project. In most cases, the rate is 7.5%. However, in some counties and municipalities, the rate can be higher. For example, in Cuyahoga County (which includes Cleveland), the rate is 8%.

Who is responsible for paying the tax?

Generally, the contractor is responsible for collecting and remitting the tax. However, if the contractor fails to do so, the owner of the property may be held liable. It`s important for both parties to ensure that the tax is properly accounted for in the contract.

Are there exemptions or exclusions?

Yes, there are some exemptions and exclusions to the Ohio construction contract sales tax. For example, contracts with the federal government and certain nonprofit organizations are exempt. Additionally, some items and services used in construction may be exempt, such as certain industrial machinery and equipment.

It`s important to note that exemptions and exclusions vary depending on the specific circumstances of each project. Consulting with a tax professional or attorney can help ensure that you are in compliance with all applicable laws.

What are the consequences of non-compliance?

Failing to properly account for the Ohio construction contract sales tax can have serious consequences. If you fail to collect or remit the tax, you may be subject to penalties and interest. Additionally, the Ohio Department of Taxation may take legal action to collect the tax owed.

Conclusion

The Ohio construction contract sales tax is an important consideration for anyone involved in construction projects in the state. By understanding the tax and ensuring compliance with all applicable laws, you can help avoid potential penalties and legal issues. Consulting with a tax professional or attorney can provide additional guidance and assistance in navigating this complex area of law.