What is the Sales Tax Statute of Limitations in Ohio?

[Berdaaaz01]

I owned a business from 2000-2004, it failed and I had to file bankruptcy December 2004. I was contacted by an agency last week, December called "Revenue" that collects monies for the state. They had all my business information, so they seem legit but they are telling me I need to pay sales tax from 6 separate months back in 2004 that they claim was never paid. I asked that she email me any information so I could review it, but she informed me they cannot do that. Instead she will be mailing me out follow up information. Which as of today December 9, has not arrived. I do not have any records from that business any more and can't access old closed bank accounts to verify their claims. So do I owe this money if it was not paid? or has it been too long? What are my next steps to figure out how to handle?

 

[Zigner]

I suggest that you wait to see what you get in the mail.

 

[LdiJ]

I owned a business from 2000-2004, it failed and I had to file bankruptcy December 2004. I was contacted by an agency last week, December called "Revenue" that collects monies for the state. They had all my business information, so they seem legit but they are telling me I need to pay sales tax from 6 separate months back in 2004 that they claim was never paid. I asked that she email me any information so I could review it, but she informed me they cannot do that. Instead she will be mailing me out follow up information. Which as of today December 9, has not arrived. I do not have any records from that business any more and can't access old closed bank accounts to verify their claims. So do I owe this money if it was not paid? or has it been too long? What are my next steps to figure out how to handle?

What state are you in? In many states there is not statute of limitations for any kind of state tax. Its also very unusual for you to just be hearing about this for the first time, 15 years later. Once you get the paperwork from the collection agency I would contact your state department of revenue or taxing authority and see if you can verify the debt.

 

[davew9128]

Call the Ohio Department of Revenue or other agency which handles sales tax...

 

[Taxing Matters]

What state are you in? In many states there is not statute of limitations for any kind of state tax.

I disagree. Most states do have various limitations on both assessment and collection of at least some of their taxes, most notably income taxes. But what is very common is that there is no statute of limitation for assessment of taxes for which returns are required if the taxpayer never filed the return.

Berdaaz, it would be important to know when the tax was assessed. It is also significant to know how the business was organized — was it a LLC, corporation, or what? If you did have a separate entity like LLC for the business is this assessment against just the business or against you personally? And what about the bankruptcy, did you file bankruptcy personally, did the business file bankruptcy, or both?

Even if the assessment is legitimate, the answers to the above questions will determine whether the state can actually collect it now. For example, if the business was a LLC or corporation and the tax is assessed against that LLC or corporation then the state is going to be out of luck because I presume that business has been defunct for many years and has no assets for the state to grab.

For the future, one record you always want to keep for ever is copies of your returns, proof of payment, and any proof of filing you have for them, since the general rule often is that the statute of limitation for assessment of tax does not start to run until the returns are filed you want to show that you did file the returns in question if the states come back many years later and claims they weren't filed. Except in unusual situations the IRS does not usually go back more than 6 years to chase returns that have not been filed, but many states have gotten a lot more aggressive in the last 15 years in dredging up old data and pursuing what they believe to be unfiled returns that were due.

 

[LdiJ]

I disagree. Most states do have various limitations on both assessment and collection of at least some of their taxes, most notably income taxes. But what is very common is that there is no statute of limitation for assessment of taxes for which returns are required if the taxpayer never filed the return.

Berdaaz, it would be important to know when the tax was assessed. It is also significant to know how the business was organized — was it a LLC, corporation, or what? If you did have a separate entity like LLC for the business is this assessment against just the business or against you personally? And what about the bankruptcy, did you file bankruptcy personally, did the business file bankruptcy, or both?

Even if the assessment is legitimate, the answers to the above questions will determine whether the state can actually collect it now. For example, if the business was a LLC or corporation and the tax is assessed against that LLC or corporation then the state is going to be out of luck because I presume that business has been defunct for many years and has no assets for the state to grab.

For the future, one record you always want to keep for ever is copies of your returns, proof of payment, and any proof of filing you have for them, since the general rule often is that the statute of limitation for assessment of tax does not start to run until the returns are filed you want to show that you did file the returns in question if the states come back many years later and claims they weren't filed. Except in unusual situations the IRS does not usually go back more than 6 years to chase returns that have not been filed, but many states have gotten a lot more aggressive in the last 15 years in dredging up old data and pursuing what they believe to be unfiled returns that were due.

In my state, the DOR makes a lot of mistakes in apply tax payments for both sales tax and withholding tax. Its a chronic problem. I was once denied a liquor license because I had 8 missing withholding or sales tax payments. In the end, it was discovered that in every instance, they had applied either my sales tax to my withholding account or vice versa. So in each of those instances one account showed and overpayment (which of course they did not refund) and the other account showed no payment at all.

As you said, states are getting very aggressive in the collect of tax and I have seen some pretty wild applications of the law. I have had to fight far more serious battles with states for client than I have ever had to fight with the feds.