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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Legal
Satisfied Customers: 37459
Experience:  Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
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I bought a used sailboat on March 19, 2006 and on April 12

Customer Question

I bought a used sailboat on March 19, 2006 and on April 12 I received a letter from the State Dept of Taxation telling me I owe sales tax. They want documentation of sales tax I paid and where I have been storing the boat. Is there a statue of limitation for State Sales Taxes on purchase of used boats? I have destroyed my records since it is beyond 7 years. Also, should'nt the person I bought the boat off of have paid the State sales taxes with the money I gave them?

The past owner gave me a title but never signed it on second asigned line and it was never notarized. Should I go back to them and get them to sign the title. He has passed away but his wife is still alive. Also, I wrote up a purchase order with he and his wife's name on the bottom. They had asked me to fax it to them back in 2006, but then they never signed it. Should I try to get his wife to sign it now, as proff to the State of what I bought the used sailboat for? I bought the boat for a low price, it was a project boat and so it had been stored inside a storage building and my 15 year old son have been refurbishing it for 7 years. The past owner had it documented with the Coast Guard so I also documented in every year since 2006 with the Coast Guard. We put the boat in last summer in September and then on October 29 it was destroyed by Hurricane Sandy. I had purchased liability only insurance on it in August last summer but it only covered liability and also haul away and salvage if the boat was damaged. The insurance company just hauled it away and cut it up and disposed of it in April 2013.

How should I respond back to the State of Ohio Department of Taxation, and what documents do I need to send them, and can they collect taxes after 7 years from date of purchase, and should'nt the past owner have paid sales taxes out of the money I gave them?
Submitted: 1 year ago.
Category: Legal
Expert:  Dimitry K., Esq. replied 1 year ago.

Thank you for your question. Please permit me to assist you with your concerns.

In Ohio there is a statute of limitations for back-taxes. While some states do not have a cutoff, Ohio does . Here is the statute that governs--it grants the state 7 years to pursue the funds. You would be responsible for reporting the sales tax yourself. The best way to respond is to provide evidence that you paid in full for the value, what that value was, and negotiate with the state for the sales tax information so that they do not charge you interest--but you would be responsible for the sales tax yourself:

131.02 Collecting amounts due to state.

 

(A) Except as otherwise provided in section 4123.37, section 5703.061, and division (K) of section 4123.511 of the Revised Code, whenever any amount is payable to the state, the officer, employee, or agent responsible for administering the law under which the amount is payable shall immediately proceed to collect the amount or cause the amount to be collected and shall pay the amount into the state treasury or into the appropriate custodial fund in the manner set forth pursuant to section 113.08 of the Revised Code. Except as otherwise provided in this division, if the amount is not paid within forty-five days after payment is due, the officer, employee, or agent shall certify the amount due to the attorney general, in the form and manner prescribed by the attorney general, and notify the director of budget and management thereof. In the case of an amount payable by a student enrolled in a state institution of higher education, the amount shall be certified within the later of forty-five days after the amount is due or the tenth day after the beginning of the next academic semester, quarter, or other session following the session for which the payment is payable. The attorney general may assess the collection cost to the amount certified in such manner and amount as prescribed by the attorney general. If an amount payable to a political subdivision is past due, the political subdivision may, with the approval of the attorney general, certify the amount to the attorney general pursuant to this section.

For the purposes of this section, the attorney general and the officer, employee, or agent responsible for administering the law under which the amount is payable shall agree on the time a payment is due, and that agreed upon time shall be one of the following times:

(1) If a law, including an administrative rule, of this state prescribes the time a payment is required to be made or reported, when the payment is required by that law to be paid or reported.

(2) If the payment is for services rendered, when the rendering of the services is completed.

(3) If the payment is reimbursement for a loss, when the loss is incurred.

(4) In the case of a fine or penalty for which a law or administrative rule does not prescribe a time for payment, when the fine or penalty is first assessed.

(5) If the payment arises from a legal finding, judgment, or adjudication order, when the finding, judgment, or order is rendered or issued.

(6) If the payment arises from an overpayment of money by the state to another person, when the overpayment is discovered.

(7) The date on which the amount for which an individual is personally liable under section 5735.35, section 5739.33, or division (G) of section 5747.07 of the Revised Code is determined.

(8) Upon proof of claim being filed in a bankruptcy case.

(9) Any other appropriate time determined by the attorney general and the officer, employee, or agent responsible for administering the law under which the amount is payable on the basis of statutory requirements or ordinary business processes of the state agency to which the payment is owed.

(B)

(1) The attorney general shall give immediate notice by mail or otherwise to the party indebted of the nature and amount of the indebtedness.

(2) If the amount payable to this state arises from a tax levied under Chapter 5733., 5739., 5741., 5747., or 5751. of the Revised Code, the notice also shall specify all of the following:

(a) The assessment or case number;

(b) The tax pursuant to which the assessment is made;

(c) The reason for the liability, including, if applicable, that a penalty or interest is due;

(d) An explanation of how and when interest will be added to the amount assessed;

(e) That the attorney general and tax commissioner, acting together, have the authority, but are not required, to compromise the claim and accept payment over a reasonable time, if such actions are in the best interest of the state.

(C) The attorney general shall collect the claim or secure a judgment and issue an execution for its collection.

(D) Each claim shall bear interest, from the day on which the claim became due, at the rate per annum required by section 5703.47 of the Revised Code.

(E) The attorney general and the chief officer of the agency reporting a claim, acting together, may do any of the following if such action is in the best interests of the state:

(1) Compromise the claim;

(2) Extend for a reasonable period the time for payment of the claim by agreeing to accept monthly or other periodic payments. The agreement may require security for payment of the claim.

(3) Add fees to recover the cost of processing checks or other draft instruments returned for insufficient funds and the cost of providing electronic payment options.

(F)

(1) Except as provided in division (F)(2) of this section, if the attorney general finds, after investigation, that any claim due and owing to the state is uncollectible, the attorney general, with the consent of the chief officer of the agency reporting the claim, may do the following:

(a) Sell, convey, or otherwise transfer the claim to one or more private entities for collection;

(b) Cancel the claim or cause it to be canceled.

(2) The attorney general shall cancel or cause to be canceled an unsatisfied claim on the date that is forty years after the date the claim is certified.

(3) No initial action shall be commenced to collect any tax payable to the state that is administered by the tax commissioner, whether or not such tax is subject to division (B) of this section, or any penalty, interest, or additional charge on such tax, after the expiration of the period ending on the later of the dates specified in divisions (F)(3)(a) and (b) of this section, provided that such period shall be extended by the period of any stay to such collection or by any other period to which the parties mutually agree. If the initial action in aid of execution is commenced before the later of the dates specified in divisions (F)(3)(a) and (b) of this section, any and all subsequent actions may be pursued in aid of execution of judgment for as long as the debt exists.

(a) Seven years after the assessment of the tax, penalty, interest, or additional charge is issued.

(b) Four years after the assessment of the tax, penalty, interest, or additional charge becomes final. For the purposes of division (F)(3)(b) of this section, the assessment becomes final at the latest of the following: upon expiration of the period to petition for reassessment, or if applicable, to appeal a final determination of the commissioner or decision of the board of tax appeals or a court, or, if applicable, upon decision of the United States supreme court.

For the purposes of division (F)(3) of this section, an initial action to collect a tax debt is commenced at the time when any action, including any action in aid of execution on a judgment, commences after a certified copy of the tax commissioner's entry making an assessment final has been filed in the office of the clerk of court of common pleas in the county in which the taxpayer resides or has its principal place of business in this state, or in the office of the clerk of court of common pleas of Franklin county, as provided in section 5739.13, 5741.14, 5747.13, or 5751.09 of the Revised Code or in any other applicable law requiring such a filing. If an assessment has not been issued and there is no time limitation on the issuance of an assessment under applicable law, an action to collect a tax debt commences when the action is filed in the courts of this state to collect the liability.

(4) If information contained in a claim that is sold, conveyed, or transferred to a private entity pursuant to this section is confidential pursuant to federal law or a section of the Revised Code that implements a federal law governing confidentiality, such information remains subject to that law during and following the sale, conveyance, or transfer.

Amended by 129th General AssemblyFile No.117,HB 508, §1, eff. 9/6/2012.

Amended by 129th General AssemblyFile No.28,HB 153, §101.01, eff. 9/29/2011.

Effective Date: 09-26-2003; 05-06-2005; 06-30-2005; 06-30-2006; 09-28-2006; 2006 HB699 03-29-2007; 2007 HB100 09-10-2007

 

Customer: replied 1 year ago.

Dimitri, Thank you for your answer. I wanted to clarify that I bought the used sailboat on March 18, 2006, and was just contacted on April 12, 2013 that I owed sales tax on the purchase. Are you saying that since it has been over 7 years since I purchased the boat and they just contacted me that I would not have to pay taxes because of the 7 year statute of limitations?

Expert:  Dimitry K., Esq. replied 1 year ago.

Mike,

The taxes are based not on when you purchased the boat but when you would have reported the boat on your taxes. As that year (2006) has not yet passed, they can still potentially pursue you for the back-taxes.

Good luck.

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