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Ohio Sales and Use Tax Impact on Dentists

Should you be charging your dental patients a sales tax for your services or products? This may be a question you have asked yourself since opening your dental practice. The answer is: it depends.

Charging Sales Tax on Products Sold

Depends on what? When talking about charging sales tax on a product, we generally think about a retail business.  But dentists need to think about this too.  If you’re  selling a toothbrush, floss or other over-the-counter tangible products, sales tax should be charged to your patients and then remitted to the state of Ohio.  Conversely, if the product is being sold with a prescription and is not available over-the-counter, there is a special exemption that allows you to sell the product without charging sales tax.  An example of this would be prescription mouthwash that’s not available over-the-counter and is being prescribed to a patient.

Paying Sales Tax on Products Purchased

Likewise, you also need to remember to pay sales tax on items you purchase for your dental practice that are subject to sales tax.  Some of these items may include:

  • Office supplies
  • Dental supplies
  • Lab supplies
  • Invisalign
  • Computers
  • Equipment

If these purchases are made online or from out of state vendors who don’t charge sales tax, use tax should be paid.  Also, if you’re not paying sales tax on one of the previously mentioned taxable services, use tax should be paid.

Paying Sales Tax on Services

As for general dentistry, those services are not taxable for sales tax purposes.  However, that doesn’t mean all services are tax exempt in Ohio.  You should still make sure you’re paying sales tax on the following services for your dental practice:

  • Lawn care or landscaping
  • Building maintenance and janitorial services
  • Repair of tangible property
  • Laundry and dry cleaning services
  • Snow removal services
  • Storage of tangible personal property

Contact Our Dental Practice Professionals

So, what should you do if you are not paying sales tax or use tax when you should be?

The state of Ohio currently offers a voluntary disclosure agreement program that could substantially reduce the amount of exposure and penalties that you may owe.  Contact Rea & Associates; our team of bright dental CPAs can provide more information about the voluntary disclosure program and other ways to ensure you are complaint with the ever changing sales and use tax laws.

Related Topics:

Understanding Ohio Local Tax Obligations

How Sales & Use Taxes Apply to Ohio Dental Practices

How To Get a Tax Credit for Health Insurance Costs

Ohio Reverses Position on Invisalign

New Ohio Tax Rules InvisalignOhio dentists who use Invisalign invisible braces need to comply with new sales tax procedures. Your practice may need to update tax, accounting and billing procedures to comply with the change. See how your practice might be impacted.

The Ohio Department of Taxation recently changed its position on the sales/use tax treatment of the invisible braces product, Invisalign. This change may have a significant impact on every dentist in Ohio.

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How Sales & Use Taxes Apply to Ohio Dental Practices

dental practice valuation

Sales Tax

As a provider of personal services, a dentist’s services are expressly exempt from sales tax. However, if your practice sells tangible personal property to patients such as mouthwash, whiteners and toothbrushes, or purchases products such as Invisalign or similar products, you must collect sales tax on these items.

To make matters worse, dentists can be consumers of tangible personal property and services as well. Your practice is responsible for paying sales tax on purchases of supplies and equipment as well as items that are consumed when rendering your services, such as crowns, braces, brackets and implants. If the vendor you purchased these items from did not charge sales tax, you must pay use tax to the Ohio Department of Taxation.

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Rea & Associates, Inc. | Bright Dental CPAs | 7201 Center St, Mentor, Ohio 44060-4858
phone + 440-266-0077