# Ohio Manufacturing Tax Laws: Exemption Checklist for Manufacturers > Source: https://netray.co/tools/ohio-manufacturing-sales-tax-exemption-checklist > Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems. > Section: Free Tools ## Short answer Checklist for Ohio manufacturers covering the manufacturing sales and use tax exemption, exemption certificates, commercial activity tax basics and ERP certificate tracking. ## Category compliance-legal ## Region Ohio, USA ## Audience - Controller - Tax manager - ERP administrator - Purchasing ## Tool **Kind:** checklist **Scoring Note:** Tick each item you have verified. Unticked critical items are gaps to close before your next return or audit. This is a working checklist, not tax advice; confirm current rules with the Ohio Department of Taxation or your tax adviser. **Groups:** #### 1. Qualifying the manufacturing exemption **Items:** **Text:** Confirmed the operation is manufacturing under Ohio's definition (tangible personal property produced for sale by a process that changes its form, composition or character) **Critical:** true **Text:** Listed machinery, tooling and equipment used primarily in the production process and documented why each qualifies (R.C. 5739.02(B)(42) is the starting reference) **Critical:** true Separated equipment used in production from equipment used in administration, storage after production or distribution Checked repair and replacement parts for exempt equipment and how they are treated Reviewed fuel, electricity and other utilities consumed in production for any applicable exemption **Text:** Reviewed raw materials and packaging that become part of the sold product (resale treatment) **Critical:** true Written down the basis for each category and who approved it #### 2. Certificates you give vendors **Items:** **Text:** Issued a completed Ohio exemption certificate with the manufacturing basis selected, usually the blanket certificate STEC B for recurring vendors **Critical:** true Verified the certificate carries your legal name, address, vendor's license or account number where required, and a signature **Text:** Stored a signed copy for every vendor that received one **Critical:** true Limited the certificate to qualifying items rather than the vendor's whole catalogue **Text:** Trained buyers to pay tax on non-qualifying supplies and office items **Critical:** true #### 3. Certificates you collect from customers **Items:** **Text:** Obtained a valid exemption or resale certificate before any tax-free sale **Critical:** true Checked that each certificate is complete, signed and matches the buyer's legal name Recorded the exemption basis, certificate date and ship-to locations covered **Text:** Defined the rule when no certificate exists: charge tax or hold the order **Critical:** true Kept certificates for the retention period required by the Department of Taxation Handled sales delivered outside Ohio under separate documentation #### 4. ERP setup and controls **Items:** **Text:** Customer master has an exempt flag, reason code and certificate reference **Critical:** true Tax codes exist for exempt production purchases, taxable supplies and use tax accrual **Text:** Item or purchase categories drive default tax treatment, not buyer judgment **Critical:** true Invoicing is blocked or warns when an exempt customer has no valid certificate on file A report lists exempt sales by customer and basis for the return A report lists exempt purchases by vendor against certificates issued Document links or scanned images are attached to customer and vendor records #### 5. Other Ohio taxes and returns **Items:** **Text:** Accrued use tax on taxable purchases where the seller did not collect Ohio tax **Critical:** true Checked county and transit rates at each delivery address Reviewed commercial activity tax (CAT) registration and filing, which is a gross receipts tax separate from sales tax Reviewed municipal net profit tax filings where the plant sits in a taxing municipality Ran a mock audit with five vendors and five customers and fixed gaps found ## Content **Intro:** Ohio manufacturers are not exempt as a status. The state exempts specific purchases and sales: property used primarily in manufacturing, items that become part of the product, and sales to qualifying buyers who give you a certificate. This checklist covers the categories, the paperwork, and the ERP fields that let you prove each exemption when asked. **Sections:** #### How to use this checklist **Body:** Review it with your controller, buyer and ERP administrator. Tick verified items, assign owners to the rest, and export the PDF as a dated record. Critical items are the ones that most often fail in audits: a certificate behind every tax-free sale, a documented production basis for equipment, and use tax accrued where the seller charged none. Repeat annually and after buying new production lines. **Bullets:** - Start with group 1, because it decides everything else - Collect missing certificates first, they are the easiest audit finding - Re-run after any plant expansion or new product line #### The manufacturing exemption in practice **Body:** The test centres on the use of the equipment: is it used primarily in the production process that changes the form, composition or character of the product? Machines on the line generally fit; forklifts moving finished goods to a dock, office computers and most facility items often do not. Document the reasoning per asset class at purchase, because rebuilding that logic years later from invoices is slow. Confirm specifics against the Revised Code and Department of Taxation guidance. #### Tracking certificates in the ERP **Body:** A certificate on paper protects you only if you can find it. Store the reference, basis and review date on the customer and vendor records, and let invoicing check them. For purchases, drive tax treatment from a category on the purchase line so exempt production items and taxable supplies post to different tax codes and use tax accrues without manual effort. **Bullets:** - Exempt flag plus reason code on the customer - Certificate image or document link on the record - Category-driven tax code on purchase lines - Exempt sales and purchases reports tied to the return #### Common mistakes **Body:** The usual errors are using one blanket certificate for every purchase from a vendor, treating all plant-floor items as exempt, ignoring use tax on out-of-state purchases, and confusing the commercial activity tax with sales tax. The CAT is a separate gross receipts tax with its own registration and thresholds, so exemption certificates do not affect it. **Cta:** If certificates and exemption bases are scattered across drives and email, we can help you set up a private assistant on your own servers that finds the right certificate for a customer or vendor in seconds. **Faq:** #### Are all Ohio manufacturers exempt from sales tax? **Answer:** No. Ohio exempts particular transactions, such as property used primarily in manufacturing and items that become part of a product sold. Supplies, office items and distribution equipment are often taxable. Document the basis for each category and check current Revised Code and Department of Taxation guidance. #### What is Ohio form STEC B? **Answer:** STEC B is Ohio's blanket sales and use tax exemption certificate. Buyers give it to a vendor for recurring qualifying purchases, selecting the exemption basis such as manufacturing. Use it only for items that qualify and keep a signed copy for every vendor. #### Is the commercial activity tax the same as sales tax? **Answer:** No. The commercial activity tax is a gross receipts tax on business activity in Ohio, with its own registration, thresholds and returns. Sales tax exemption certificates do not exempt receipts from the CAT. Review both obligations separately. #### Do I owe use tax on out-of-state purchases? **Answer:** Generally yes, when a taxable item is delivered to Ohio and the seller did not collect Ohio tax. Accrue use tax at the rate for the delivery location and reconcile the accrual account to the return each period. ## Search terms ohio manufacturing tax laws, ohio manufacturing sales tax exemption, ohio stec b exemption certificate, ohio manufacturing exemption checklist, ohio commercial activity tax manufacturer, ohio sales tax manufacturing equipment, ohio exemption certificate tracking erp, ohio use tax manufacturer --- Talk to an engineer: https://netray.co/contact?intent=erp_ai | Machine catalog: https://netray.co/agent/catalog.json