Module 10: Audits & Enforcement Reality

1. The audit gap

Ohio’s sales and use tax enforcement is overwhelmingly reactive: desk audits, sample audits, and matched third-party data (including federal payment reporting where applicable—see Module 5) arrive months or years after the transaction. There is no statewide real-time block on misclassified construction fixtures or wrong service tax treatment at checkout.

2. Why reactive enforcement cannot fill the $24B hole

• Velocity: Retail and platform volume outpaces auditor headcount.
• Detection lag: Fixture vs. realty errors and small facilitator non-collection surface only when documentation or whistleblowers appear.
• Asymmetry: Business use-tax compliance is audited more than consumer self-assessment—Module 5—so optical fairness suffers even when revenue is pursued.

3. Administrative burden vs. effectiveness

Heavy paper and portal requirements (Module 9) do not equal real-time assurance. They shift cost to compliant filers while leakage persists at the edge of POS and marketplace defaults.

4. Bridge to system failure and reform

Module 11 maps ambiguity; Module 12 proposes real-time validation so enforcement supplements prevention, not only ex post assessment.

Outcomes (to expand)

• [ ] Audit yield by sector (construction, EIS, facilitators)
• [ ] Time-to-discovery for typical leakage types
• [ ] Policy options: information sharing, mandated API taxability signals, real-time registry lookups