1. technology and computing
2. software

Ohio Tax
Ohio Tax & Jobs 2014...
Sales & Use Tax
Edward J. Bernert, Partner, Baker & Hostetler LLP, Columbus
Tuesday, January 28, 2014
10:00 a.m. to 12:15 p.m.
Biographical Information
Edward J. ("Ted") Bernert, Partner, Baker & Hostetler LLP
65 E. State Street, Suite 2100, Columbus, Ohio 43215
[email protected]
614.462.2687
Fax 614.228.1541
Edward J. (“Ted”) Bernert concentrates his practice in the area of state and local taxes with a particular
emphasis on the major Ohio taxes affecting businesses and business owners–sales and use, financial
institution, personal income, commercial activity and real property taxes. He represents national
companies concerning Ohio tax matters related to compliance, planning and tax legislation. Mr. Bernert
regularly deals with various tax department officials upon audit or administrative appeals. He has an
active tax litigation practice before the Ohio Board of Tax Appeals and upon appeal to the courts,
including the Supreme Court of Ohio.
Mr. Bernert is a member of the Executive Committee of the American Bar Association’s State and Local
Tax Committee and is a past chair of the Ohio State Bar Association Taxation Committee and the State
and Local Tax Section of the Columbus Bar Association. Mr. Bernert was appointed by the Governor to
the Ohio Business Gateway Steering Committee to address the continued development of an electronic
link for filing taxes and other matters affecting business. He also serves as a member of The Ohio
Chamber of Commerce Taxation Committee. Mr. Bernert is an adjunct professor of state and local taxes
at the Capital University Law and Graduate Center and served as Chief Editor of Ohio Tax Review,
formerly published by the Center. He currently serves as the co-editor of the Guidebook to Ohio Taxes,
published by Commerce Clearing House. He has repeatedly been named an “Ohio Super Lawyer” in the
area of Taxation and holds an AV rating by Martindale-Hubbell.
SALES AND USE TAX
UPDATE – 2014
Ted Bernert
BakerHostetler
[email protected]
(614) 228-1541
Topics
•
•
•
•
•
•
Amnesty VDA
Ohio Legislation
Ohio Administrative Actions
Nexus
Ohio Cases
Other State Developments
2
Amnesty/VDA
• Look-back on purchase audits
(i)
(ii)
January 1, 2009 when
participating in amnesty
January 1, 2008 in any case
• Voluntary disclosure agreements
3
Ohio Legislation
• State rates move from 5.5% to
5.75%
• Specified digital products are
taxable
• Magazine subscriptions are taxable
• Click-through nexus
4
Ohio Legislation (cont.)
• Taxable digital products – need
not be permanent
(i)
Books
(ii)
Music
(iii) Videos
(iv) Not other digitized products
5
Ohio Legislation (cont.)
• Sales to or by cable service
provider, video service provider or
radio or TV station are not
taxable.
• Click-through nexus was passed
by General Assembly.
• Vetoed by the Governor.
6
Administrative Actions
• Matrix
• 911 Charge for wireless calling
• Sourcing direct mail
i. To address issue of multiple
destinations
7
Administrative Actions (cont.)
(ii) Two kinds of direct mail
1. Advertising and
promotional
2. Other direct mail
8
Administrative Actions (cont.)
(iii) Advertising and promotional
1. Sourced to principal
address for advertiser
2. Advertiser can assume
task of assigning
sourcing
9
Administrative Actions (cont.)
(iv) Other direct mail
1.
Sourced to origin of
mailing
2.
Advertiser can assume
talk of assigning sourcing
3.
Advertiser can inform
printing company of
destinations
10
Nexus
• Streamlined Sales Tax
- Full participant
- Amnesty for sellers only
through the end of the year
11
Nexus (cont.)
• Amazon Law Cases
- U.S. Supreme Court refused to
hear New York Case
- Illinois Supreme Court struck down
Illinois law in Performance
Marketing
- Colorado Tattletale statute in flux
12
Nexus
Federal Legislation
• Marketplace Fairness Act of 2013
(“MFA”)
- Legislation would permit the states
to require a remote seller to collect
the state’s use tax although the
seller lacks physical presence in
that state.
- Legislation would overrule Quill
decision.
13
Nexus
Federal Legislation (cont.)
-
Provides a $1,000,000 threshold in gross
(not limited to taxable) sales nationwide
before seller is required to comply.
-
States must either join Streamlined Sales
and Use Tax Agreement or legislate certain
measures of uniformity for both state and
local taxes:
1. A single agency in the state responsible
for state and local administration, returns,
audits of remote sellers, etc.;
14
Nexus
Federal Legislation (cont.)
2. A single return;
3. Single state and local audit;
4. Uniform tax base;
5. Sourcing rules (destination for interstate
sales);
6. Specification of products and services
subject to tax;
-
Does not appear to require a Matrix
like that for SSUTA states;
15
Nexus
Federal Legislation (cont.)
7. Providing software free of
charge;
8. Procedures for certifying
software providers; and
9. Procedures for holding remote
sellers and certified service
providers harmless for mistakes.
16
Nexus
Federal Legislation (cont.)
-
MFA does not pre-empt other stateimposed standards, e.g. click-through
nexus.
-
MFA does not create nexus for other taxes.
-
MFA does not answer how to challenge
states that are not members of SSUTA as
to the states’ compliance with
simplification requirements.
17
Nexus
Federal Legislation (cont.)
- Passed the U.S. Senate on May 6, 2013
by 69-27 vote.
- Referred to the House Judiciary
Committee.
- Passage not assured but neither is its
defeat.
18
Nexus
• Chairman of House Judiciary has
proposed principles for
enactment.
• Fate of legislation is uncertain but
cannot be ignored
19
Nexus
Federal Legislation (cont.)
• Major implications if enacted.
• SSUTA has created an Implementation
Committee to consider how to implement
MFA.
• What if the Marketplace Fairness Act were
enacted?
- Who polices the states that are not part of
the SSUTA?
20
Nexus
Federal Legislation (cont.)
• What if the Marketplace Fairness Act were
enacted? (cont.)
-
Will increase the number of registrations and tax
returns to be filed;
-
Will increase the volume of exemption certificates to
be obtained by remote sellers;
-
Will increase billings of tax by vendors;
-
Requires staying current with the state laws and
rates;
21
Nexus
Federal Legislation (cont.)
• What if the Marketplace Fairness Act were
enacted? (cont.)
-
Will require the implementing of automated services
for compliance;
Other than defenses under the Due Process
standards, and notwithstanding the statement in MFA
that it does not affect other taxes, does anyone think
that a vendor will be able to resist income, gross
receipts and other business tax nexus for those
states in which it is registered under MFA?
22
Nexus
Federal Legislation (cont.)
• What if the Marketplace Fairness Act were
enacted?
- May encourage remote sellers –
especially those providing digital products
– to relocate to tax-free states; and
- May drive remote sellers outside the U.S.
23
Colorado Tattletale Statute
•
Colorado law imposes three requirements on
non-collecting Internet retailers: (1)Transaction
notice to customer about obligation to collect
use tax; (2) annual mailing to customers
summarizing prior year purchases; and (3)
“tattletale” report to state revenue department
about the customer. The Direct Marketing
Association challenged the Colorado legislation
in federal court on Commerce Clause and
privacy grounds.
24
Ohio Cases
• Dunagan
• Transfer from SMLLC to owner not
taxable
(i) No consideration
25
Ohio Cases (cont.)
• Schlegel
(i) Casual sale for sale of aircraft
(ii) Need to prove actions of seller
relative to aircraft
(iii) No longer need to be used in Ohio
by seller
26
Ohio Cases (cont.)
• Refuse Transfer – item must be
part of the motor vehicle
• Reichenbach – can claim farming
exemption without farm income
27
Other States
• Massachusetts enacted and then
repealed a tech tax – a tax on
customizing software
• Minnesota Tax Court treated
customization of software as
nontaxable
28
Other States (cont.)
• Compare the result with the position
in Ohio that such customization as
taxable as part of prewritten software
or as an employment service
• Hartney case in Illinois restricts the
ability to plan avoid local tax
29
Proposed Ohio Legislation
• Proposal to alert taxpayer when
sales/use tax is overpaid
• Still requires an application for
refund
30
SALES AND USE TAX UPDATE - 2014
Ted Bernert
Kelvin Lawrence
BakerHostetler
65 East State Street
Suite 2100
Columbus, Ohio 43215
(614) 462-2687 (Phone)
(614) 462-2616 (Fax)
[email protected]
I.
SPECIAL OHIO USE TAX AMNESTY ENDS
The latest Ohio Use Tax Amnesty expired on May 1, 2013. Under the statute that
enacted the amnesty, a taxpayer cannot be assessed for use taxes for transactions
occurring prior to January 1, 2009 if participating in the amnesty. Otherwise, a consumer
cannot be assessed for transactions occurring prior to January 1, 2008. With the amnesty
no longer available, those taxpayers that have potential use tax liability should consider
utilizing the Voluntary Disclosure Agreement process. Unless a consumer use tax return
is filed, the periods will not close under the benefit of the statute of limitations because
the statute does not begin to run absent the filing of the use tax return. The Tax
Department has been successful in arguing that even taxpayers that file sales tax returns
as vendors do not enjoy the benefit of a statute of limitations for use tax due absent the
filing of a consumer use tax return.
II.
OHIO LEGISLATION
Amended Substitute House Bill 59 (130th General Assembly) enacted several sales and
use tax provisions:
•
The state portion of sales and use tax rates increased from 5.5% to 5.75%;
•
Specified digital products are taxable; and
•
Magazine subscriptions are taxable.
Specified digital products are defined in R.C. 5739.01(QQQ) to mean an electronically
transferred digital audiovisual work, digital audio work, or digital book.
As used in division (QQQ) of this section:
(1) "Digital audiovisual work" means a series of related images that, when shown
in succession, impart an impression of motion, together with accompanying
sounds, if any.
(2) "Digital audio work" means a work that results from the fixation of a series of
musical, spoken, or other sounds, including digitized sound files that are
downloaded onto a device and that may be used to alert the customer with respect
to a communication.
(3) "Digital book" means a work that is generally recognized in the ordinary and
usual sense as a book.
(4) "Electronically transferred" means obtained by the purchaser by means other
than tangible storage media.
The Ohio Tax Department, in its question and answer formats, explained the changes as
follows:

“Audiovisual products (such as movies), audio products (such as songs), and books
delivered electronically. Tax applies to both temporary and permanent transfers (i.e.,
need not purchase the product for ownership). Examples are Netflix, HULU, ITunes, e-books for Kindle and other electronic readers.

“The definition of “digital products” now complies with the Streamlined Sales Tax
Project requirements.

“Making these digital products taxable levels the playing field with physical goods
that are currently taxed (printed books, CDs and DVDs, whether rented or owned).”
Sales to or by cable service provider, video service provider or radio or television station
are not taxable.
Click-through Nexus
In Am. Sub. HB 59 (130th General Assembly), the Ohio General Assembly passed
legislation to create nexus by means of a click-through arrangement, which was
presumed to create substantial nexus. The click-through arrangement occurs when the
seller:
“Enters into an agreement with one or more residents of this state under which the
resident, for a commission or other consideration, directly or indirectly refers
potential customers to the seller, whether by a link on a web site, an in-person oral
presentation, telemarketing, or otherwise, provided the cumulative gross receipts from
sales to consumers referred to the seller by all such residents exceeded ten thousand
dollars during the preceding twelve months.”
The Governor vetoed this provision and the Ohio General Assembly did not override the
veto.
2
Administrative Actions
A. TAXABILITY MATRIX
The Ohio Tax Department last updated the Taxability Matrix issued pursuant to the
Streamlined Sales Tax Agreement effective August 19, 2013. A copy of the Matrix
appears in the Appendix. This is a useful document because sellers and certified service
providers generally can rely on the information represented in the Matrix.
B. 911 Charge on Wireless Calling Services
Beginning January 1, 2014, all sales of prepaid wireless calling services are subject to a
charge of five tenths of one percent (0.005) of the sale price. The charge must be
separately listed. For additional information, see the Notice of the Ohio Tax Department,
which is in the Appendix.
C. Ohio Tax Information Release No. ST 2013-01, Issued August 1, 2013
The Information Release explains how to source direct mail. Direct mail is separated into
two classifications: (1) “advertising and promotional direct mail” and (2) “other direct
mail.” Direct mail, especially advertisements, requires special sourcing rules because the
printers do not have the wherewithal to determine the states to which the direct mail will
be distributed. Most state statutes provide that the states to which the printed material is
shipped can impose a use tax even if the printed items are delivered to the advertiser’s
customers and never are physically delivered to the advertiser.
“Advertising and promotional direct mail” include items such as catalogs, brochures and
coupon booklets. “Other direct mail” includes invoices, bills, statements of account,
payroll advices, privacy notices, tax reports, stockholder reports, newsletters and
information pieces.
Other direct mail is sourced by the more typical sourcing rule of R.C. 5739.033(C).
Absent knowledge by the vendor of the actual destination of the materials, the sale is
sourced to the address for the purchaser maintained in the vendor’s records so long as the
use of the address does not constitute bad faith. The purchaser can avoid this rule by
providing a direct pay permit or an exemption certificate claiming direct mail or an
equivalent statement. The vendor would then be relieved of the obligation to collect tax
and the purchaser would be responsible for paying tax in all jurisdictions in which the
items were delivered when the destination state does not exempt the printed materials.
The rule for advertising and promotional direct mail is similar to the sourcing for other
direct mail with two differences. First, the sourcing rule applied absent a direct pay
permit or exemption certificate is the place from which the items are shipped. Second,
the purchaser can provide the vendor information showing the jurisdictions to which the
items will be shipped and the seller will then be required to collect the tax of the
destination jurisdictions. If the seller fails to collect the tax, the purchaser retains the
obligation to pay the tax directly.
3
For additional information, see the Information Release in the Appendix.
III.
NEXUS
A.
Ohio Becomes A Full Member of Streamlined Sales Tax
Effective January 1, 2014, Ohio became a full member state of the Streamlined Sales Tax
Governing Board. For the next twelve months Ohio will [continue to] provide amnesty
for uncollected or unpaid sales or use taxes to a seller who registers to collect and remit
applicable sales or use taxes on sales made to purchasers in Ohio. Amnesty is applicable
only to sales or use taxes due from a seller in its capacity as a seller and not to purchasers.
The amnesty is available even if the seller has nexus so long as all other requirements are
met. This amnesty terminates at the end of 2014.
B.
“Amazon Law Cases”
1.
New York
In Overstock.com, Inc. & Amazon.com LLC v. New York Department of Taxation and
Finance, 20 NY 3d 586 (March 28, 2013), the New York Court of Appeals upheld the
statute in providing a presumption that the affiliate program using websites of residents
that “click-through” to the remote sellers’ website for the purpose of making purchases
created sufficient nexus and physical presence. The activity of the affiliates was found to
be “active.” The presumption of active marketing in the affiliate program was found not
to violate Due Process because the presumption was found to be reasonable.
Unsurprisingly, the taxpayers were denied review by the United States Supreme Court.
The taxpayers limited the case to a facial challenge of the statute unlike the more typical
“as applied” challenge, making the refusal by the Court all the more expected.
2.
Illinois
Illinois imposed its version of the “Amazon statute” creating a click-through nexus
standard even broader than that imposed by the New York statute because the existence
of “affiliates” created nexus and not simply a presumption that the affiliates were
marketing on behalf of the remote seller and thereby creating nexus. The Circuit Court of
Cook County issued a permanent injunction against the Illinois statute. Performance
Mktg. Assn. v. Hamer (Circuit Court of Cook County, Illinois, No. 2011 CH 26333). The
Court also found that the Illinois statute violated the Internet Tax Freedom Act passed by
Congress in 1998.
The Department of Revenue appealed to the Illinois Supreme Court, which affirmed the
Circuit Court in reliance on the Internet Tax Freedom Act, not the Commerce Clause.
Performance Marketing Association, Inc. v. Hamer, 2013 IL 114496 (October 18, 2013).
4
C.
Colorado Tattletale Statute
Colorado law imposes three requirements on non-collecting Internet retailers: (1) pertransaction notices to customers about the obligation to collect use tax; (2) annual mailing
to customers summarizing prior year purchases; and (3) “tattletale” reports to the state
revenue department about the customers. The Direct Marketing Association challenged
the Colorado legislation in federal court on Commerce Clause and privacy grounds.
The U.S. District Court in Denver issued a permanent injunction. Direct Mktg. Assn. v.
Huber (U.S.D.C. Colorado, No. 10-cv-01546-REB-CBS), March 30, 2012. The court
barred enforcement of all notice and reporting provisions. Relief was granted under both
the discrimination and undue burden claims under the Commerce Clause. The
discrimination prong noted that Colorado retailers were not required to “turn in” their
customers.
On August 20, 2013, the United States Court of Appeals for the Tenth Circuit failed to
reach the substantive issues but determined that the District Court lacked jurisdiction to
enjoin Colorado’s tax collection effort. The case was remanded to the district court to
dismiss the Commerce Clause claims of the Direct Marketing Association.
It is reported that the Direct Marketing Association will pursue the case in Colorado state
court.
D.
Federal Legislation-Marketplace Fairness Act of 2013 (“MFA”)
Congress is considering legislation that would permit the states to require a remote seller
to collect the states’ use taxes even when the sellers lack physical presence in that state.
This legislation is designed to overrule Quill Corp. v. North Dakota, 504 U.S. 298, 311
(1992).
As proposed, MFA provides a $1,000,000 threshold in gross (not limited to taxable) sales
nationwide before a seller is required to comply. Thus, it would affect sellers that make
only exempt sales. Some observers argue that this threshold is too high while others
argue that it is too low.
Under the Bill as presently constituted, states must either join the Streamlined Sales and
Use Tax Agreement (SSUTA) or legislate certain measures of uniformity for both state
and local sales and use taxes:
1.
A single agency in the state responsible for state and local administration,
returns, audits of remote sellers, etc.;
2.
A single return;
3.
Single state and local audit;
4.
Uniform tax base;
5
5.
Sourcing rules (destination for interstate sales);
6.
Specification of products and services subject to tax similar to but not the
same as the Matrix used by SSUTA states;
7.
Providing software free of charge;
8.
Procedures for certifying software providers; and
9.
Procedures for holding remote sellers and certified service providers
harmless for mistakes.
It is important to keep in mind that MFA does not pre-empt other state-imposed nexus
standards, e.g. click-through nexus. The statute would not create nexus for other taxes.
Importantly, MFA does not answer how to challenge states that are not members of
SSUTA as to the states’ compliance with simplification requirements.
Of course legislation with the same goal as MFA has been proposed before. This time,
however, the bill passed the U.S. Senate on May 6, 2013 by 69-27 vote. The Bill has
been referred to the House Judiciary Committee. Past history would suggest that the
legislation is doomed but some would say that “this time is different.”
Chairman Goodlatte of the House Judiciary Committee announced seven points needed
for this type of legislation:
Basic Principles on Remote Sales Tax:
1.
Tax Relief - Using the Internet should not create new or discriminatory
taxes not faced in the offline world. Nor should any fresh precedent be
created for other areas of interstate taxation by States.
2.
Tech Neutrality - Brick & Mortar, Exclusively Online, and Brick & Click
businesses should all be on equal footing. The sales tax compliance
burden on online Internet sellers should not be less, but neither should it
be greater than that on similarly situated offline businesses.
3.
No Regulation Without Representation - Those who would bear state
taxation, regulation and compliance burdens should have direct recourse to
protest unfair, unwise or discriminatory rates and enforcement.
4.
Simplicity - Governments should not stifle businesses by shifting onerous
compliance requirements onto them; laws should be so simple and
compliance so inexpensive and reliable as to render a small business
exemption unnecessary.
5.
Tax Competition - Governments should be encouraged to compete with
one another to keep tax rates low and American businesses should not be
disadvantaged vis-a-vis their foreign competitors.
6
6.
States’ Rights - States should be sovereign within their physical
boundaries. In addition, the federal government should not mandate that
States impose any sales tax compliance burdens.
7.
Privacy Rights - Sensitive customer data must be protected.
The announcement of these principles suggests that the final bill if enacted could have
markedly different provisions compared with the current bill.
Despite the uncertainty surrounding MFA, because major implications likely will arise if
MFA becomes law, it is worthwhile to consider the effects of enactment. For its part, the
Streamlined Governing Board has created an Implementation Committee to consider how
to implement MFA.
One important issue is who polices the states that are not part of the SSUTA? There is no
procedure for remote sellers or other states to challenge a state’s self-determination that
the state is in compliance with the uniformity provisions of MFA.
It is clear that the enactment of MFA will increase the number of registrations and tax
returns to be filed for companies involved in interstate commerce. Those affected will
not be limited to “Internet sellers.” Sellers will be required to greatly increase the volume
of exemption certificates to be obtained. Likewise, sellers will be compelled to stay
current with the state laws and rates. This increased compliance will require the
implementing of automated services for compliance.
For consumers, it can be anticipated that enactment will increase billings of tax by sellers
thereby requiring increased scrutiny by consumers to prevent over-collection of tax.
Consumers will need to provide many more exemption certificates to their suppliers.
Other than defenses under the Due Process standards, and notwithstanding the statement
in MFA that it does not affect other taxes, sellers may soon be forced to resist income,
gross receipts and other business tax nexus for those states in which they are registered
under MFA.
The enactment of MFA may encourage remote sellers – especially those providing digital
products – to relocate to tax-free states. Further, the enactment of MFA may drive
remote sellers outside the U.S.
IV.
OHIO CASES
A.
Sale—Lack of Consideration
Taxpayer purchased an automobile using personal funds and titled it in Pennsylvania in
the name of a single member limited liability company (SMLLC). The Taxpayer claims
that the car had been registered in Ohio and tax paid when brought into the state.
Thereafter he caused the title of the car to be transferred from his SMLLC to his name
personally. The Taxpayer asserted that no tax was due on the transfer because no
consideration existed for the transfer. The Tax Commissioner disagreed but the Ohio
7
Board of Tax Appeals (BTA) reversed the Tax Commissioner and agreed with the
Taxpayer, finding no consideration for the transfer.
Dunagan v. Testa, Ohio BTA No. 2011-A-1466 (October 31, 2013).
B.
Casual Sale Exemption
Taxpayer bought a small aircraft in Tennessee and challenged an Ohio use tax assessment
arguing for the benefit of the casual sale exemption. The BTA denied the exemption
because the Taxpayer failed to provide information about the identity of the seller and
information about the history of the airplane relative to the seller. The BTA emphasized
that the exemption was dependent upon proving the elements of the manner in which the
aircraft was acquired and used by the seller--that is for the seller’s own use and not
purchased or held for sale. The references in the discussion to a required use in Ohio
should be taken as dicta because the statute had earlier been changed to substitute a use in
any state for a use in Ohio as a predicate for the exemption.
Schlegel v. Levin, Ohio BTA No. 2010-A-1757 (May 23, 2013).
C.
Transportation for Hire Exemption
Taxpayer claimed exemption for a tipper, which is set up at the landfill and is used to
assist the trailer in dumping the waste after being hauled to the dump. The tipper
functions similarly to a built-in dumping mechanism in the truck but the contested item
remains at the dump and is attached to the trailer only when performing the off-loading
process. The BTA affirmed the Tax Commissioner’s conclusion that the tipper did not
qualify for the transportation for hire exemption because it was not attached or
incorporated into the vehicle and it was used after the transportation was complete.
Refuse Transfer Systems, Inc. v. Levin, Ohio BTA No. 2009-N-1710 (October 2,
2013).
D.
Farming Exemption
Taxpayer purchased a tractor and backhoe and claimed exemption for direct use in
farming. The Tax Commissioner denied the exemption because the taxpayer had no
farming income for federal income tax purposes for the year of purchase. The Taxpayer,
however, explained that he moved to Ohio too late to produce hay commercially but his
preparation and maintenance of the fields that would produce hay in the next season
constituted the business of farming in the year of purchase. The BTA agreed with the
Taxpayer and upheld the exemption.
Reichenbach v. Testa, Ohio BTA No. 2011-A-2726 (June 28, 2013).
8
V.
SELECTED DEVELOMENTS FROM OTHER STATES
A.
Massachusetts “Tech Tax”
Massachusetts amended its statute to apply sales and use tax to certain services relating to
computer system design and to the modification, integration, enhancement, installation,
or configuration of standardized or prewritten software. The tax applied to computer
system design services, the planning, consulting or designing of computer systems that
integrate computer hardware, software, or communication technologies and are provided
by a vendor or a third party. In effect, Massachusetts sought to tax the customization
services with respect to prewritten software.
This provision was enacted effective July 31, 2013. On September 27, 2013, the
Governor signed legislation, 2013 MA H. 3662, to repeal the new tax. His signature
followed legislative action with only one member of the house and no members of the
Senate opposing the repeal. The rapid repeal reflected a vigorous response by the tech
community.
B.
Minnesota-Configuring SAP Software
The Minnesota Tax Court found that the consulting and professional services on a time
and expense basis in connection with the sale of enterprise software including nonbundled support of the installation and impletion of software modules by SAP were not
taxable. At issue were charges for customizing the prewritten software that SAP licensed
to users. The charges were done under separate contracts from the licensing of the
software modules. These configuring expenses were not listed as taxable services under
Minnesota law. Further, the services were not part of the sales prices of the software
licenses, were not fabrication charges for the software, were not necessary to complete
the licensing of the software, and did not constitute installation of the prewritten
software.
SAP Retail, Inc. v. Commissioner of Revenue, Minn. Tax Ct. Dkt. No. 8345-R
(September 19, 2013)
C.
Illinois Sourcing of Local Sales
In a much anticipated case, the Supreme Court of Illinois determined that taxpayers could
no longer use specific sales offices to reduce local taxes when an examination of all of
the facts and circumstances surrounding the sales would cause the sale to be sourced
away from the sales office. Hartney Fuel Oil had its main office in Forest View, a city
that was within the taxing jurisdiction of Cook County and the Regional Transportation
Authority. In order to reduce the taxes, Hartney Fuel used a separate sales office to
accept the sales from customers. Hartney Fuel argued that under the relevant regulations,
the acceptance of the order was the definitive place where the sale would be sourced for
local tax purposes.
The Director of the Illinois Department of Revenue and the localities that were losing
9
revenue argued that the state law required that the sourcing be done on a fact-intensive
inquiry looking into the totality of the circumstances. Both the Circuit Court and the
Court of Appeals found in favor of the Hartney Fuel finding that the sale was sourced to
the sales office under a bright-line test provided by regulation.
The Illinois Supreme Court reversed in part. The Court found that the regulation did
provide that the place where the order was accepted was the definitive place where the
sale was to be sourced and defining which locality had the benefit of the local tax. The
Court then found that the regulation was contrary to the statute. As a result, Hartney did
not owe tax for the prior period because the Illinois Bill of Rights protected a taxpayer
when written guidance was relied on. Sales in the future. however must be sourced based
on a totality of the circumstances. At this writing, the Director of Revenue is working
with the interested parties to sort out the parameters of the test(s) to be determined in the
future to source local sales.
Hartney Fuel Oil Company v. Hamer, 2013 IL 115130 (November 21, 2013).
VI.
Proposed Ohio Legislation
On November 25, 2013, the Ohio Governor announced the goal of notifying taxpayers
about overpayments even when the taxpayer is unaware of the right to a refund. House
Bill 365 was introduced to accomplish this goal. Notwithstanding this new procedure the
statute requires an application for refund in the case of sales and use taxes.
602915583.1
10
STATE NAME: Ohio
Effective Date: 8-1-2013
Completed by: Phyllis Shambaugh
E-mail address: [email protected]
Phone number: 614-466-4974
Streamlined Sales Tax Governing Board
Section 328 Taxability Matrix
Library of Definitions
Date Submitted: June 20, 2013
Each of the items listed in the chart is defined in the Library of Definitions in the Streamlined Sales and Use Tax Agreement (SSUTA) as amended
through May 24,2012. Refer to Appendix C of the SSUTA for each definition.
Place an 'X" in the appropriate column under the heading "Treatment of definition" to indicate the treatment of each definition in your state. If a
product definition was not adopted by your state, enter "NA" in the column under the heading 'Reference" and indicate in the "Treatment of
definition" columns the treatment of the product in your state. In accordance with the SSUTA, your state must adopt the definitions in the Library of
Definitions that apply to your state without qualifications except for those allowed by the SSUTA. For this reason, do not enter any comments or
qualifications in the two columns under the heading 'Treatment of definition". If your state has adopted a definition in the Library of Definitions with
a qualification not specified in the SSUTA, do not place an "X" in either column under the heading "Treatment of definition" but include a comment
in the "Reference" column explaining the qualification. Enter the applicable statute/rule cite in the "Reference" column.
Sellers and certified service providers are relieved from tax liability to the member state and its local jurisdictions for having charged
and collected the incorrect amount of sales and use tax resulting from the seller or certified service provider relying on erroneous
data provided by the member state relative to treatment of the terms defined in the Library of Definitions.
Administrative Definitions
Treatment .of
definition
·Reference
Statute/Rule Cite/Comment
Reference Sales price: Identify how the options listedbelow.are treated in Included .in
Excluded
your state. The following options may•. be .ex:cl,ud.edJrom the.
Sales: Price ·· from S~les ·
Number
· . Price
definition of sales. price only. if they are :;;epar,i!tely stated on.
for SST
\.:i.;_~·:;:~-~:._./; \~.;~!}.~+.(;-:,·.~ ,;.
Use Only•.•. , the:biRto-.the!purchaser•:·. "''·· .: ·, ..;· :_,,,:: •. ::::~../ ;_,:,.,,::,\,,:., •. >-· :: :. ·"·•·.. : .. ·· :.co+•.
10010
X
• Charges by the seller for any services necessary to
co~ete the sale other than delivery and installation
10070
X
No specific provision
• Telecommunication nonrecurring charges
10040
X
R.c. 5739.01(H)(1)(a)(v)
• Installation charges
10060
X
R.C. 5739.01(H)(1)(a)(vi) unless it is the
• Value of trade-in
trade-in of a motor vehicle on the purchase
of a new motor vehicle
Excluded
Included
in
Delivery
Charges
for
personal
p~operty
or
seryices
other
Statute/Rule
Cite/Comment
•
sales Price· · fromSa{es ·
than dire.ct mall.. The following charg~·are ln!:l11ded in·
.. -.··price·• .
the definition of sales price unhii\S:your'state excludes· •·. · .
~- .. -::: ··, ·_..;
,_,.~;~·~::··,;;~~:_;_.j:;.::~;:;:-{.:,::;;:,(: , ,-, :.:· ~: ....,;-· : .. ,.:;.·.
,.,. ; •. -,;.··. · ;',.,them. ti'oni,~afes;price·:wflen•such•·imami!i>ial!'e'seiliit.ueiYA•·•
·---..
>·
!
~-
1
Streamlined Sales Tax 13overning Board
Section 328 Taxability Matrix
STATE NAME: Ohio
of
from .Sales
·Price,
may
taxes on a retail sale that are imposed ori the seller, if the state
statute authorizing or imposing the tax prpvides that the seller may,
but is not required, to collect such tax from the consumer, The tax
must be separately stated on the invoice) bill of sale or similar
document given to the purchaser. Sales and use taxes are not
included in the sales· price.
List all state and local taxes, other than sales and use taxes
imposed on the seller that your state excludes from sales price
under this provision.
• NONE
•
may exclude from the sales price tribal taxes on a
that are imposed on the seller if the Tribal law authorizing or
imposing the tax provides that the seller may, but is not required, to
collect such tax from the consumer The tax must be
·
2
Streamlined Sales Tax Governing Board
Section 328 TaxabilitY Matrix
STATE NAME: Ohio
Effective Date: 8-1-2013
AdminiStrative Definitions
Library of Definitions
.J Reference
•• . • ~-~~~~t;:~~t ~f .· .. ;
stated on the invoice, bill of sale or similar-document given to the
purchaser.
List all tribal taxes on a retail sale·that are Imposed on the seller if
the. Tribal law authorizing or imposing thE> tax provides that the
seller may, but is not required, to collect such tax from the
consumer. The tax must be separately stated on ·the invoice, bill of
sale or similar document given to the purehaser.
•
NIA
•
•
Sales Tax Holidays
... ..-').' --.:. :·.;.-.;~ --~~, ;: -~:'-'·;:· ,. '
..
Sal~>s Tax Holidays: Does your state have a sales tax holiday?
·-·...
.
··•t
20060
Yes.
,;_. ~-->:_,,,;_:;:.._.- _'1::
~:~~:~~~i:~~:J~ef~),gw~~g.~o~ucts.(J."' .~:~~~;~. J: }~~le
•
•
All En~star aualified products
Specific energy star qualified products or
energy star qualified classifications
No
Statute/Rule Cite!Comm~>nt.
::· ::: ;';; -,. ;,:: ::: '' (, ..•.::_·:=-:-:... .
-... >:,., . _. ..•_. .., -:·.:.. : >::-; '. :: ..... .
·.
~
-;:! -: :···_. : ' "
~
-~'
/ >'·
X
.J.; ·• ~x~~~~:;:;;J . ~~~~~~~ul~ ~;~~~Cornfl1~~~
.
)>
)>
)>
20150
•
•
20160
20170
20180
20190
20070
20080
20090
20100
•
•
•
•
All Disaster Preparedness Supply
Specific Disaster Preparedness Supply
l> Disaster preparedness general
supply
l> Disaste,c-pre1Jarednes$ sa~ty su_!lplY
l> Disaster prepared ness food-related
S!Jm>IY
l> Disaster preparedness fastening
supply
School supply
Schoof art supply
School instructional
material
--------------School computer supply
-
3
Streamlined Sales Tax Governing Board
Section 328 Taxability Matrix
STATE NAME: Ohio
Library of Definitions
Effective Date: 8-1·2013
Administrative Definitions
···.
,:·::.
;-_,,·,
20130
20110
20120
·..
.....·.:
Other products defined in Part II of the .Library of
• De~ni!iorts.inc:l~dedin your state S<~l,~stax . ,,· · .·
· .. ·. .hoUdav~.;.:;;.• :·:.:•:c. , .;,.:,: :.. .-: . ., .. ;,.·.>•.• '""""''"'''"" ·
• Clothinq
• Computers
• Prewritten computer software
20050
20020
20030
20040
. ,· !h~~j~~ld' i·<i.• 'c·•:f·..
•
•
•
.P~odj.ictDefinitions.: "''''" •·· "'·''· ··•
•
•
•
•
·;:,.
,•
..c.omputer.cre~lated,pr!)du~·· '·. , ····• .•...... :: , ,.,: ,,, . ,. · ·
30100
30040
30050
30060
30015
30025
30035
•
•
•
•
•
Non-prewritten (custom) romputer software
•
•
___
,_
:'·: :·.: .:.:<•,,( j : ..:.
Computer
Prewritten computer software
Prewritten computer software delive~red e~lectr!)nically
Prewritten computer software delivered via load and
I '' ·
· .. ,
,,,·/..:e~.:.-; .
Reference
Statute/Rule Cite/Comment
' ..... ······:c.:·• .. ·.•...•..•
..
,;.,c;.;,;;,',.>'· ·'' 1.:.·••... ,.,:,,',:.·.
''· ..
-:.;.~ :: ..• ::..::,:).:·· . "").:: :·.-.~
•.''
Clothin_g_
Essential clothing priced below a state specific
~
threshold
~ Fur clothinQ
Clothinq accessories or eauioment
Protective eauioment
Soort or recreational eauioment
C(Qthin!l':and;rel.ated:·D.todu~•.. •,:.:. . :: ·:
20010
20015
Tre~tment ,of
definition ·.
Amount of
Taxable
_Exempt
';,
:·
•••>·'>···· '·...:.
,•)< •.
··'· '..
.;
. '"' .. I..,;, ·, .
.::::i.Ta:Kable: ,., ... ...,:·.• Exem!Rt''.
X·•<: ,,statute.'Rille•Cite/CQmnient:.:·... · .. ·. ,; .,. ..
X
All clothingis taxable. R.C. 5739.01 (8)(1)
R.C. 5739.01(8)(1)'
X
X
R.C. 5739.01(8)(11_
R.C. 5739.01(8)(1)
R.C. 5739.01(8)(1)
R.C. 5739.01 (8)(1)
X
X
X
, .:::::raxable.,.: ·•· ,;: ... Exe~mpt:,. ,,,, .Statute/RuJe:..C.ite/C!)mmEint,,c: ;,;,..,.",..... :.:·
X
R.C.
R.C.
R.C.
R.C.
X
X
X
5739.01(8)(1)
5739.01(8)(1)
5739.01(8)(1)
5739.01 (8)(1)
leave
Non-prewritten (custom) computer software delivered
I
X
X
eleetr!)nically ·
Non-prewritten (custom) romputer software delive~red via
load and leave
I
X
Custom system software is a taxable
romputer service under R.C.
5739.01(B)(3)(e), Ohio Admin. Code 57039-46CA><2>ic>
Custom system software is a taxable
computer service under RC.
5739.01(8)(3)(e), Ohio Admin. Code 57039-46(Alc2licl
Custom system software is a taxable
romputer service underR.C.
i
4
·,
Streamlined Sales Tax Governing Board
Section 328 Taxability Matrix
STATE NAME: Ohio
_ •• ._..."&.1•- - -..""'~ ... -. ·-- ""
~dlllilli~trativ~ Definitio~s .· ·. · . ··• ·. •·...
.· .·"· .....................• : . •-•: ..........:.·.
-·-.. -·
-·
-····- ..·-··-
· .• · · < · :T~eat~entof .
·::.;•.:.. -:·.>.>.>·:·.\. :·•.:.:.• ._ ....... -defimtion..........
·
··
.; ~~eference :·...•.·.. ·. . .
··•'·
··"·· .· ............, >.·.:.,::
.· .·.. . .
:... ,. , ... .
573~:?.1.~~l(~)(e), Ohio Admin. Code 5703-
9-46iAli2l!Cl
... · , . , •
30200
30210
30220
30230
·
·Mand'atow..c.omputer·software·mairttenance•ce>ntr.t¢t:S•:.~.i.;, •. ,c.,,/:
• · Mandatory computer software maintenance contracts with
re~ect to orewritten computer software
• Mandatory computer software maintenance contracts with
respect to prewritten computer software which is delivered
electronicallv
• Mandatory computer software maintenance contracts with
respect to prewritten computer software which is delivered
via load and leave
• Mandatory computer software maintenance contracts with
respect to non-prewritten (custom) computer software
30240
•
Mandatory computer software maintenance contracts with
respect to non-prewritten (custom) software which is
delivered electronically
30250
•
Mandatory computer software maintanance contracts with
respect to non-prewritten (custom) software which is
delivered via load and leave
30300
30310
30320
30330
· . Optionat,comptiter·softwar.emaintenariceo..col)tl'ilcts.:. •· ..• : . ·..• ..
• Optional computer software maintenance contracts with
respect to prewr'ltlen computer software that only
provide updates or upgrades with resoect to the software
• Optional computer software maintenance contracts with
respect to prewritten computer software that only provide
updates or upgrades delivered electronically with
respect to the software
• Optional computer software maintenance contracts with
respect to prewritten computer software that only provide
updates or upgrades delivered via load and leave with
· respect to the software
• Optional computer softwar~ maintenance contracts with
respect to non-prewritten 1custom} computer software
•.. :,:,Jiill:ab,e,.:.•.•. · •I'Jc:empf":~~; •.•~tat!lte/RuJe;Cite/Comment;;, ..•.•..:... ·> • .·• •
X
Ohio Admin. Code 5703-9-59
X
Ohio Admin. Code 5703-9-59
X
Ohio Admin. Code 5703-9-59
X
Custom system software is a taxable
computer service under R.C.
573~:?.1.~~l(~)(e), Ohio Admin. Code 57039-461All2l1Cl
X
Custom system software is a taxable
computer service under R.C.
573~:?.1.(Bl(3)(e), Ohio Admin. Code 57039-46iAU2UCl
.
·
X
Custom system software is a taxable
computer service under R.C.
573~;01~~)(~)(e), Ohio Admin. Code 57039-46!Ali2acl
.:.C.Tax:able:. "._ ;.,.Ex;emot.: L"; <StatuteJRule·:Cite/CQmnuint,,,, ·.. .o,,.,.; ,,X
Ohio Admin. Code 5703-9-59
X
Ohio Admin. Code 5703-9-59
X
Ohio Admin. Code 5703-9-59
X
Custom system software is a taxable
computer service under R.C.
5
Streamlined Sales Tax Governing Board
Section 328 Taxability Matrix
STATE NAME: O.hio
..
ff•
~-.-
0:
- . 8-1-2013
Administrative Defini_tions .·
. ·.1·•-:;.=;:::·:.\;;':·: .·. :,,_,,• .... ·.·. •--: ...< ,;:
30340
•
30350
•
30360
•
30370
•
30380
30390
·-·J-
,f Definif-·-··Lib
. . .
·
Treat~entof. . . . _· Reference
.,, ; :!.i .:::.<:-::.: .:>: ..• •, ..••.•••.. .d~fimt•Qn::, . ·. · · ·· ..... · ,· · ·.... ·,,.; ·, ..... •.
.. : .
that only provide updates or upgrades with respect to the
software
Optional computer software maintenance contracts with
respect to non-prewritten (custom) computer software that
only provide updates or upgrades delivered
electronically with respect to the software
Optional computer software maintenance contracts with
respect to non-prewritten (custom) computer software that
only provide updates or upgrades delivered via load and
leave with respect to !he software
Optional computer software maintenance contracts with
respect to non-prewritten (custom) computer software that
only provide support services to the software
X
X
X
Optional computer software maintenance contracts with
respect to non-prewritten (custom) computer software that
provide updates or upgrades and support services to
!he software
• Optional computer software maintenance contracts with
respect to non-prewritten (custom) computer software that
provide updates or upgrades delivered electronically
and support services to the software
• Optional computer software maintenance contracts with
respect to non-prewritten (custom) computer software
provide updates or upgrades delivered via load and
leave and SUDDOrt services to the software
Indicate your state's tax treatment for optional computer software
Taxable
maintenance contracts with respect to preWI'Itbm computer
Percentage
software sold:tor. one non-itemized price thatlnclude updates and
upgrades-al)d/or support services..Use p(,rcentagesin the taxable
and exempt columns to denote taxtreatinentin your State. For
example:.lf all. taxable. pUt .100% In the ~ble calli mri; If. all
. nontaxabJe/exe(Jlpt put 100% in the exemptc~lurim; .if 50% taxable
and .50% I)OI)taxable/exempt put SO% in the,taxable column• and ·
... ;.··
:S0%1it.thirexemi>t.column;·., ._•, .. / ... ,..;;i,,;.:,::,:.:':<·', . •.;·;.:.;';\ ,. · . ·.,.•. ·
100%
• Optional computer software maintenance contracts with
respect to prewritten computer software that provide
updates or uoorades and support services to the
.. ;
30400
X
X
X
Exempt
Percentage .
'
.
. . . ::.,- ;: ..: . . . >'-: ;,; ,. •;":
5739.01(B)~~)(e), Ohio Admin. Code 57039-46!All2lic
Custom system software is a taxable
computer service under R.C.
5739.01(8)(3)(e), Ohio Admin. Code 57039-46(A)(2)(c)
Custom system software is a taxable
computer service under R.C.
5739.01 (B)(3)(e), Ohio Admin. Code 57039-46(A)(2)(c)
Custom system software is a taxable
computer service under R.C.
573:1~~~~~~)(e), Ohio Admin. Code 57039-46A 2 c
Custom system software is a taxable
computer service under R.C.
5739.01 (8)(3)(e), Ohio Admin. Code 57039-46(A)(2)(c)
Custom system software is a taxable
computer service under R.C.
5739.01(8)(3)(e), Ohio Admin. Code 57039-46(A)(2)(c}
Custom system software is a taxable
computer service under R.C .
. 5739.01{B)(3)(e), Ohio Admin. Code 57039-46(A)(2)(c)
statute/Rule Cite/Comment
..
_... " ·
j
,· ;, ·;_.,,:: ~ '·
. ...
... · . '! .
•,
Ohio Admin. Code 5703-9-59
6
Streamlined Sales Tax Governing Board
Section 328 Taxability Matrix
STATE NAME: Ohio
Effective Date: 8-1-2013
Library of Definitions
.··. • . .: !Administrative Definitions
30410
•
30420
•
30430
•
'''"· L._.;; ./ ';, :-:·
,:,.t~;~rit;::~. :~f-
software
Optional computer software ·maintenance contracts with
respect to prewritten computer software that provide
updates and upgrades delivered electronically and
support services to the software
Optional computer software maintenance contracts with
respect to prewritten computer software that provide
updates and upgrades delivered via load and leave and
support services to the software
Optional computer software maintenance contracts with
respect to prewritten computer software that only provide
support services to the software
..Oigital,p.~oduct,S(excludes telecommunication!';serv.ices•. ar'ci.llary
_,.,,, ·.· ::·
100%
Ohio Admin. Code 5703-9-59
100%
Ohio Admin. ·code 5703-9-59
100%
I.
Yes
I
No.
I
X
Ohio Admin. Code 5703-9-59
.· ·J· Statute/Rule .Cite/Comme.nt .
..:·.::·... ikseriiice&:iirid:c:Qmputer-sofl:Ware}•:,·•·:.-i.·c:;;:;.:-c"::i.-.,;:·x•.->''<''•''"-"•'·'''< .,:, ·,:, :.•· ·. •.- .•.:.. ;,,,,._,, . , •:...• ,_,·,·~·'-·-··"' <:>;/·.:::;;::,:,;:•)-:.,::: ...••
31000
I A state imposing tax on products "transferred electronically" is not I
required to adopt definitions for specified digital products.
("Specified digital products" includes the defined terms: digital audio
visual works; digital audio works; and digital books.) Does your
state impose tax on products transferred electronically other than
digital audio visual works, digital audio works, or digital books?
::.,-. -.
31040
31070
31100
31065
31050
31060
-~>_::::r.
:. . ,.,::·.::.·'-· . .:;: . . ,. .
Digital audio visual works sold to an end user with rights for
permanent use
•
Digital audio works sold to an end user with rights for
permanent use
•
Digital books sold to an end user with rights for permanent
use
For transactions· other than those includep above, a state must
specifically impose and separately enum·erate a broader imposition
of the tax.. ·.
·
..
· · · .
.· .
' .o6e~.Qt!r::stat.!iimPQse taxon; , . ;',
ij_._._.. .... _'::. ·
•
Digital audio visual works sold to users other than the end
user.
•
Digital audio visual works sold with rtghts of use less than
permanent use.
• Digital audio visual works sold with rights of use
c·c . ··•· '., ....
Reference
··
,.,,,,_;,:·:•.:;;.,·. ,,_. ::.;.,
RC. 5739.01(8)(3)(e) and (u) taxes
"electronic information services" and
"electronic publishing services" that
provide access to computer equipment to
obtain information if used in business
": :Taxable.>..!.: .-~e.JtlpF . c.. :lcstiltirleJRti(e-Cite/.Comm(lnt-::.,••,;., . . •. , ...
X
•
X
X
Yes·
No
: ···.:1.
Statute/Rule Cite/Comment
-·~-
-..
. ·:
'·.; ;. :_
X
X
X
7
:\
Streamlined Sales Tax Governing Board
Section 328 Taxability Matrix
STATE NAME: Ohio
differently than a non-subscription purchase of such
Statute/Rule Cite/Comment
•
Food and food ingredients excluding alcoholic
and tobacco
·
0
8
Streamlined Sales Tax Governing Board
·
Section 328 Taxability Matrix
STATE NAME: Ohio
-•r_._..,•• _
......._.. 8-1
- . --13
Administrative. Definitions
. <. :.:: .. ' .·_.; ,•.;;{_:: :· .·;,:,;.:., ......:. . : : :·,_. :':: .... :: .·..
40040
41000
..
)>
41020
41030
51010
51020
51050
51060
51090
51100
51130
:·.-.. ":
Prepared food options. The.following:food items heated,
mixed or combined by the seller are .includl!d in the definition
of preparoed fc:iod unless astate elects:toexcludethem from
the definition· prepared food. Slich:food items e.xcluded
from prepared food are taxed the same as food and food .
ingtedientsc; (Indicate .how the opticms fqr tfief61tOW!rig food items
that otherwise. meet the definition of prepared food are• treated in
·.. t·vouf:Siatei.,t:; :.:< ·.·..
. ·.·· ... ::·:.• ·. :,·_ ::.•)J.·:.: . .:Lc>:L.,.:,:'} ,.-...•.. :. . ·
)> Food sold without eating utensils provided by the seller
whose primary NAICS classification is manufacturing in
sector 311 except subsector 3118 (bakeries)
)> Food sold without eating utensils provided by the seller
in an unheated state by weight or volume as a single
item
J> . Bakery items sold without eating utensils provided by
the seller, including bread, rolls, buns, biscuits, bagels,
croissants, pastries, donuts, Danish, cakes, tortes,
. pies, tarts, muffins, bars, cookies, tortillas
Health-care products·
Drugs (indicate how the options are treated in vour state)
· ''iDrugs:for-:hllman;use .. : .,.,. >. :.:-.·,;,._>::...··.:>.. ·..
• Drugs for human use without a prescription
• Drugs for human use with a prescription
• Insulin for human use without a prescriotion
• Insulin for human use with a prescriotion
• Medical oxvaen for human use without a prescription
•
Medical oxygen for human use with a prescription
•
Over-the-cciunter drugs for human use without a
prescription
.. -..
.,.
•.
-;·:.: :·
-;_.,:·: . : ,.
Article XII, I> 3, and RC. 5739.0218){2)
Food for consumption off the premises
where sol~ ~s exempt under Ohi~~~~~~t
Article XII, 3, and R.C. 5739.02 8 2
Food for consumption off the premises
where sold is exempt·under Ohio Canst
Article XIL S 3, and R.C. 5739.02113\121
X
X
J> .Prepared Food
-
. Reference
·. .:i:l_efinition,. ·' ... . . >>~,:·::~::__ :-,_:,;
Food sold through vending machines
of
41010
·-··
-·-·-· -,f Definiti
Treatment of
Lib
Statute/Rule Cite/Comment
Excluded
from
Prepared.· .
Food ··
Included inPrepared
. Food
.: . :<.··
. ·-: ·.": ... _.,__ . ."J..
;
·..'/.. ~.
·_
"
.. :· .·•
... ·.·
. .:•
N/A
N/A
N/A
Exempt
Taxable
.:
,·--,.-
,· : .. ·, ·;•: .;:..:·
X
X
X
X
X
X
X
Statute/Rule Cite/Comment
..
-,
:. '· :.
. :-• ' .. ··. : ..
5739.01(8)(1)
5739.02(8)(18)
5739.02(8)(18)
5739.02(8)(18)
5739.01 (8)(1)
5739.02(8)(18)
5739.01(8)(1), Information Release
2010-03
:;
....
.
R.C.
R.C.
R.C.
R.C.
R.C.
R.C.
R.C.
9
Streamlined Sales Tax Governing Board
Section 328 Taxability Matrix
STATE NAME: Ohio
_.................... -...........
--.Ad~i~i~~;~:~~- ~e~~iti~~~.\ • ' . •i'. >
51140
51170
51190
51195
51200
51205
51240
51250
~
......
--~-~
--
-··--·--··
Treatment of .. ·
;. •···•· ,- . : .. . ........ : definition) ...
X
• Over-the-counter druQs for human use with a prescription
X
Grooming
and
hygiene
products
j'or
human
use
that
don't
•
meet the· definition of"drug"
X
• Grooming and hygiene products for human use that meet
the definition of 'drua" without a ilrescriotion
X
• Grooming and hygiene products :for human use that meet
the definition of "dru!l" with a prescription
X
• Drugs for human use to hospitals
X
DruQs
for
human
use
to
other
medical
facilities
•
X
Prescription
druqs
for
human
use
to
hospitals
•
X
Prescription
druqs
for
human
use
to
other
medical
facilities
•
X
• Free samples of drugs for human use
X
Free
samples
of
prescription
drugs
for
human
use
•
·. ·::;:...,.·::.. ::-_:. " - ' . ;-..
· ··.Dfugsifori.ariimal.;us.e .• ·• · .•,
.:~---,·; ... ··'· . ·--.··
X
• Drugs for animal use without a prescription
X
• Drugs for animal use with a prescription
X
• Insulin for animal use without a prescription
X
• Insulin for animal use with a orescriotion
X
• Medical oxvaen for animal use without a prescriotion
X
Medical
oxygen
for
animal
use
with
a
prescriotion
•
X
• Over-the-counter drugs for animal use without a
prescription
X
• Over-the-counter druas for animal use with a prescription
X
• Groomin!l and hvqiene oroducts for animal use
X
• Drugs for animal use to veterinary hospitals and other
animal medical facilities
X
• Prescription drugs for ani[llal use to hospitals and other animal
medical facilities
X
• Free samples of druqs for animal use
X
• Free samples of prescriPtion druas for animal use
. Durable medical equipment (indicate how the options are treated . T~ble
Exempt
. in vour·state} . ,,;.·. · . : . . . ... : ..'. ·• :.,; ... ·• >•· :. .;• .....,. ·.. ·• ·.· •. . . . . . ,: ,,. -: ·.-..
..··'. ·'"'". ...-:• .: . ·.:. :;'.;·.: : .
X
• Durable medical equipment, not for home use, without a .
prescription
X
• Durable medical egui(lment,- not for home use, with a __
L
__
~·:-
51030
51040
51070
51080
51110
51120
51150
51160
51180
51210
51220
51260
51270 .
52010
52020
·Reference
--~
.
RC. 5739.01(8)(1)
R.C. 5739.01(8)(1)
R.C. 5739.01(8)(1)
R.C. 5739.01 (8)(1)
R.C. 5739.01(8)(1)
R.C. 5739.01(8)(1)
R.C. 5739.01(8)(18)
R.C. 5739.01(8)(18)
R.C. 5739.01(8)(1)
R.C. 5741.02(C)(7)
_,,.
R.C.
R.C.
RC.
R.C.
R.C.
R.C.
R.C.
..
. ' ..
';...
,: ,.. -· ' ' -:;:: . ,:·~-- ....
5739.01(8)(1)
5739.01(8)(1)
5739.01(8)(1)
5739.01(8)(1)
5739.01(8)(1)
5739.01 (8)(1)
5739.01 (8)(1)
R.C. 5739.01(8){1)
R.C. 5739.01(8)(1\
R.C. 5739.01 (8)(1)
R.C. 5739.01(8)(1)
R.C. 5739.01 (8)(1)
R.C. 5739.01(8)(1)
Statute/Rule Cite/Comment
"
: ....:_____ :.'
R.C. 5739.01(8)(1), R.C. 5739.02(8)(19)
R.C. 5739.01(8)(1), R.C. 5739.02(8)(19)
10
Streamlined Sales Tax Governing Board
Section 328 Taxability Matrix
STATE NAME: Ohio
"-'"
............. - -................
_..,
._
Administrative Definitions
· 0 :.::: ; . ::•: :':. ·'
..
· ·.. ,; ··1.•· :' ::
.
-·-·-· .-·.
. . ..
:; .,,.;,,:_. :. :~ii.·
-·····-·-··-
prescription
Durable medical equipment, not for home use, with a
prescription paid for by Medicare
Durable medical equipment, not for home use, with a
prescription reimbursed by Medicare
Durable medical equipment, not for home use, with a
prescription paid for bv Medicaid
Durable medical equipment, not for home use, with a
prescription reimbursed by Medicaid
Durable medical equipment for home use wtthout a
prescri()tion
Durable medical equipment for home use with a
prescription
Durable medical equipment for home use with a .
prescription paid for by Medicare
Durable medical equipment for home use with a
prescription reimbursed by Medicare
Durable medical equipment for home use with a
prescription paid for by Medicaid
Durable medical equipment for home use with a
prescription reimbursed by Medicaid
Oxygen delivery equipment, not for home use, without a
prescription
,:·.,.......... ,,,:., .: . . . .
·x
R.C. 5739.01(8)(1), RC. 5739.02(8)(19)
X
R.C. 5739.01(8)(1), R.C. 5739.02(8)(19)
X
R.C. 5739.01(8)(1), R.C. 5739.02(8)(19)
X
R.C. 5739.01{8)(1), R.C. 5739.02(8)(19)
52040
0
52050
•
52060
o
52070
•
52080
•
52090
•
52100
o
52110
•
52120
o
52130
0
52140
0
Oxygen delivery equipment, not for home use, with a
prescription
X
52150
•
Oxygen delivery equipment, not for home use, wlth a
prescription paid for by Medicare
X
52160
•
Oxygen delivery equipment, not for home use, with a
prescription reimbursed by Medicare
X
-
., .. '.,:~::. ·:',i .' ... y •
RC. 5739.01(8)(1), RC. 5739.02(8)(19)
0
-
R~ference
0:;
X
52030
-
..
' _,::;,L-•:>.;; .;d~~~t;;;::!.;~ i: j;
X
X
R.C. 5739.02(8)(19)
X
R.C. 5739.02(8)(19)
X
R.C. 5739.02(8)(19)
X
R.C. 5739.02(8)(19)
X
R.C. 5739.02(8)(19)
· ..
Taxable unless it is medical oxygendispensing equipment purchased by
hospitals, nursing homes, or other medical
facilities. R.C. 5739.02(B)(16).
Taxable unless it is medical oxygen. dispensing equipment purchased by
hospitals, nursing homes, or other medical
facilities. RC. 5739.02(Bl(18).
Taxable unless tt is medical oxygendispensing equipment purchased by
hospitals, nursing homes, or other medical
facilities. R.C. 5739.02(Bl(18).
Taxable unless it is medical oxygendispensing equipment purchased by
hospitals, nursing homes, or other medical
facilities. R.C. 5739.02(8)(18).
11
Streamlined Sales Tax Governing Board
Section 328 Taxability Matrix
STATE NAME: Ohio
_____ .,.,_
8-1-2013
---·
Administrative Definitions .
. ' >:.;. · ; :. :
·:.·,,,. : . : :.
' ·... · .
•f Definiti
---~---··-
Lib
···.:.·..:·:: •• .'.'';';< ..::•;c./:·:
c·.
:·>
Treatment of
defioiti<>.nL . ..
X
52170
•
Oxygen delivery equipment, not for home use, with a
prescription paid for by Medicaid
52180
•
Oxygen delivery equipment, not for home use, with a
prescription reimbursed by Medicaid
X
52190
•
X
52200
•
52210
•
52220
•
52230
•
52240
•
52250
•
52260
•
Oxygen delivery equipment for home use without a
prescription
Oxygen delivery equipment for home use with a
prescription
Oxygen delivery equipment for home use with a
prescription paid for by Medicare
Oxygen delivery equipment for home use with a
prescription reimbursed·bv Medicare
Oxygen delivery equipment for home use with a
prescription paid for by Medicaid
Oxygen delivery equipment for home use with a
prescription reimbursed bv Medicaid
Kidney dialysis equipment, not for home use, without a
prescription
Kidney dialysis equipment, not for home use, with a
52270
•
52280
•
52290
•
52300
•
52310
•
52320
52330
•
•
Reference
:c : · ;.o;, :.,, ,,·, .. ·•.. :.;
... ...,
; ,::,
Taxable unless it is medical oxygendispensing equipment purchased by
hospitals, nursing homes, or other medical
facilities. R.C. 5739.02/Bl/18).
Taxable unless it is medical oxygendispensing equipment purchased by
hospitals, nursing homeril~r~!her medical
facilities. R.C. 5739.02(8 18.
:
.'."
.:::·
R.C. 5739.01(8)(1)
X
R.C. 5739.02(8)(19)
X
R.C. 5739.02(8)(19)
X
R.C. 5739.02(8)(19)
X
R.C. 5739.02(8)(19)
X.
R.C. 5739.02(8)(19)
X
R.C. 5739.01(8)(1), R.C. 5739.02(8)(19)
X
R.C. 5739.01(8)(1),RC. 5739.02(8)(19)
X
R.C. 5739.01(8)(1), R.C. 5739.02(8)(19)
X
R.C. 5739.01(8)(1), R.C. 5739.02(8)(19)
X
R.C. 5739.01(8)(1}, R.C. 5739.02(8)(19)
X
R.C. 5739.01(8)(1), R.C. 5739.02(8)(19)
X
R.C. 5739.01 (8)(1)
-
presc~tion
Kidney dialysis equipment, not for home use, with a
·
prescription paid for bv Medicare
Kidney dialysis equipment, not for home use, with a
prescription· reimbursed by Medicare
Kidney dialysis equipment, not for home use, with a
prescription oaid for bv Medicaid
·
Kidney dialysis equipment, not for home use, with a
prescription reimbursed by Medicaid
Kidney dialysis equipment for home use without a
.. prescription
Kidney dialysis equipment for· home use with a prescriPtion
Kidnev dialvsis eauipment for home use with a prescriptio!:!_,__
X
-
-----
X
R.C. 5739.02(8)(19)
R.g. 5739,02(8)(19)
12
Streamlined Sales Tax Governing Board
Section 328 Taxability Matrix
STATE NAME: Ohio
-··-- ..··- _,._. - . - ·:',>: :•. : ..:':. ,; ....
~d;Ti~~~:~~~e~zi~ion~ .
52340
•
52350
•
52360
•
52370
•
52380
•
52390
•
52400
•
52410
•
52420
•
52430
•
52440
52450
•
•
.
52460
•
52470
•
52480
•
52490
•
f-
. . .
·-·· ..
_
,-
..
_............. _......
........ . :: ..._,:;, ·;d~finltiQO/;,:::. -•-
paid for by Medicare
Kidney dialysis equipment for home use with a prescription
reimbursed by Medicare
.
Kidney dialysis equipment for home use wtth a prescription
paid for by Medicaid
Kidney dialysis equipment for home use with a prescription
reimbursed by Medicaid
Enteral feeding systems, not for home use, without a
prescription
Enteral feeding systems, not for home use, with a
prescription
Enteral feeding systems, not for home use, with a ·
prescription paid for by Medicare
Enteral feeding systems, not for home use, with a
prescription reimbursed by Medicare
Enteral feeding systems, not for home use, with a
prescription paid for by Medicaid
Enteral feeding systems, not for home use, with a
prescription reimbursed by Medicaid
Enteral feeding systems for home use without a
prescription
Enteral feedina svsterns for home use with a prescriPtion
Enteral feeding systems for home use with a prescription
paid for
Medicare
Enteral feeding systems for home use with a prescription
reimbursed bv-Medicare
Enteral feeding systems for home use with a prescription
paid for by Medicaid
Enteral feeding systems for home use with a prescription
reimbursed by Medicaid
Repair and replacement parts for durable medical
equipment which are for sin~Je patient use
53010
treated::in:v.ciur·statel ,_. :. ·
->
<> ---.- :-·
. · _ ___ -
_~-· _Mobility_ enhancing eguipment withoiJia presc_ription
_I
,•,-./;,.': . ::~··)\.:..,.:;
.
._;:·•-L:.: .-.:_.:·... ··.
X
RC. 5739.02(6)(19)
X
RC. 5739.02(6)(19)
X
R.C. 5739.02(6)(19)
,. _____
X
RC. 5739.01(6)(1), R.C. 5739.02(6)(19)
X
R.C. 5739.01(6)(1), R.C. 5739.02(6)(19)
X
R.C. 5739.01(6)(1), R.C. 5739.02(6)(19)
X
R.C. 5739.01(6)(1), R.C. 5739.02(6)(19)
X
R.C. 5739.01(6)(1), R.C. 5739.02(6)(19)
X
R.C. 5739.01(6)(1), R.C. 5739.02(6)(19)
X
R.C. 5739.01(6)(1), R.C. 5739.02(6)(19)
bv
Mobility enhancing .equipment (indicate-how the options are
..
Reference
Treatm.ent of
'
Taxable
..
X
X
R.C. 5739.02(6)(19)
R.C. 5739.02(6)(19)
X
RC. 5739.02(6)(19) .
X
R.C. 5739.02(6)(19)
X
R.C. 5739.02(6)(19)
X
Only if the durable medical equipment itself
is exempt
Exempt
-: .::: - :::•. : -.:· :... ,·_:·:..
X
-_
Statue/Rule Cite/Comment
-,
.'
R.C. 5739.01(6)(1)
13
Streamlined Sales Tax Governing Board
Section 328 Taxability Matrix
STATE NAME: Ohio
Effective
paid for
devices with a prescription reimbursed by
eyeglasses with a prescription paid for by
eyeglasses with a prescription paid for by
14
Streamlined Sales Tax Governing Board
Section 328 Taxability Matrix
STATE NAME: Ohio
1 ihr"rv of r
Effective Date: 8-1-2013
~ L.f~I_IJ
-L·
'·-··-·-· ·•··· ::,;o:,, ....... : ...
54290
1 543oo
.
--~
•
.
"""~
•
•
•
•
•
•
•
•
•
--
•
[ Kererence
'~> ~ ~-;,;., ~-~-_:;:-,'-:(~> ,-:,·. -.~,::: :~·-:i.. ,-:-.':~- ,>.'..-,;,.:'... : .:.c ....i.. /, ·._
:, _.:,_:._
' R.C. 5739.01(8)(1),
-X---- R.C. 5'
X
R.C.5'
X
R.C. 5739.02{8)(19
X
R.C. 5739.02(8)(19
5739.02(8)[19
R.C. 5739.01(8)(1),
R.C. 5739.01(8)(1),
R.C. 5739.01(8)(1),
R.C. 5739.01{8){1),
x
X
X
x
x
--x
-x
R.C. 5739.02(8)(19)
R.c.
I
I
R.C.
R.C.
R.C.
R.C.
5739.02(8)(19)
5739.02(8)(19)
5739.02{8)(192
5739.02(8)(19)
R.C. 5739.01(8)(1), R.C. 5739.02(8)(19]
R.C. 5739.01{8){1), R.C. 5739.02{8)(19)
>billing service
I
Voicemail
- t:,:_,_:, ->~,-~--- _;~.
X
I
I R.C.
X
I
I
I~'""'"""mu•c
X
:~~-:--.~~-
how
the options are- treated in your J
1"""u'"
. ~
-·: ·. -·
·I
c.
}>
>5>
>
'"'>"
J -
61ooo
1010
1021
1031
I 61().11
X
X:.~.
,;:.;,:-.:. . ~-- ,·. .;.I>Tal!:aiile: . -1, , . EXilinpt ·+S~teJRulli:Cite/CI)mment ·'.
·.
160010
50020
50030
60040
60050
60060
tot
I
· . '·___::'__:_:_:
•
Hearing aids without a
•· Hearing aids with a
1 paid for by_
•
Hearing aids with a
!by_
•
Hearing aids with a
•
Hearing aids with a
1 P?id forbv
I by
•
Hearing aids with a
ta
•
Dental
s with a
•
Dental
s_with a
1 paid for bv
•
Dental
with a pr•
by
•
Dental I'
_ _,_M.,e.,dican
s with-a pniscriptionpaid forby
•
Den
•
Dentao tJ
s with a prescription reimbursed by
54240
54250
54260
54270
54280
I
·. I
•• .,._,.,._.
R.C. 5739.01(8){
R.C. 5739.01 (B)(
"'"'""'"'
.. :·,:: - :-.- ~-:.:::,~,_ __._.__ -~----- . - '~-:--~~- , ;:-. :.. ·. . : ;- .: . :-:-.: -~:/:2\:".- ,- ,. _·, :=~_::·:·~ ,::,"1:_-L,:.:.:-:;~:._:_.;,.-:~-,:.;>~·>
X
"'
)
R.C. 5739 .
X
T
~
11900
I fixed
l_rnob~i"Cie '-7,;'=
7
p P j calling
11 prepaid wil'§lless c§lling
:1 private
x
x
x
x
R.l
X
I RC. 5739.01
I
13
R.C.
R.t. 5739:01 _ f )
)(3){1)
R.C
R.C. 5739.01
R.C. 5739.01 )(3)(f)
R.C. 5739.011 ~
15
Streamlined Sales Tax Governing Board
Section 328 Taxability Matrix
STATE NAME: Ohio
Library of Definitions
Treatment of ··
Effective Date: 8-1-2013
Adminil?frative Definitions .
. ... I.
61110
61120
61130
61140
61150
61160
61180
61190
61200
61210
61220
61230
61240
61250
61260
61280
61290
61300
61310
61320
61325
61330
61340
61350
•.. ·-.' .:,
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•-
•.c
i .. ·.
International value-added non-voice data service
International residential telecommunications service
Interstate 800 service
Interstate 900 service
Interstate fixed wireless service
Interstate mobile wireless service
Interstate prepaid callin!l service
Interstate prepaid wireless callinq service
Interstate private communications service
Interstate value-added non-voice data service
Interstate residential telecommunications service
Intrastate 800 service
Intrastate 900 service
Intrastate fixed wireless service
Intrastate mobile wireless service
Intrastate j)i:~id calling service
Intrastate prepaid wireless calling service
Intrastate pri\tate communications service
Intrastate value-added non-voice data service
Intrastate residential telecommunications service
Paqinq service
Coin-ooerated teiElQhone service
Pay telephone service
Local Service as defined b~ Ohio
c:detini:tiP!l .
Reference ·
2
' ....
X
I
.l
X
X
X
X
X
X
X
X
X
I
.l
X
X
X
X
X
X
X
X
X
I
.l
X
X
j_ --x
X
:. ~ ... ;_·
.. .-:
I R.C. 5739.02(8)(47)
R.C. 5739.01(8)(3)(f)
RC. 5739.01(8)(3)(1)
5739.02(8)(46)
RC. 5739.01 (8)(3)(f)
R.C. 5739.01(8)(3)(f)
RC. 5739.01(8)(3)(1)
R.C. 5739.01(8)(3)(1)
RC. 5739.01(8)(3)(1)
I R.C. 5739.02(8)(47)
R.C. 5739.01(8)(3)(1)
R.C. 5739.01(8)(3)(f)
I R.C. 5739.02(8)(46)
R.C. 5739.01 (8)(3)(1)
RC. 5739.01(8)(3)(1)
R.C. 5739.01(8)(3)(1)
R.C. 5739.01 (8)(3)(1)
R.C. 5739.01(8)(3)(fl
I R.C. 5739.02(8)(47)
R.C. 5739.01(8)(3)(1)
R.C. 5739.01 (8)(3)(f)
I R.C. 5739.01(8)(3)(f)
R.C. 5739.01(8)(3)(1)
N/A
I RC.
•
16
Ohio
Department of
Taxation
Attn. Ohio Retailers: 9-1-1 Charge on Wireless Calling Services
Effective January 1, 2014, all sales of prepaid wireless calling service are subject to a wireless 91-1 charge to be collected at the point of sale. R.C. 128.42(B) imposes a charge of five tenths of
one percent (0.005) of the sale price on the retail sale of prepaid wireless calling service.
Retailers must collect the wireless 9-1-1 charge from the customer and list the wireless 9-1-1
charge separately on the customer's receipt. Further, retailers must first electronically register
their company and then file their monthly returns electronically via the Ohio Business Gateway.
The return is due on or before the 23rd of the following month (same as Sales Tax). The first
return will be due February 23,2014, and monthly thereafter. Retailers may retain 3% of the
total wireless 9-1-1 charges as a collection fee. Retailers that do not sell prepaid wireless calling
service are not affected by the wireless 9-1-1 charge and should disregard this notification. For
more information on the wireless 9-1-1 charge, visit tax.ohio.gov (see FAQs: Sales and Use- 91-1 Charge) or call the Ohio Department of Taxation at (888) 405-4039.
Thank you for using the Ohio Tax Alert tax notification system.
Checkpoint Contents
State & Local Tax Library
State & Local Tax Reporters
States
Ohio
Official Material
Ohio Tax Information Release
2013
Ohio Tax Information Release, No. ST 2013-01, 08/01/2013
Ohio Tax Information Release No. ST 2013-01, 08/01/ 2013
Date Issued: 08/01/2013
Tax Type(s): Sales and Use Tax
Direct Mail Sourcing and Definitions, August, 2013
This Information Release defines direct mail terms and explains how to source "other direct mail" and
"advertising and promotional direct mail."
Definitions
"Advertising and promotional direct mail" means:
a. printed material that meets the definition of "direct mail," in R.C. 5739.01 (ZZ);
b. the primary purpose of which is to attract public attention to a product, person, business or
organization, or to attempt to sell, popularize or secure financial support for a product, person,
business or organization. "Product" means tangible personal property, a product transferred
electronically or a service.
"Other direct mail" means any direct mail that is not "advertising and promotional direct mail" regardless
of whether "advertising and promotional direct mail" is included in the same mailing. The term includes,
but is not limited to:
a. Transactional direct mail that contains personal information specific to the addressee including, but
not limited to, invoices, bills, statements of account, payroll advices;
b. Any legally required mailings including, but not limited to, privacy notices, tax reports and
stockholder reports; and
c. Other non-promotional direct mail delivered to existing or former shareholders, customers,
employees, or agents including, but not limited to, newsletters and informational pieces.
Other direct mail does not include the development of billing information or the provision of any data
processing service that is more than incidental
Sourcing of "Other Direct Mail"
Except as otherwise provided below, sales of "other direct mail" are sourced in accordance with R.C.
5739.033(C)(3). That provision sources the sale "to the location indicated by an address for the purchaser
that is available from the vendor's business records that are maintained in the ordinary course of the
vendor's business, when use of that address does not constitute bad faith."
A purchaser of "other direct mail" may provide the vendor with either:
a. A direct pay permit; or
b. A fully completed certificate of exemption claiming "direct mail" (or other written statement that
includes the purchaser's name and business address; a vendor's license or seller's account number,
if any; the name of the seller; the reason for exemption; and the signature of the purchaser, if
provided in hard copy).
If the purchaser provides the permit, certificate or statement referred to in a orb, the vendor, in the
absence of bad faith, is relieved of all obligations to collect, pay or remit any tax on any transaction
involving "other direct mail" to which the certificate or statement apply. However, the purchaser is required
to report and pay the applicable tax due to the jurisdictions in which the recipients of the "other direct
mail" are located.
Sourcing of "Advertising and Promotional Direct Mail"
Except as otherwise provided below, sales of "advertising and promotional direct mail" are sourced in
accordance with R.C. 5739.033(C)(5). That provision sources the sale to the address from which the
tangible personal property was shipped.
A purchaser of "advertising and promotional direct mail" may provide the vendor with:
a. A direct pay permit; or
b. A fully completed certificate of exemption claiming "direct mail; (or other written statement that
includes the purchaser's name and business address; a vendor's license or seller's account number,
if any; the name of the seller; the reason for exemption; and the signature of the purchaser, if
provided in hard copy); or
c. Information showing the jurisdictions to which the "advertising and promotional direct mail" is to be
delivered to the recipients.
If the purchaser provides the permit, certificate or statement referred to in a orb, the vendor, in the
absence of bad faith, is relieved of all obligations to collect, pay or remit any tax on any transaction
involving "advertising and promotional direct mail" to which the certificate or statement apply. However,
the purchaser is required to report and pay the applicable tax due to the jurisdictions in which the
recipients of the "advertising and promotional direct mail" are located.
If the purchaser provides the vendor with information showing the jurisdictions to which the "advertising
and promotional direct mail" is to be delivered to recipients, the vendor shall source the sale to those
jurisdictions and collect and remit the applicable tax. In the absence of bad faith, the vendor is relieved of
any further obligation to collect any additional tax on the sale of "advertising and promotional direct mail" if
the vendor has sourced the sale according to the delivery information provided by the purchaser.
However, the purchaser is required to report and pay the applicable use tax due to the jurisdictions in
which the recipients of the "advertising and promotional direct mail" are located if the vendor has not
collected sales tax in those jurisdictions.
If you have any questions regarding this matter, you should call us at 1-888-405-4039.
OHIO RELAY SERVICES FOR
THE HEARING OR SPEECH IMPAIRED
Phone: 1-800-750-0750
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