OHIO SALES TAX – NEW RULES FOR 2010
January 14, 2010
Payne, Nickles & Company
The state of Ohio has changed its rules on where a taxable sale occurs and thus how much sales tax needs to be collected. The rules of what makes up a taxable transaction for sales tax have not changed.
The state of Ohio has now retained origin sourcing for most sales of tangible personal property. Other sales will be taxed where the consumer received the property and sales of services will be reported at the location where the consumer receives the service. Leases and rentals will continue to be taxed as they have been. Telecommunication service rules have not changed either.
Ohio vendors of tangible personal property will report their sales to Ohio consumers at the location where the vendors receive the order from the consumer. For over-the-counter sales made from fixed locations, this will be no change from current law. However, vendors that previously switched to destination sourcing for delivery sales under previous Ohio law will be required to source their sales to the location where the order is received, rather than the delivery location.
For remote sales (e.g., mail order, telephone or online sales) made by Ohio vendors, the sale will be sourced to the location where the order is received, which is not necessarily the location from which orders are processed or shipped.
For those taxpayers that are required to change their sourcing procedures, the effective date for those changes is Jan. 1, 2010. However, recognizing that these changes may require programming changes or training, the Department of Taxation will not impose penalties on those vendors that are required to change their method of sourcing, so long as those changes are made by April 1, 2010.
If you have any questions, please contact us at cpas@pncpa.biz.
Treasury Circular 230 Disclosure -
Unless expressly stated otherwise, any federal tax advice contained in this communication is not intended or written to be used, and cannot be used or relied upon, for the purpose of avoiding penalties under the Internal Revenue Code, or for promoting, marketing or recommending any transaction or matter addressed herein.