New Ohio Sales Tax Bill (July 2019)

Ohio now joins a growing list of states imposing sales tax collections on out-of-Ohio sellers and online marketplaces (based on company revenue or number of transactions).

Ohio’s Old Law:

  • The bill eliminates Ohio’s unique form of “substantial nexus “for out-of-state sellers that critics called “cookie nexus.”  The old law required Internet retailers to collect and remit Ohio sales tax only if they use cookies on their websites.
  • Moreover, Ohio interpreted “substantial nexus” if out-of-state seller had sales of $500,000 or more in Ohio, and who placed “in-state software” on Ohio computers and phones or had servers located in Ohio.

New Ohio Law:

  • Using the 2018 Wayfair U.S. Supreme Court case, Ohio sales tax will now be imposed on retail sellers with $100,000 or more gross receipts from sales into Ohio, or, who engage in 200 or more separate sales transactions into Ohio during the current or preceding calendar year.
  • Several states adopted a similar standard following the Wayfair decision in which states could satisfy federal constitutional requirements with economic nexus provisions based on the amount of business done in a state without any physical presence.  So, the Wayfair decision eliminated the old physical presence test.
  • Ohio will also impose Ohio sales tax on marketplace facilitators like Amazon.com Inc. or eBay Inc., for companies selling on their websites. Ohio anticipates these changes combined could rake in $210 million in fiscal year 2021.
  • The new Ohio bill also maintains Ohio’s current sales tax on “transportation network companies” like Uber and Lyft.  Ohio is currently in a tax dispute with Uber in which Uber claims it isn’t liable to pay $1.6 million in Ohio sales tax.

So those of us living in Ohio will begin to notice out-of-state retail sellers, online or otherwise, begin charging Ohio sales tax on purchases under the new Ohio bill. And, for those of us who use Uber or Lyft to go from here to there, don’t be surprised when you notice Ohio sales taxes charged on your trip fee.     

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    Howard L. Richshafer

    Howard Richshafer joined Wood + Lamping in 2008, and his practice is focused on civil and criminal tax problems, estate planning and probate, tax court trial work, mergers and acquisitions, and general corporate business matters. Howard is also a licensed Ohio CPA. Over the past 40 years, Howard has represented clients experiencing all types of civil and criminal tax problems with IRS. Those problems include IRS audits, IRS criminal investigations, enforced collection of unpaid tax liabilities involving levies, liens, and seizures of assets and income.

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