News Releases

News Release

February 1, 2007 - Ohio Department of Taxation Announces Delay in Destination Sales Implementation

COLUMBUS, Ohio - Ohio retailers whose delivery sales in calendar year 2005 totaled less than $30 million are getting a break from a provision of the Streamlined Sales Tax Agreement that would have required them to shift this year to a destination-based means of calculating sales tax.

Ohio Tax Commissioner Richard Levin decided today to not issue a Tax Commissioner’s Journal Entry stating that certified service provider services are available in the state, thus exempting retailers below the $30 million threshold from the requirement. These retailers can continue to calculate sales tax using origin-based sourcing, or location of the sale, which is normally their store location.

Most retail vendors in Ohio, however, must switch to the delivery-based system by January 1, 2008. Retailers in Ohio that have a service or delivery license were already required to use destination-based sourcing and must continue to do so.

If the tax commissioner had determined that certified service provider services were being provided by the Governing Board of the Streamlined Sales Tax Agreement, retail vendors whose delivery sales in 2005 were less than $30 million and greater than $5 million, would have been required to begin collecting sales tax using destination-based sourcing – the rate in effect at the location to which the goods were delivered – starting May 1, 2007.

In general, a certified service provider assists the vendor in determining the taxability and applicable tax rates for sales both in and outside of Ohio. This is a requirement of the Streamlined Sales Tax Agreement, in which Ohio is participating along with more than 20 other states. The agreement’s goal is to establish uniform sales tax policies that enable states to collect sales tax that is currently not being collected on many out of state sales, particular catalog and Internet. The estimated loss of revenue to Ohio is over $400 million annually.

 

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(For additional information, contact Gary Gudmundson, Communications Director, at (614) 644-6903 or Mike McKinney, Public Information Officer, at 614-466-5461.)