October 1, 2007 - Department of
Taxation: Sales Tax Collection Rules Won't Change
COLUMBUS, Ohio - Ohio retailers who engage
in delivery sales will not be required to
change the way they calculate sales taxes starting Jan. 1,
the Ohio Department of Taxation announced today.
Today was the deadline for Ohio Tax Commissioner Richard A.
Levin to certify whether the Governing Board of the
Streamlined Sales and Use Tax Agreement had approved changes
sought by the Ohio General Assembly earlier this year to
exempt small retailers from a move to destination sourcing of
the sales tax.
Levin indicated today that the Governing Board has not agreed
to these changes.
As a result, no Ohio retailers will be required to change the
way they calculate sales taxes at the end of the year. A few
dozen of Ohio’s largest delivery retailers – those with more
than $30 million in delivery sales annually – will continue
to calculate sales taxes based on the destination of the sale
as well as smaller delivery retailers who have voluntarily
converted to destination sourcing. All others may continue
calculating the tax based on rates at the origin of the sale.
“The bottom line here is that nothing changes for Ohio
retailers,” Levin said.
State government had long been looking at moving retailers
from origin-based to destination-based sourcing of the state
sales tax in order to make Ohio a full member of the
Streamlined Sales and Use Tax Agreement. The agreement is an
effort to harmonize sales tax rules across state lines and
eventually put states in position to start collecting sales
taxes on sales from out of state businesses – particularly
catalog and Internet sales.
In May 2006, businesses with more than $30 million in
delivery sales switched to destination sourcing, and state
law at that time called for other retailers with delivery
sales to follow suit by Jan. 1, 2008.
But with small business owners expressing concern about the
complexity of calculating sales tax rates based on the
destination of sales, the General Assembly relaxed the
requirement last summer. Language included in the state
budget bill would have moved other retailers to destination
sourcing only if retailers with less than $500,000 in annual
delivery sales were exempted.
Ohio could not win agreement for such an exemption during a
meeting last month in Kansas City, Kan. of the Governing
Board of the streamlined sales tax effort. Work on possible
alternatives also failed to bear fruit.
Levin said he would still like to find a way to make Ohio a
full member of the streamlined sales tax effort, but that he
is also sensitive to the needs of small business.
“The goal here is to level the playing field and make sure
Ohio retailers are on an equal footing with out-of-state
competitors,” Levin said. “Ohio businesses should not be at a
disadvantage to out-of-state retailers when it comes to
selling to Ohio residents.”
# # #
TAXPAYER INFORMATION: Contact (888) 405-4039 or (614)
MEDIA INFORMATION: Contact John Kohlstrand at (614) 644-3858
or Mike McKinney at (614) 466-5461.