News Release
December 12, 2003 -
Sales Tax Law Change: Delivery Delayed (Change
in 'situsing' sales pushed back to January 1, 2005)
COLUMBUS -- A change in how Ohio sales tax
is charged on certain transactions involving the sale and
delivery of goods within the state has been delayed one year
to January, 1, 2005. The effective date of the change is
being pushed back from January 1, 2004 by Substitute House
Bill 127 signed (12/11/03) by Governor Bob Taft.
Tax Commissioner Pat McAndrew says the delay is meant to give
Ohio merchants more time to implement changes in their
business processes (e.g. re-program cash registers/computers)
to comply with a fundamental change in the way sales tax is
charged in Ohio. "We will be working with the retail
community to make the transition as smooth as possible."The
change, now scheduled for 2005, will require Ohio businesses,
selling and then shipping their goods across a county line in
Ohio to charge the sales tax rate that exists in the county
where the merchandise will be delivered, not the sales tax
rate where it is sold. This means, for example, if a Cuyahoga
County retailer sells merchandise and delivers it to a buyer
living in Lake County, the retailer must charge the sales tax
rate in Lake County, not Cuyahoga County. The local sales tax
revenue will then go to Lake County - not Cuyahoga County --
as a result of that sale.The change in Ohio's situsing law
will not affect those transactions in which
a retailer located in a particular county sells merchandise
that is carried away by, or delivered to, a customer living
in that same county.This change in the 'situsing', or
locating, of sales involving deliveries, was part of Senate
Bill 143, the Streamlined Sales Tax bill, passed by the Ohio
General Assembly in 2002. The change was required to bring
Ohio into conformance with the national Streamlined Sales Tax
Project (SSTP). The SSTP goal is to develop a sales tax
system that brings some uniformity to the tangle of sales tax
laws across the country so that more out-of-state businesses
will agree to collect states' sales tax.
Businesses do not now have to collect a state's sales tax if
they have no 'physical presence' (e.g. a store, warehouse,
etc.) in that state. If a business does have a 'physical
presence' in a state, it is required to collect that state's
sales tax. Currently, out-of-state businesses that are
required to collect a state's tax and are shipping their
product into that state, charge the sales tax rate where the
buyer is located.
McAndrew says the end-goal of this change is meant to benefit
everyone. "My hope is that Ohio businesses and their
customers will keep in mind that there are a lot of non-Ohio
businesses not charging or collecting tax. We've estimated
that the state and local governments are losing nearly $600
million a year in uncollected tax. The result is that
out-of-state businesses have a competitive advantage and the
rest of us pay more tax than we should. We're trying to level
the playing field and keep the tax rate down by moving to a
sales tax system that makes sure all pay their fair share of
tax."
STILL SCHEDULED FOR JANUARY 1, 2004 . . .The
Ohio Department of Taxation (ODT) is moving forward with two
other changes in 2004 that affect businesses filing sales tax
returns:
- ODT is eliminating a sales tax return (the ST-10) many
businesses use and replacing it with an existing return (the
UST-1) that serves even more taxpayers.
- ODT is also instituting a new filing schedule that
ultimately will have all semi-annual taxpayers on the same
filing cycle of January through June and July through
December. There are now six sales tax filing periods. Making
the conversion to uniform filing cycles will require some
vendors to file three returns instead of two in 2004. ODT
will contact those vendors with instructions of how to make
the necessary changes. The new filing schedule will be
complete and operational in 2005.
Nearly all business, including those who find their filing
periods changed, can still file their taxes electronically
through the Ohio Business Gateway (OBG). The Ohio Business
Gateway is the easiest and fastest way to file and pay sales
tax, as well as many other state taxes and fees. The OBG is
available at the Department's web site, http://tax.ohio.gov/
For more information contact Gary Gudmundson, Communications
Director, Ohio Department of Taxation, 614-644-6903.