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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.