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ST 2005-01 - Vendor Compensation - Issued April 2005; Revised
July 2005
A recent change in Ohio law requires vendors (retailers) that
sell and then ship (deliver) their goods across county lines
in Ohio to charge the sales tax rate that exists in the
county where the merchandise will be delivered, not the rate
in effect where the retailer sold the goods. The change will
not affect the vast majority of retailers that sell
merchandise that is carried away by customers
(over-the-counter sales) or delivered to customers at a
location in the same county where the retailer sold the
goods. Retailers may elect to begin collecting sales tax
based on destination beginning January 1, 2005. Mandatory
compliance will phase in between May 1, 2006 and January 1,
2008. Those vendors with delivery sales greater than $30
million in 2005 must begin collecting tax based on
destination May 1, 2006. Vendors with delivery sales greater
than $5 million in 2006 must begin collecting tax based on
destination May 1, 2007. On January 1, 2008, compliance
becomes mandatory for all vendors.
Vendors subject to the new sales tax sourcing provisions may
be eligible to apply for one-time compensation to offset some
of the cost they incur associated with their compliance
efforts.
To be eligible, a vendor must hold one or more regular county
vendor’s licenses (numbers 01-xxxxxx through 88-xxxxxx)
issued prior to May 1, 2006, and have at least one permanent
location in Ohio. The compensation is not available for sales
made pursuant to service, delivery or transient vendor’s
licenses. The vendor must also make delivery sales of
tangible personal property into another county or other
counties. The compensation shall be the actual amount of tax
collected per county for each month of the six-month period,
not to exceed twenty-five dollars per county per month and in
which the vendor does not have a permanent location. This
compensation is available for each of the first six months
after the vendor switches to destination based sourcing as
required by Ohio Revised Code section 5739.033.
Vendors with multiple vendors’ licenses filing on master
numbers (89-x3xxxx) are also eligible for the compensation.
Such vendors can receive the actual amount of tax collected
per county for each month of the six-month period, not to
exceed twenty-five dollars per month for each county into
which they make deliveries and in which they have no
location. No compensation can be claimed for sales delivered
from one location into a county where the vendor has another
location. Again, compensation is available for each of the
first six months after the vendor changes its sourcing method
to comply with the destination sourcing statute.
Compensation can be applied for by completing and filing the
attached Application for Compensation of Expenses Incurred
for Destination Based Sourcing Tax Collections (form
ST-AR-DBS). The form ST-AR-DBS shall be filed within sixty
days after the end of the reporting period that includes the
last day of the last month of the six-month period for which
the vendor is requesting compensation.
Examples for calculating compensation requests:
A) A Franklin County vendor ships to the following counties
during the month*, but has no fixed place of business in
those counties
- Licking
County
$ 50 Tax Paid on
Return
$25 Compensation
- Madison
County
$100 Tax Paid on
Return
$25 Compensation
- Pickaway
County
$100 Tax Paid on
Return
$25 Compensation
- Delaware
County
$ 15 Tax Paid on
Return
$15 Compensation
B) A Franklin County vendor ships to the following counties
during the month*, but the Franklin County vendor also has a
fixed place of business in Madison and Delaware counties.
- Licking
County
$ 50 Tax Paid on
Returns
$25 Compensation
- Madison
County
$100 Tax Paid on
Returns
$ 0 Compensation
- Pickaway
County
$100 Tax Paid on
Returns
$25 Compensation
- Delaware
County
$ 15 Tax Paid on
Returns
$ 0 Compensation
C) A vendor has two locations, one in Franklin County and one
in Delaware County. During the month*, both locations ship
into Knox County where these is no location. The maximum
compensation for the vendor is $25.00 for Knox County.
Franklin County location:
-Knox
County
$20 Tax Paid on
Return
$20 Compensation
Delaware County location, same vendor:
-Knox
County
$15 Tax Paid on
Return
$ 5 Compensation
Total compensation for Knox County - $25
*These are monthly examples. The total reimbursement is
limited to $25 per month, per county that tax was reported in
for a maximum of $150 per county for the six month
reimbursement period.
Vendors are required to submit the following information with
their
ST-AR-DBS:
- a copy of the invoice(s) for any purchase(s)
- proof the invoice(s) was paid in full (e.g., copies
of cancelled checks, bank statements, etc.)
- a numerical list of all active vendor's licenses for
the legal entity claiming the compensation
- any documentation that verifies the amount of
compensation claimed
If you have any questions regarding this information release,
please contact Taxpayer Services at 1-888-405-4039, or e-mail
us through our Web site: tax.ohio.gov.
OHIO RELAY SERVICES FOR THE
HEARING AND SPEECH IMPAIRED
Telephone: 1-800-750-0750