Information Release

ST 2009-01 - Sales and Use Tax: Vendor Compensation – Issued July 2009 

 

Recent legislation (Am. Sub. H.B.429 of the 127th Ohio General Assembly) requires vendors (retailers) of tangible personal property that switched to tax collections based on delivery (destination-based sourcing), or were initially set up to collect tax based on delivery, in Ohio to charge the sales tax rate that exists at the Ohio location where the vendor receives an order for the sale of such property (origin-based sourcing) as opposed to where the property is delivered, if the receipt of the property by the consumer takes place in Ohio.  This change must be made by January 1, 2010, but vendors who desire to do so may make the change at any time prior to that date.

Vendors that switched from origin-based sourcing to destination-based sourcing under the prior law may be eligible to apply for one-time compensation to offset some of the cost they incur associated with their compliance efforts. 

In order to be eligible for the compensation, a vendor must have received temporary compensation for the original switch from origin-based sourcing to destination-based sourcing under section 5739.123 of the Revised Code. The compensation shall be a one-time payment equal to the actual total costs the vendor incurred in converting back to the origin-based sourcing requirements, subject to the reimbursement caps in the next paragraph. 

The compensation can not exceed one thousand dollars for vendors that were required by law to convert to destination-based sourcing prior to April 18, 2008, or six hundred dollars for vendors that irrevocably elected to convert to destination-based sourcing prior to that date.  The vendor shall not receive compensation that exceeds its total cost of complying with the origin-based sourcing requirements. 

Compensation can be applied for by completing and filing an Application for Compensation of Expenses Incurred for Origin Based Sourcing Tax Collections (form ST-AR-OBS). 

Vendors are required to submit the following information with their ST-AR-OBS:

  • a numerical list of all active vendor’s licenses for the entity noted on line 4 of page 1 of the reimbursement application;
  • copies of invoice(s) or other  documentation reflecting the expenses incurred to switch to origin-based sourcing;
  • copies of canceled checks or other proof that the invoices or expenses were paid in full.

 

Questions?

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 OR SPEECH IMPAIRED
Phone: 1-800-750-0750