Sales and Use Tax

Out-of-State Sellers

Pursuant to Am. Sub. H.B. 166, out-of-state sellers who meet certain economic thresholds must obtain an Ohio seller’s use tax account and collect and remit the applicable sales tax, beginning August 1, 2019.

 

Economic Presence Standard

Effective August 1, 2019, Ohio law adopted a nexus standard that requires any person or business without a physical presence in Ohio to obtain an Ohio seller’s use tax license and pay applicable tax if the business meets one or both of the following criteria in the current calendar year or the previous calendar year:

  • The business has gross sales into Ohio exceeding $100,000; or
  • The business has 200 or more separate transactions into Ohio

Note – Any person or business that has a physical presence in Ohio and makes taxable retail sales must be registered with the Department. These minimum thresholds do not apply to any business with a physical presence in Ohio.

Collection, Filing, and Remitting Requirements

An out-of-state seller that meets Ohio’s substantial nexus laws will be required to obtain a seller’s use tax license, collect tax on taxable sales made to consumers in this state, file returns and remit the appropriate tax.

Effective Date

Collection, filing, and remitting requirements for out-of-state sellers begin the month that the seller establishes substantial nexus and applies prospectively from that date.

Example – An out-of-state seller has $150,000 of gross sales into Ohio in calendar year 2018. The out-of-state seller is subject to Ohio’s nexus laws beginning August 1, 2019. The seller must register for a seller’s use tax license and begin collecting sales tax from its customers on August 1, 2019. The first sales tax return is due September 23, 2019.

Example 2 – An out-of-state seller exceeds $100,000 of gross sales into Ohio on October 15, 2019. The out-of-state seller is subject to Ohio’s nexus laws beginning October 16, 2019. The seller must register for a seller’s use tax license and begin collecting sales tax from its customers on October 16, 2019. The first sales tax return is due November 23, 2019.

Registration

Ohio law requires any out-of-state person or business making retail sales of tangible personal property or taxable services into Ohio to register for a seller’s use tax license once substantial nexus is met. Out-of-state sellers may register through the Ohio Business Gateway or the Streamlined Sales Tax Project.

When completing a registration form, business owners will need to know where their company falls within the North American Industry Classification System (NAICS). Click here for a partial list of NAICS codes. For more information on NAICS, visit the U.S. Census Bureau.

Ohio Business Gateway — Out-of-state sellers may obtain a seller’s use tax license immediately through the Ohio Business Gateway (Gateway). Note: Businesses must first establish an account with Gateway before using it to request a seller’s use tax license.

Streamlined Sales Tax Registration System – Out-of-state sellers may register for multiple states, including Ohio, by submitting a single application through the Streamlined Sales Tax Registration System.

Businesses with a physical presence in Ohio should register for sales tax by obtaining a vendor’s license. Please click here for more information.

Due Dates for Monthly Returns and Payments

Monthly sales tax returns are due by the 23rd of the following month from the period filed.

Example – August 1 through August 31 return is due September 23rd.

Filing Sales Tax Returns

All returns must be filed electronically. Taxpayers may file returns through the Ohio Business Gateway. Alternatively, taxpayers can contract with a Certified Service Provider (CSP) to file the Simplified Electronic Return (SER) through Streamlined Sales Tax. For more information on Streamlined Sales Tax, please visit their website.

Payment of Sales Tax

Taxpayers have several options for remitting the tax collected from customers.

ACH Debit – is available through the Ohio Business Gateway. This is also known as payment by "electronic check."   

Credit card — The Department offers credit card payment options in cooperation with Official Payments Corporation. Credit card payments may be made via phone, Internet, or the Ohio Business Gateway. For more information, please click here.

* A convenience fee does apply.

ACH Credit - The Department also offers taxpayers the option of remitting tax by ACH credit. Taxpayers interested in this option must first register with the Treasurer of State at eft.tos.ohio.gov. Please call (877) 338-6446 for more information.

 

Previous Nexus Standards

Many of the other substantial nexus provisions remain unchanged by the Bill. However, Am. Sub. H.B. 166 repealed the provisions relating to software nexus and network nexus. The bill also repealed a provision that created a presumption of nexus when a person provided a commission to individuals located in Ohio for referring potential customers to the seller if the cumulative gross receipts from sales (and not the commissions) are greater than $10,000.

Marketplace Transactions

Out-of-state sellers are not required to collect and remit sales tax on taxable sales made through a marketplace, so long as the marketplace facilitator is collecting and remitting sales tax on your behalf. For additional information on marketplace facilitators, please click here

Other Resources

Please call the Department at 1-800-304-3211 to obtain more information on substantial nexus and/or marketplace facilitator statutes.