Information Release

This archived Information Release has been superseded by a later release. It is archived here for historical/reference purposes ONLY. For the most current Information Releases, please refer to the main "Information Releases - Current Releases" index.

ST 2000-02  - Employment Service Update Following the BELLEMAR PARTS Decision - May 15, 2000

The Ohio Supreme Court's decision in Bellemar Parts Industries, Inc. v. Tracy (2000) 88 Ohio St. 3d 351 rejected the argument that purchases of temporary employment services are exempt from sales and use tax under either the purchase for resale exception or the primarily used in manufacturing exception.1 In light of this decision, this Information Release addresses the following:

  1. The disposition of refund claims filed pending the Bellemar decision;
  2. Subsequent filing compliance for purchases of temporary services;
  3. Resolution of prior liabilities on purchases of temporary services; and
  4. Vendor responsibilities.

Disposition of Refund Claims Based on Bellemar Positions

Many taxpayers filed refund claims based on the positions taken by the taxpayer in Bellemar. These refund claims will now be denied at the Sales and Use Tax Division level. As the claims are processed, taxpayers will receive notification of the denial together with a form to obtain the taxpayer's agreement or disagreement. Separate letters will be sent out for each claim.

Subsequent Filing Compliance for Purchases of Temporary Services

Taxpayers with Direct Pay Authority should immediately begin accruing and paying tax on their purchases of employment services.

All other taxpayers should notify their employment service vendors to immediately begin collecting tax from them for all purchases of employment services.

Resolution of Prior Liabilities on Purchases of Temporary Services

The Department of Taxation will grant a temporary grace period from penalties to all taxpayers that have failed to report and remit sales or use tax on purchased employment services. This temporary grace period begins immediately and will remain open until December 31, 2000. The grace period will apply only to purchases of employment services made prior to June 1, 2000.

Under the grace period, taxpayers will be permitted to report and pay tax and interest on their pre-June 1, 2000 purchases of employment services by December 31, 2000 with no imposition of penalties. The grace period will not apply to purchases of employment services made after May 31, 2000 and will not apply to other types of taxable purchases.

Finally, taxpayers assessed after December 31, 2000 for failure to report and pay tax on purchases of employment services will be assessed full penalties on all pre-June 1, 2000 purchases.

To assist you in reporting the tax and interest to include with your payment, an Excel worksheet is available on the Department's website []. (Both the worksheet and the instructions for completing it can be accessed directly from the home page.) We suggest that taxpayers submit a copy of the worksheet with their payment so that compliance can be verified upon investigation or audit. If you are unable to access the website or need some other assistance in computing the tax and interest due, please contact one of our district offices.

Checks should be made payable to the Treasurer of State and mailed with a copy of the worksheet to:

The State of Ohio
Department of Taxation
P.O. Box 530
Columbus, OH 43216-0530
ATTN: Audit Review Section

Sales & Use Tax Division

Vendor Responsibilities

Vendors of employment services are requested to notify their customers that are currently not being charged sales tax of the Bellemar decision. If the vendor's client is not a provider of employment services, then an existing exemption certificate will most likely be invalid. For example, if a customer's reason for not paying tax is based on an exemption certificate claiming that the benefit of the service is being resold and/or is used primarily in a manufacturing operation, then the exemption certificate or other documentation will no longer be valid and tax should be charged. The sooner this can be accomplished the better. The Department will not accept as valid a vendor's reliance on such an exemption certificate for purchases made by a customer after May 31, 2000. Therefore, vendors of employment services continuing to honor such reasons on or after June 1, 2000 will be subject to assessment of tax, interest and penalties for erroneously exempting those sales.


1To obtain a copy of the Bellemar decision, go to the Supreme Court’s website at The file can be searched by release date (April 12, 2000) or by caption (name).

If you have any questions regarding this matter, you should call us at 1-888-405-4039.

Phone: 1-800-750-0750