SENATOR Blessing

To enact sections 5740.01 to 5740.08 of the Revised

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Code and to repeal Section 6 of Sub. H.B. 483 of

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the 123rd General Assembly to enact the Simplified

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Sales and Use Tax Administration Act.

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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 5740.01, 5740.02, 5740.03, 5740.04,	5
5740.05, 5740.06, 5740.07, and 5740.08 of the Revised Code be	6
enacted to read as follows:	7

Sec. 5740.01. As used in this chapter:

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(A) "Agreement" means the streamlined sales and use tax	9
agreement as amended and adopted on January 27, 2001, by the	10
national conference of state legislatures' special task force on	11
state and local taxation of telecommunication and electronic	12
commerce, and unanimously adopted by the national conference of	13
state legislatures' executive committee.	14

(B) "Certified automated system" means software certified	15
jointly by the states that are signatories to the agreement to	16
calculate the sales or use tax imposed by each jurisdiction on a	17
transaction, determine the amount of tax to remit to the	18
appropriate state, and maintain a record of the transaction.	19

(C) "Certified service provider" means an agent certified	20
jointly by the states that are signatories to the agreement to	21
perform all of the seller's sales and use tax functions.	22

(D) "Person" means an individual, trust, estate, fiduciary,	23
partnership, limited liability company, limited liability	24
partnership, corporation, or any other legal entity.	25

(E) "Sales tax" means the tax levied by division (A) of	26
section 5739.02 or section 5739.021, 5739.023, 5739.026, or	27
5739.10 of the Revised Code.	28

(F) "Seller" means any person making sales, leases, or	29
rentals of personal property or services.	30

(G) "State" means any state of the United States and the	31
District of Columbia.	32

(H) "Use tax" means the tax levied by section 5741.02,	33
5741.021, 5741.022, or 5741.023 of the Revised Code.	34

Sec. 5740.02. The tax commissioner shall participate in	35
discussions with other states regarding the development of a	36
simplified sales and use tax system to reduce the burden and cost	37
for all sellers to collect this state's sales and use taxes. The	38
commissioner also shall participate in multi-state discussions to	39
review or amend the terms of the agreement to simplify and	40
modernize sales and use tax administration that embodies the	41
simplification requirements set forth in section 5740.05 of the	42
Revised Code. For purposes of these discussions, the commissioner	43
or the commissioner's designee, and up to three other delegates	44
designated by the commissioner, shall represent this state.	45

Sec. 5740.03. (A) Subject to section 5740.05 of the Revised	46
Code, the tax commissioner may enter into the agreement with one	47
or more states. In furtherance of the agreement, the commissioner	48
may act jointly with other states that are members of the	49
agreement to establish standards for certification of service	50
providers and automated systems, establish performance standards	51
for multi-state sellers, and procure goods and services. The	52
commissioner may take other actions reasonably required to	53
implement this chapter, including adopting rules.	54

Sec. 5740.04. (A) No provision of the agreement, in whole or	55
in part, invalidates or amends the law of this state. Adoption of	56
the agreement by this state does not amend the law of this state.	57
Implementation in this state of any condition of the agreement,	58
whether adopted before, at, or after membership of this state in	59
the agreement, must be by the action of this state.	60

(B) The agreement is an accord among individual cooperating	61
sovereigns in furtherance of their governmental functions. The	62
agreement provides a mechanism among the member states to	63
establish and maintain a cooperative, simplified system for the	64
application and administration of sales and use taxes under the	65
duly adopted laws of each member state.	66

Sec. 5740.05. The tax commissioner shall not enter into the	67
agreement unless the agreement requires each state to meet the	68
requirements set forth in divisions (A) to (I) of this section.	69
The agreement shall:	70

(A) Set restrictions to limit over time the number of state	71
sales and use tax rates;	72

(B) Establish uniform standards for attributing the source	73
of transactions to taxing jurisdictions, the administration of	74
exempt sales, and sales and use tax returns and remittances;	75

(C) Provide a central, electronic registration system that	76
allows a seller to register to collect and remit sales and use	77
taxes for all signatory states;	78

(D) Provide that registration with the central registration	79
system and the collection of sales and use taxes in the signatory	80
states will not be used as a factor in determining whether the	81
seller has nexus with a state for any tax;	82

(E) Provide for reduction of the burdens of complying with	83
local sales and use taxes through the following:	84

(1) Restricting variances between the state and local tax	85
bases;	86

(2) Requiring states to administer any sales and use taxes	87
levied by local jurisdictions within the state so that sellers	88
collecting and remitting these taxes will not have to register or	89
file returns with, remit funds to, or be subject to independent	90
audits from, local taxing jurisdictions;	91

(3) Restricting the frequency of changes in the local sales	92
and use tax rates and setting effective dates for the application	93
of local jurisdictional boundary changes to local sales and use	94
taxes;	95

(4) Providing notice to sellers and certified service	96
providers of changes in local sales and use tax rates and in the	97
boundaries of local taxing jurisdictions.	98

(F) Outline any monetary allowances that are to be provided	99
by the states to sellers or certified service providers. The	100
agreement must allow for a joint public and private sector study	101
of the compliance cost on sellers and certified service providers	102
to collect sales and use taxes for state and local governments	103
under various levels of complexity, to be completed by July 1,	104
2002.	105

(G) Require each state to certify compliance with the terms	106
of the agreement prior to becoming a member of the agreement, and	107
to maintain compliance, under the laws of the member state, with	108
all provisions of the agreement while a member;	109

(H) Require each state to adopt a uniform policy for	110
certified service providers that protects the privacy of consumers	111
and maintains the confidentiality of tax information;	112

(I) Provide for the appointment of an advisory council of	113
private sector representatives and an advisory council of	114
non-member state representatives to consult with in the	115
administration of the agreement.	116

Sec. 5740.06. (A) The agreement binds and inures only to the	117
benefit of this state and the other member states. No person,	118
other than a signatory state, is an intended beneficiary of the	119
agreement. Any benefit to a person other than a state is	120
established by the law of this state and the other member states	121
and not by the terms of the agreement.	122

(B) Consistent with division (A) of this section, no person	123
shall have any cause of action or defense under the agreement or	124
by virtue of this state's approval of the agreement. No person	125
may challenge, in any action brought under any provision of law,	126
any action or inaction by any department, agency, or other	127
instrumentality of this state, or any political subdivision of	128
this state, on the ground that the action or inaction is	129
inconsistent with the agreement.	130

(C) No law of this state, or the application thereof, may	131
be declared invalid as to any person or circumstance on the ground	132
that the law or application of it is inconsistent with the	133
agreement.	134

Sec. 5740.07. (A) A certified service provider is the agent	135
of the seller with whom the certified service provider has	136
contracted for the collection and remittance of sales and use	137
taxes. As the seller's agent, the certified service provider is	138
liable for sales and use taxes due each member state on all sales	139
transactions it processes for the seller, except as provided in	140
this section.	141

A seller that contracts with a certified service provider is	142
not liable to the state for sales or use taxes due on transactions	143
processed by the certified service provider, unless the seller	144
misrepresented the type of personal property or services it sells	145
or committed fraud. In the absence of probable cause to believe	146
that the seller made a material misrepresentation or has committed	147
fraud, the seller is not subject to audit of the transactions	148
processed by the certified service provider. A seller is subject	149
to audit for transactions not processed by a certified service	150
provider. The member states acting jointly may perform a system	151
check of the seller and review the seller's procedures to	152
determine if the certified service provider's system is	153
functioning properly and the extent to which the seller's	154
transactions are being processed by the provider.	155

(B) A person who provides a certified automated system is	156
responsible for the proper functioning of that system and is	157
liable to the state for underpayments of the sales and use tax	158
attributable to errors in the functioning of that system. A	159
seller that uses a certified automated system remains responsible	160
and is liable to the state for reporting and remitting sales and	161
use taxes.	162

(C) A seller that has a proprietary system for determining	163
the amount of sales or use tax due on transactions and has signed	164
a performance agreement establishing tax performance standards for	165
that system is liable for the failure of the system to meet the	166
performance standards.	167

Sec. 5740.08. (A) A certified service provider shall	168
preserve the privacy of consumers who buy, lease, or rent personal	169
property or services from sellers with whom the provider has	170
contracted for the collection and remittance of sales and use	171
taxes to this state. The provider shall use a certified automated	172
system to perform sales and use tax calculations, remittances, and	173
reporting that does not retain the personally identifiable	174
information of consumers, except as follows:	175

(1) To determine whether a consumer's status or intended	176
use of the goods or services purchased is exempt from the sales or	177
use tax;	178

(2) To investigate fraud by a consumer or seller;

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(3) To the extent necessary to ensure the reliability of	180
the providers' technology and certified automated system in	181
performing all of a seller's sales and use tax functions.	182

The provider shall provide technical, physical, and	183
administrative safeguards to protect personally identifiable	184
information from unauthorized access and disclosure.	185

(B) A certified service provider shall provide to consumers	186
clear and conspicuous notice of its information retention and	187
sharing practices, including what information it collects, how the	188
information collected is used, and whether the information is	189
disclosed to other states that are members to the agreement. A	190
provider that retains personally identifiable information in	191
accordance with division (A) of this section shall notify	192
consumers of its intent to retain such information and shall	193
afford consumers reasonable access to their data and the	194
opportunity to correct inaccurately recorded data.	195

(C) If any person, other than a state that is a member of	196
the agreement, seeks to discover a consumer's personally	197
identifiable information, a reasonable and timely effort shall be	198
made by the provider to notify the consumer of such request.	199

(D) Notwithstanding this section, the laws of this state	200
regarding the collection, use, and maintenance of confidential	201
taxpayer information remain applicable and binding. The agreement	202
does not enlarge or limit this state's authority to do any of the	203
following:	204

(1) Conduct audits or other reviews as provided under the	205
agreement or state law;	206

(2) Provide records pursuant to section 149.03 of the	207
Revised Code or to governmental agencies under disclosure laws;	208

(3) Prevent the disclosure of confidential taxpayer	209
information in accordance with Title 57 of the Revised Code;	210

(4) Prevent, consistent with federal law, the disclosure or	211
misuse of federal return information obtained under a disclosure	212
agreement with the Internal Revenue Service;	213

(5) Collect, disclose, disseminate, or otherwise use	214
anonymous data for governmental purposes.	215

(E) This section does not enlarge or limit the privacy	216
policies of any seller that has selected a certified service	217
provider as its agent to perform all of the seller's sales and use	218
tax functions.	219

(F) A certified service provider that fails to comply with	220
this section is subject to investigation by the tax commissioner	221
or his agents and the attorney general, and prosecution by the	222
attorney general.	223

Section 2. That Section 6 of Sub. H.B. 483 of the 123rd	224
General Assembly is hereby repealed.	225