S. B. No. 269 As Introduced

Senators Amstutz, Austria, Clancy, Gardner, Grendell, Jacobson, Jordan, Padgett, Schuler, Wachtmann, Zurz

A BILL

To amend section 5741.02 of the Revised Code to 1
exempt from the use tax items held by a person, 2
but not for that person's own use, and donated to 3
a charitable organization. 4

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

       Section 1. That section 5741.02 of the Revised Code be 5
amended to read as follows: 6

       Sec. 5741.02. (A)(1) For the use of the general revenue fund 7
of the state, an excise tax is hereby levied on the storage, use, 8
or other consumption in this state of tangible personal property 9
or the benefit realized in this state of any service provided. The 10
tax shall be collected as provided in section 5739.025 of the 11
Revised Code, provided that on and after July 1, 2003, and on or 12
before June 30, 2005, the rate of the tax shall be six per cent. 13
On and after July 1, 2005, the rate of the tax shall be five and 14
one-half per cent. 15

       (2) In the case of the lease or rental, with a fixed term of 16
more than thirty days or an indefinite term with a minimum period 17
of more than thirty days, of any motor vehicles designed by the 18
manufacturer to carry a load of not more than one ton, watercraft, 19
outboard motor, or aircraft, or of any tangible personal property, 20
other than motor vehicles designed by the manufacturer to carry a 21
load of more than one ton, to be used by the lessee or renter 22
primarily for business purposes, the tax shall be collected by the 23
seller at the time the lease or rental is consummated and shall be 24
calculated by the seller on the basis of the total amount to be 25
paid by the lessee or renter under the lease or rental agreement. 26
If the total amount of the consideration for the lease or rental 27
includes amounts that are not calculated at the time the lease or 28
rental is executed, the tax shall be calculated and collected by 29
the seller at the time such amounts are billed to the lessee or 30
renter. In the case of an open-end lease or rental, the tax shall 31
be calculated by the seller on the basis of the total amount to be 32
paid during the initial fixed term of the lease or rental, and for 33
each subsequent renewal period as it comes due. As used in this 34
division, "motor vehicle" has the same meaning as in section 35
4501.01 of the Revised Code, and "watercraft" includes an outdrive 36
unit attached to the watercraft. 37

       (3) Except as provided in division (A)(2) of this section, in 38
the case of a transaction, the price of which consists in whole or 39
part of the lease or rental of tangible personal property, the tax 40
shall be measured by the installments of those leases or rentals. 41

       (B) Each consumer, storing, using, or otherwise consuming in 42
this state tangible personal property or realizing in this state 43
the benefit of any service provided, shall be liable for the tax, 44
and such liability shall not be extinguished until the tax has 45
been paid to this state; provided, that the consumer shall be 46
relieved from further liability for the tax if the tax has been 47
paid to a seller in accordance with section 5741.04 of the Revised 48
Code or prepaid by the seller in accordance with section 5741.06 49
of the Revised Code. 50

       (C) The tax does not apply to the storage, use, or 51
consumption in this state of the following described tangible 52
personal property or services, nor to the storage, use, or 53
consumption or benefit in this state of tangible personal property 54
or services purchased under the following described circumstances: 55

       (1) When the sale of property or service in this state is 56
subject to the excise tax imposed by sections 5739.01 to 5739.31 57
of the Revised Code, provided said tax has been paid; 58

       (2) Except as provided in division (D) of this section, 59
tangible personal property or services, the acquisition of which, 60
if made in Ohio, would be a sale not subject to the tax imposed by 61
sections 5739.01 to 5739.31 of the Revised Code; 62

       (3) Property or services, the storage, use, or other 63
consumption of or benefit from which this state is prohibited from 64
taxing by the Constitution of the United States, laws of the 65
United States, or the Constitution of this state. This exemption 66
shall not exempt from the application of the tax imposed by this 67
section the storage, use, or consumption of tangible personal 68
property that was purchased in interstate commerce, but that has 69
come to rest in this state, provided that fuel to be used or 70
transported in carrying on interstate commerce that is stopped 71
within this state pending transfer from one conveyance to another 72
is exempt from the excise tax imposed by this section and section 73
5739.02 of the Revised Code; 74

       (4) Transient use of tangible personal property in this state 75
by a nonresident tourist or vacationer, or a ~~non-business~~ 76
nonbusiness use within this state by a nonresident of this state, 77
if the property so used was purchased outside this state for use 78
outside this state and is not required to be registered or 79
licensed under the laws of this state; 80

       (5) Tangible personal property or services rendered, upon 81
which taxes have been paid to another jurisdiction to the extent 82
of the amount of the tax paid to such other jurisdiction. Where 83
the amount of the tax imposed by this section and imposed pursuant 84
to section 5741.021, 5741.022, or 5741.023 of the Revised Code 85
exceeds the amount paid to another jurisdiction, the difference 86
shall be allocated between the tax imposed by this section and any 87
tax imposed by a county or a transit authority pursuant to section 88
5741.021, 5741.022, or 5741.023 of the Revised Code, in proportion 89
to the respective rates of such taxes. 90

       As used in this subdivision, "taxes paid to another 91
jurisdiction" means the total amount of retail sales or use tax or 92
similar tax based upon the sale, purchase, or use of tangible 93
personal property or services rendered legally, levied by and paid 94
to another state or political subdivision thereof, or to the 95
District of Columbia, where the payment of such tax does not 96
entitle the taxpayer to any refund or credit for such payment. 97

       (6) The transfer of a used manufactured home or used mobile 98
home, as defined by section 5739.0210 of the Revised Code, made on 99
or after January 1, 2000; 100

       (7) Drugs that are or are intended to be distributed free of 101
charge to a practitioner licensed to prescribe, dispense, and 102
administer drugs to a human being in the course of a professional 103
practice and that by law may be dispensed only by or upon the 104
order of such a practitioner. 105

        (8) Computer equipment and related software leased from a 106
lessor located outside this state and initially received in this 107
state on behalf of the consumer by a third party that will retain 108
possession of such property for not more than ninety days and that 109
will, within that ninety-day period, deliver such property to the 110
consumer at a location outside this state. Division (C)(8) of this 111
section does not provide exemption from taxation for any otherwise 112
taxable charges associated with such property while it is in this 113
state or for any subsequent storage, use, or consumption of such 114
property in this state by or on behalf of the consumer. 115

       (9) Cigarettes that have a wholesale value of three hundred 116
dollars or less used, stored, or consumed, but not for resale, in 117
any month. 118

       (10) Tangible personal property held by a person but not for 119
that person's own use and donated by that person, without charge, 120
to a nonprofit organization operated exclusively for charitable 121
purposes in this state, no part of the net income of which inures 122
to the benefit of any private shareholder or individual and no 123
substantial part of the activities of which consists of carrying 124
on propaganda or otherwise attempting to influence legislation. 125
For the purposes of this division, "charitable purposes" has the 126
same meaning as in division (B)(12) of section 5739.02 of the 127
Revised Code. 128

       (D) The tax applies to the storage, use, or other consumption 129
in this state of tangible personal property or services, the 130
acquisition of which at the time of sale was excepted under 131
division (E) of section 5739.01 of the Revised Code from the tax 132
imposed by section 5739.02 of the Revised Code, but which has 133
subsequently been temporarily or permanently stored, used, or 134
otherwise consumed in a taxable manner. 135

       (E)(1)(a) If any transaction is claimed to be exempt under 136
division (E) of section 5739.01 of the Revised Code or under 137
section 5739.02 of the Revised Code, with the exception of 138
divisions (B)(1) to (11) or (28) of section 5739.02 of the Revised 139
Code, the consumer shall provide to the seller, and the seller 140
shall obtain from the consumer, a certificate specifying the 141
reason that the transaction is not subject to the tax. The 142
certificate shall be in such form, and shall be provided either in 143
a hard copy form or electronic form, as the tax commissioner 144
prescribes. 145

       (b) A seller that obtains a fully completed exemption 146
certificate from a consumer is relieved of liability for 147
collecting and remitting tax on any sale covered by that 148
certificate. If it is determined the exemption was improperly 149
claimed, the consumer shall be liable for any tax due on that sale 150
under this chapter. Relief under this division from liability does 151
not apply to any of the following: 152

       (i) A seller that fraudulently fails to collect tax; 153

       (ii) A seller that solicits consumers to participate in the 154
unlawful claim of an exemption; 155

       (iii) A seller that accepts an exemption certificate from a 156
consumer that claims an exemption based on who purchases or who 157
sells property or a service, when the subject of the transaction 158
sought to be covered by the exemption certificate is actually 159
received by the consumer at a location operated by the seller in 160
this state, and this state has posted to its web site an exemption 161
certificate form that clearly and affirmatively indicates that the 162
claimed exemption is not available in this state; 163

       (iv) A seller that accepts an exemption certificate from a 164
consumer who claims a multiple points of use exemption under 165
division (B) of section 5739.033 of the Revised Code, if the item 166
purchased is tangible personal property, other than prewritten 167
computer software. 168

       (2) The seller shall maintain records, including exemption 169
certificates, of all sales on which a consumer has claimed an 170
exemption, and provide them to the tax commissioner on request. 171

       (3) If no certificate is provided or obtained within ninety 172
days after the date on which the transaction is consummated, it 173
shall be presumed that the tax applies. Failure to have so 174
provided or obtained a certificate shall not preclude a seller, 175
within one hundred twenty days after the tax commissioner gives 176
written notice of intent to levy an assessment, from either 177
establishing that the transaction is not subject to the tax, or 178
obtaining, in good faith, a fully completed exemption certificate. 179

       (4) If a transaction is claimed to be exempt under division 180
(B)(13) of section 5739.02 of the Revised Code, the contractor 181
shall obtain certification of the claimed exemption from the 182
contractee. This certification shall be in addition to an 183
exemption certificate provided by the contractor to the seller. A 184
contractee that provides a certification under this division shall 185
be deemed to be the consumer of all items purchased by the 186
contractor under the claim of exemption, if it is subsequently 187
determined that the exemption is not properly claimed. The 188
certification shall be in such form as the tax commissioner 189
prescribes. 190

       (F) A seller who files a petition for reassessment contesting 191
the assessment of tax on transactions for which the seller 192
obtained no valid exemption certificates, and for which the seller 193
failed to establish that the transactions were not subject to the 194
tax during the one-hundred-twenty-day period allowed under 195
division (E) of this section, may present to the tax commissioner 196
additional evidence to prove that the transactions were exempt. 197
The seller shall file such evidence within ninety days of the 198
receipt by the seller of the notice of assessment, except that, 199
upon application and for reasonable cause, the tax commissioner 200
may extend the period for submitting such evidence thirty days. 201

       (G) For the purpose of the proper administration of sections 202
5741.01 to 5741.22 of the Revised Code, and to prevent the evasion 203
of the tax hereby levied, it shall be presumed that any use, 204
storage, or other consumption of tangible personal property in 205
this state is subject to the tax until the contrary is 206
established. 207

       (H) The tax collected by the seller from the consumer under 208
this chapter is not part of the price, but is a tax collection for 209
the benefit of the state, and of counties levying an additional 210
use tax pursuant to section 5741.021 or 5741.023 of the Revised 211
Code and of transit authorities levying an additional use tax 212
pursuant to section 5741.022 of the Revised Code. Except for the 213
discount authorized under section 5741.12 of the Revised Code and 214
the effects of any rounding pursuant to section 5703.055 of the 215
Revised Code, no person other than the state or such a county or 216
transit authority shall derive any benefit from the collection of 217
such tax. 218

       Section 2. That existing section 5741.02 of the Revised Code 219
is hereby repealed. 220

Section 1. That section 5741.02 of the Revised Code be	5
amended to read as follows:	6

Sec. 5741.02. (A)(1) For the use of the general revenue fund	7
of the state, an excise tax is hereby levied on the storage, use,	8
or other consumption in this state of tangible personal property	9
or the benefit realized in this state of any service provided. The	10
tax shall be collected as provided in section 5739.025 of the	11
Revised Code, provided that on and after July 1, 2003, and on or	12
before June 30, 2005, the rate of the tax shall be six per cent.	13
On and after July 1, 2005, the rate of the tax shall be five and	14
one-half per cent.	15

(2) In the case of the lease or rental, with a fixed term of	16
more than thirty days or an indefinite term with a minimum period	17
of more than thirty days, of any motor vehicles designed by the	18
manufacturer to carry a load of not more than one ton, watercraft,	19
outboard motor, or aircraft, or of any tangible personal property,	20
other than motor vehicles designed by the manufacturer to carry a	21
load of more than one ton, to be used by the lessee or renter	22
primarily for business purposes, the tax shall be collected by the	23
seller at the time the lease or rental is consummated and shall be	24
calculated by the seller on the basis of the total amount to be	25
paid by the lessee or renter under the lease or rental agreement.	26
If the total amount of the consideration for the lease or rental	27
includes amounts that are not calculated at the time the lease or	28
rental is executed, the tax shall be calculated and collected by	29
the seller at the time such amounts are billed to the lessee or	30
renter. In the case of an open-end lease or rental, the tax shall	31
be calculated by the seller on the basis of the total amount to be	32
paid during the initial fixed term of the lease or rental, and for	33
each subsequent renewal period as it comes due. As used in this	34
division, "motor vehicle" has the same meaning as in section	35
4501.01 of the Revised Code, and "watercraft" includes an outdrive	36
unit attached to the watercraft.	37

(3) Except as provided in division (A)(2) of this section, in	38
the case of a transaction, the price of which consists in whole or	39
part of the lease or rental of tangible personal property, the tax	40
shall be measured by the installments of those leases or rentals.	41

(B) Each consumer, storing, using, or otherwise consuming in	42
this state tangible personal property or realizing in this state	43
the benefit of any service provided, shall be liable for the tax,	44
and such liability shall not be extinguished until the tax has	45
been paid to this state; provided, that the consumer shall be	46
relieved from further liability for the tax if the tax has been	47
paid to a seller in accordance with section 5741.04 of the Revised	48
Code or prepaid by the seller in accordance with section 5741.06	49
of the Revised Code.	50

(C) The tax does not apply to the storage, use, or	51
consumption in this state of the following described tangible	52
personal property or services, nor to the storage, use, or	53
consumption or benefit in this state of tangible personal property	54
or services purchased under the following described circumstances:	55

(1) When the sale of property or service in this state is	56
subject to the excise tax imposed by sections 5739.01 to 5739.31	57
of the Revised Code, provided said tax has been paid;	58

(2) Except as provided in division (D) of this section,	59
tangible personal property or services, the acquisition of which,	60
if made in Ohio, would be a sale not subject to the tax imposed by	61
sections 5739.01 to 5739.31 of the Revised Code;	62

(3) Property or services, the storage, use, or other	63
consumption of or benefit from which this state is prohibited from	64
taxing by the Constitution of the United States, laws of the	65
United States, or the Constitution of this state. This exemption	66
shall not exempt from the application of the tax imposed by this	67
section the storage, use, or consumption of tangible personal	68
property that was purchased in interstate commerce, but that has	69
come to rest in this state, provided that fuel to be used or	70
transported in carrying on interstate commerce that is stopped	71
within this state pending transfer from one conveyance to another	72
is exempt from the excise tax imposed by this section and section	73
5739.02 of the Revised Code;	74

(4) Transient use of tangible personal property in this state	75
by a nonresident tourist or vacationer, or a ~~non-business~~	76
nonbusiness use within this state by a nonresident of this state,	77
if the property so used was purchased outside this state for use	78
outside this state and is not required to be registered or	79
licensed under the laws of this state;	80

(5) Tangible personal property or services rendered, upon	81
which taxes have been paid to another jurisdiction to the extent	82
of the amount of the tax paid to such other jurisdiction. Where	83
the amount of the tax imposed by this section and imposed pursuant	84
to section 5741.021, 5741.022, or 5741.023 of the Revised Code	85
exceeds the amount paid to another jurisdiction, the difference	86
shall be allocated between the tax imposed by this section and any	87
tax imposed by a county or a transit authority pursuant to section	88
5741.021, 5741.022, or 5741.023 of the Revised Code, in proportion	89
to the respective rates of such taxes.	90

As used in this subdivision, "taxes paid to another	91
jurisdiction" means the total amount of retail sales or use tax or	92
similar tax based upon the sale, purchase, or use of tangible	93
personal property or services rendered legally, levied by and paid	94
to another state or political subdivision thereof, or to the	95
District of Columbia, where the payment of such tax does not	96
entitle the taxpayer to any refund or credit for such payment.	97

(6) The transfer of a used manufactured home or used mobile	98
home, as defined by section 5739.0210 of the Revised Code, made on	99
or after January 1, 2000;	100

(7) Drugs that are or are intended to be distributed free of	101
charge to a practitioner licensed to prescribe, dispense, and	102
administer drugs to a human being in the course of a professional	103
practice and that by law may be dispensed only by or upon the	104
order of such a practitioner.	105

(8) Computer equipment and related software leased from a	106
lessor located outside this state and initially received in this	107
state on behalf of the consumer by a third party that will retain	108
possession of such property for not more than ninety days and that	109
will, within that ninety-day period, deliver such property to the	110
consumer at a location outside this state. Division (C)(8) of this	111
section does not provide exemption from taxation for any otherwise	112
taxable charges associated with such property while it is in this	113
state or for any subsequent storage, use, or consumption of such	114
property in this state by or on behalf of the consumer.	115

(9) Cigarettes that have a wholesale value of three hundred	116
dollars or less used, stored, or consumed, but not for resale, in	117
any month.	118

(10) Tangible personal property held by a person but not for	119
that person's own use and donated by that person, without charge,	120
to a nonprofit organization operated exclusively for charitable	121
purposes in this state, no part of the net income of which inures	122
to the benefit of any private shareholder or individual and no	123
substantial part of the activities of which consists of carrying	124
on propaganda or otherwise attempting to influence legislation.	125
For the purposes of this division, "charitable purposes" has the	126
same meaning as in division (B)(12) of section 5739.02 of the	127
Revised Code.	128

(D) The tax applies to the storage, use, or other consumption	129
in this state of tangible personal property or services, the	130
acquisition of which at the time of sale was excepted under	131
division (E) of section 5739.01 of the Revised Code from the tax	132
imposed by section 5739.02 of the Revised Code, but which has	133
subsequently been temporarily or permanently stored, used, or	134
otherwise consumed in a taxable manner.	135

(E)(1)(a) If any transaction is claimed to be exempt under	136
division (E) of section 5739.01 of the Revised Code or under	137
section 5739.02 of the Revised Code, with the exception of	138
divisions (B)(1) to (11) or (28) of section 5739.02 of the Revised	139
Code, the consumer shall provide to the seller, and the seller	140
shall obtain from the consumer, a certificate specifying the	141
reason that the transaction is not subject to the tax. The	142
certificate shall be in such form, and shall be provided either in	143
a hard copy form or electronic form, as the tax commissioner	144
prescribes.	145

(b) A seller that obtains a fully completed exemption	146
certificate from a consumer is relieved of liability for	147
collecting and remitting tax on any sale covered by that	148
certificate. If it is determined the exemption was improperly	149
claimed, the consumer shall be liable for any tax due on that sale	150
under this chapter. Relief under this division from liability does	151
not apply to any of the following:	152

(ii) A seller that solicits consumers to participate in the	154
unlawful claim of an exemption;	155

(iii) A seller that accepts an exemption certificate from a	156
consumer that claims an exemption based on who purchases or who	157
sells property or a service, when the subject of the transaction	158
sought to be covered by the exemption certificate is actually	159
received by the consumer at a location operated by the seller in	160
this state, and this state has posted to its web site an exemption	161
certificate form that clearly and affirmatively indicates that the	162
claimed exemption is not available in this state;	163

(iv) A seller that accepts an exemption certificate from a	164
consumer who claims a multiple points of use exemption under	165
division (B) of section 5739.033 of the Revised Code, if the item	166
purchased is tangible personal property, other than prewritten	167
computer software.	168

(2) The seller shall maintain records, including exemption	169
certificates, of all sales on which a consumer has claimed an	170
exemption, and provide them to the tax commissioner on request.	171

(3) If no certificate is provided or obtained within ninety	172
days after the date on which the transaction is consummated, it	173
shall be presumed that the tax applies. Failure to have so	174
provided or obtained a certificate shall not preclude a seller,	175
within one hundred twenty days after the tax commissioner gives	176
written notice of intent to levy an assessment, from either	177
establishing that the transaction is not subject to the tax, or	178
obtaining, in good faith, a fully completed exemption certificate.	179

(4) If a transaction is claimed to be exempt under division	180
(B)(13) of section 5739.02 of the Revised Code, the contractor	181
shall obtain certification of the claimed exemption from the	182
contractee. This certification shall be in addition to an	183
exemption certificate provided by the contractor to the seller. A	184
contractee that provides a certification under this division shall	185
be deemed to be the consumer of all items purchased by the	186
contractor under the claim of exemption, if it is subsequently	187
determined that the exemption is not properly claimed. The	188
certification shall be in such form as the tax commissioner	189
prescribes.	190

(F) A seller who files a petition for reassessment contesting	191
the assessment of tax on transactions for which the seller	192
obtained no valid exemption certificates, and for which the seller	193
failed to establish that the transactions were not subject to the	194
tax during the one-hundred-twenty-day period allowed under	195
division (E) of this section, may present to the tax commissioner	196
additional evidence to prove that the transactions were exempt.	197
The seller shall file such evidence within ninety days of the	198
receipt by the seller of the notice of assessment, except that,	199
upon application and for reasonable cause, the tax commissioner	200
may extend the period for submitting such evidence thirty days.	201

(G) For the purpose of the proper administration of sections	202
5741.01 to 5741.22 of the Revised Code, and to prevent the evasion	203
of the tax hereby levied, it shall be presumed that any use,	204
storage, or other consumption of tangible personal property in	205
this state is subject to the tax until the contrary is	206
established.	207

(H) The tax collected by the seller from the consumer under	208
this chapter is not part of the price, but is a tax collection for	209
the benefit of the state, and of counties levying an additional	210
use tax pursuant to section 5741.021 or 5741.023 of the Revised	211
Code and of transit authorities levying an additional use tax	212
pursuant to section 5741.022 of the Revised Code. Except for the	213
discount authorized under section 5741.12 of the Revised Code and	214
the effects of any rounding pursuant to section 5703.055 of the	215
Revised Code, no person other than the state or such a county or	216
transit authority shall derive any benefit from the collection of	217
such tax.	218

Section 2. That existing section 5741.02 of the Revised Code	219
is hereby repealed.	220