Am. Sub. S. B. No. 269 As Reported by the House Ways and Means Committee

Senators Amstutz, Austria, Clancy, Gardner, Grendell, Jacobson, Jordan, Padgett, Schuler, Wachtmann, Zurz, Spada, Roberts, Fingerhut, Dann, Armbruster, Carey, Goodman, Harris, Kearney, Schuring

Representatives Seitz, Latta, Gilb, Schaffer, Gibbs, Strahorn, Collier, Hagan, Kilbane

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, or to the state or its 4
political subdivisions for exclusively public 5
purposes. 6

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

       Section 1. That section 5741.02 of the Revised Code be 7
amended to read as follows: 8

       Sec. 5741.02. (A)(1) For the use of the general revenue fund 9
of the state, an excise tax is hereby levied on the storage, use, 10
or other consumption in this state of tangible personal property 11
or the benefit realized in this state of any service provided. The 12
tax shall be collected as provided in section 5739.025 of the 13
Revised Code, provided that on and after July 1, 2003, and on or 14
before June 30, 2005, the rate of the tax shall be six per cent. 15
On and after July 1, 2005, the rate of the tax shall be five and 16
one-half per cent. 17

       (2) In the case of the lease or rental, with a fixed term of 18
more than thirty days or an indefinite term with a minimum period 19
of more than thirty days, of any motor vehicles designed by the 20
manufacturer to carry a load of not more than one ton, watercraft, 21
outboard motor, or aircraft, or of any tangible personal property, 22
other than motor vehicles designed by the manufacturer to carry a 23
load of more than one ton, to be used by the lessee or renter 24
primarily for business purposes, the tax shall be collected by the 25
seller at the time the lease or rental is consummated and shall be 26
calculated by the seller on the basis of the total amount to be 27
paid by the lessee or renter under the lease or rental agreement. 28
If the total amount of the consideration for the lease or rental 29
includes amounts that are not calculated at the time the lease or 30
rental is executed, the tax shall be calculated and collected by 31
the seller at the time such amounts are billed to the lessee or 32
renter. In the case of an open-end lease or rental, the tax shall 33
be calculated by the seller on the basis of the total amount to be 34
paid during the initial fixed term of the lease or rental, and for 35
each subsequent renewal period as it comes due. As used in this 36
division, "motor vehicle" has the same meaning as in section 37
4501.01 of the Revised Code, and "watercraft" includes an outdrive 38
unit attached to the watercraft. 39

       (3) Except as provided in division (A)(2) of this section, in 40
the case of a transaction, the price of which consists in whole or 41
part of the lease or rental of tangible personal property, the tax 42
shall be measured by the installments of those leases or rentals. 43

       (B) Each consumer, storing, using, or otherwise consuming in 44
this state tangible personal property or realizing in this state 45
the benefit of any service provided, shall be liable for the tax, 46
and such liability shall not be extinguished until the tax has 47
been paid to this state; provided, that the consumer shall be 48
relieved from further liability for the tax if the tax has been 49
paid to a seller in accordance with section 5741.04 of the Revised 50
Code or prepaid by the seller in accordance with section 5741.06 51
of the Revised Code. 52

       (C) The tax does not apply to the storage, use, or 53
consumption in this state of the following described tangible 54
personal property or services, nor to the storage, use, or 55
consumption or benefit in this state of tangible personal property 56
or services purchased under the following described circumstances: 57

       (1) When the sale of property or service in this state is 58
subject to the excise tax imposed by sections 5739.01 to 5739.31 59
of the Revised Code, provided said tax has been paid; 60

       (2) Except as provided in division (D) of this section, 61
tangible personal property or services, the acquisition of which, 62
if made in Ohio, would be a sale not subject to the tax imposed by 63
sections 5739.01 to 5739.31 of the Revised Code; 64

       (3) Property or services, the storage, use, or other 65
consumption of or benefit from which this state is prohibited from 66
taxing by the Constitution of the United States, laws of the 67
United States, or the Constitution of this state. This exemption 68
shall not exempt from the application of the tax imposed by this 69
section the storage, use, or consumption of tangible personal 70
property that was purchased in interstate commerce, but that has 71
come to rest in this state, provided that fuel to be used or 72
transported in carrying on interstate commerce that is stopped 73
within this state pending transfer from one conveyance to another 74
is exempt from the excise tax imposed by this section and section 75
5739.02 of the Revised Code; 76

       (4) Transient use of tangible personal property in this state 77
by a nonresident tourist or vacationer, or a ~~non-business~~ 78
nonbusiness use within this state by a nonresident of this state, 79
if the property so used was purchased outside this state for use 80
outside this state and is not required to be registered or 81
licensed under the laws of this state; 82

       (5) Tangible personal property or services rendered, upon 83
which taxes have been paid to another jurisdiction to the extent 84
of the amount of the tax paid to such other jurisdiction. Where 85
the amount of the tax imposed by this section and imposed pursuant 86
to section 5741.021, 5741.022, or 5741.023 of the Revised Code 87
exceeds the amount paid to another jurisdiction, the difference 88
shall be allocated between the tax imposed by this section and any 89
tax imposed by a county or a transit authority pursuant to section 90
5741.021, 5741.022, or 5741.023 of the Revised Code, in proportion 91
to the respective rates of such taxes. 92

       As used in this subdivision, "taxes paid to another 93
jurisdiction" means the total amount of retail sales or use tax or 94
similar tax based upon the sale, purchase, or use of tangible 95
personal property or services rendered legally, levied by and paid 96
to another state or political subdivision thereof, or to the 97
District of Columbia, where the payment of such tax does not 98
entitle the taxpayer to any refund or credit for such payment. 99

       (6) The transfer of a used manufactured home or used mobile 100
home, as defined by section 5739.0210 of the Revised Code, made on 101
or after January 1, 2000; 102

       (7) Drugs that are or are intended to be distributed free of 103
charge to a practitioner licensed to prescribe, dispense, and 104
administer drugs to a human being in the course of a professional 105
practice and that by law may be dispensed only by or upon the 106
order of such a practitioner. 107

        (8) Computer equipment and related software leased from a 108
lessor located outside this state and initially received in this 109
state on behalf of the consumer by a third party that will retain 110
possession of such property for not more than ninety days and that 111
will, within that ninety-day period, deliver such property to the 112
consumer at a location outside this state. Division (C)(8) of this 113
section does not provide exemption from taxation for any otherwise 114
taxable charges associated with such property while it is in this 115
state or for any subsequent storage, use, or consumption of such 116
property in this state by or on behalf of the consumer. 117

       (9) Cigarettes that have a wholesale value of three hundred 118
dollars or less used, stored, or consumed, but not for resale, in 119
any month. 120

       (10) Tangible personal property held for sale by a person but 121
not for that person's own use and donated by that person, without 122
charge or other compensation, to either of the following: 123

       (a) A nonprofit organization operated exclusively for 124
charitable purposes in this state, no part of the net income of 125
which inures to the benefit of any private shareholder or 126
individual and no substantial part of the activities of which 127
consists of carrying on propaganda or otherwise attempting to 128
influence legislation; or 129

       (b) This state or any political subdivision of this state, 130
but only if donated for exclusively public purposes. 131

        For the purposes of division (C)(10) of this section, 132
"charitable purposes" has the same meaning as in division (B)(12) 133
of section 5739.02 of the Revised Code. 134

       (D) The tax applies to the storage, use, or other consumption 135
in this state of tangible personal property or services, the 136
acquisition of which at the time of sale was excepted under 137
division (E) of section 5739.01 of the Revised Code from the tax 138
imposed by section 5739.02 of the Revised Code, but which has 139
subsequently been temporarily or permanently stored, used, or 140
otherwise consumed in a taxable manner. 141

       (E)(1)(a) If any transaction is claimed to be exempt under 142
division (E) of section 5739.01 of the Revised Code or under 143
section 5739.02 of the Revised Code, with the exception of 144
divisions (B)(1) to (11) or (28) of section 5739.02 of the Revised 145
Code, the consumer shall provide to the seller, and the seller 146
shall obtain from the consumer, a certificate specifying the 147
reason that the transaction is not subject to the tax. The 148
certificate shall be in such form, and shall be provided either in 149
a hard copy form or electronic form, as the tax commissioner 150
prescribes. 151

       (b) A seller that obtains a fully completed exemption 152
certificate from a consumer is relieved of liability for 153
collecting and remitting tax on any sale covered by that 154
certificate. If it is determined the exemption was improperly 155
claimed, the consumer shall be liable for any tax due on that sale 156
under this chapter. Relief under this division from liability does 157
not apply to any of the following: 158

       (i) A seller that fraudulently fails to collect tax; 159

       (ii) A seller that solicits consumers to participate in the 160
unlawful claim of an exemption; 161

       (iii) A seller that accepts an exemption certificate from a 162
consumer that claims an exemption based on who purchases or who 163
sells property or a service, when the subject of the transaction 164
sought to be covered by the exemption certificate is actually 165
received by the consumer at a location operated by the seller in 166
this state, and this state has posted to its web site an exemption 167
certificate form that clearly and affirmatively indicates that the 168
claimed exemption is not available in this state; 169

       (iv) A seller that accepts an exemption certificate from a 170
consumer who claims a multiple points of use exemption under 171
division (B) of section 5739.033 of the Revised Code, if the item 172
purchased is tangible personal property, other than prewritten 173
computer software. 174

       (2) The seller shall maintain records, including exemption 175
certificates, of all sales on which a consumer has claimed an 176
exemption, and provide them to the tax commissioner on request. 177

       (3) If no certificate is provided or obtained within ninety 178
days after the date on which the transaction is consummated, it 179
shall be presumed that the tax applies. Failure to have so 180
provided or obtained a certificate shall not preclude a seller, 181
within one hundred twenty days after the tax commissioner gives 182
written notice of intent to levy an assessment, from either 183
establishing that the transaction is not subject to the tax, or 184
obtaining, in good faith, a fully completed exemption certificate. 185

       (4) If a transaction is claimed to be exempt under division 186
(B)(13) of section 5739.02 of the Revised Code, the contractor 187
shall obtain certification of the claimed exemption from the 188
contractee. This certification shall be in addition to an 189
exemption certificate provided by the contractor to the seller. A 190
contractee that provides a certification under this division shall 191
be deemed to be the consumer of all items purchased by the 192
contractor under the claim of exemption, if it is subsequently 193
determined that the exemption is not properly claimed. The 194
certification shall be in such form as the tax commissioner 195
prescribes. 196

       (F) A seller who files a petition for reassessment contesting 197
the assessment of tax on transactions for which the seller 198
obtained no valid exemption certificates, and for which the seller 199
failed to establish that the transactions were not subject to the 200
tax during the one-hundred-twenty-day period allowed under 201
division (E) of this section, may present to the tax commissioner 202
additional evidence to prove that the transactions were exempt. 203
The seller shall file such evidence within ninety days of the 204
receipt by the seller of the notice of assessment, except that, 205
upon application and for reasonable cause, the tax commissioner 206
may extend the period for submitting such evidence thirty days. 207

       (G) For the purpose of the proper administration of sections 208
5741.01 to 5741.22 of the Revised Code, and to prevent the evasion 209
of the tax hereby levied, it shall be presumed that any use, 210
storage, or other consumption of tangible personal property in 211
this state is subject to the tax until the contrary is 212
established. 213

       (H) The tax collected by the seller from the consumer under 214
this chapter is not part of the price, but is a tax collection for 215
the benefit of the state, and of counties levying an additional 216
use tax pursuant to section 5741.021 or 5741.023 of the Revised 217
Code and of transit authorities levying an additional use tax 218
pursuant to section 5741.022 of the Revised Code. Except for the 219
discount authorized under section 5741.12 of the Revised Code and 220
the effects of any rounding pursuant to section 5703.055 of the 221
Revised Code, no person other than the state or such a county or 222
transit authority shall derive any benefit from the collection of 223
such tax. 224

       Section 2. That existing section 5741.02 of the Revised Code 225
is hereby repealed. 226

Section 1. That section 5741.02 of the Revised Code be	7
amended to read as follows:	8

Sec. 5741.02. (A)(1) For the use of the general revenue fund	9
of the state, an excise tax is hereby levied on the storage, use,	10
or other consumption in this state of tangible personal property	11
or the benefit realized in this state of any service provided. The	12
tax shall be collected as provided in section 5739.025 of the	13
Revised Code, provided that on and after July 1, 2003, and on or	14
before June 30, 2005, the rate of the tax shall be six per cent.	15
On and after July 1, 2005, the rate of the tax shall be five and	16
one-half per cent.	17

(2) In the case of the lease or rental, with a fixed term of	18
more than thirty days or an indefinite term with a minimum period	19
of more than thirty days, of any motor vehicles designed by the	20
manufacturer to carry a load of not more than one ton, watercraft,	21
outboard motor, or aircraft, or of any tangible personal property,	22
other than motor vehicles designed by the manufacturer to carry a	23
load of more than one ton, to be used by the lessee or renter	24
primarily for business purposes, the tax shall be collected by the	25
seller at the time the lease or rental is consummated and shall be	26
calculated by the seller on the basis of the total amount to be	27
paid by the lessee or renter under the lease or rental agreement.	28
If the total amount of the consideration for the lease or rental	29
includes amounts that are not calculated at the time the lease or	30
rental is executed, the tax shall be calculated and collected by	31
the seller at the time such amounts are billed to the lessee or	32
renter. In the case of an open-end lease or rental, the tax shall	33
be calculated by the seller on the basis of the total amount to be	34
paid during the initial fixed term of the lease or rental, and for	35
each subsequent renewal period as it comes due. As used in this	36
division, "motor vehicle" has the same meaning as in section	37
4501.01 of the Revised Code, and "watercraft" includes an outdrive	38
unit attached to the watercraft.	39

(3) Except as provided in division (A)(2) of this section, in	40
the case of a transaction, the price of which consists in whole or	41
part of the lease or rental of tangible personal property, the tax	42
shall be measured by the installments of those leases or rentals.	43

(B) Each consumer, storing, using, or otherwise consuming in	44
this state tangible personal property or realizing in this state	45
the benefit of any service provided, shall be liable for the tax,	46
and such liability shall not be extinguished until the tax has	47
been paid to this state; provided, that the consumer shall be	48
relieved from further liability for the tax if the tax has been	49
paid to a seller in accordance with section 5741.04 of the Revised	50
Code or prepaid by the seller in accordance with section 5741.06	51
of the Revised Code.	52

(C) The tax does not apply to the storage, use, or	53
consumption in this state of the following described tangible	54
personal property or services, nor to the storage, use, or	55
consumption or benefit in this state of tangible personal property	56
or services purchased under the following described circumstances:	57

(1) When the sale of property or service in this state is	58
subject to the excise tax imposed by sections 5739.01 to 5739.31	59
of the Revised Code, provided said tax has been paid;	60

(2) Except as provided in division (D) of this section,	61
tangible personal property or services, the acquisition of which,	62
if made in Ohio, would be a sale not subject to the tax imposed by	63
sections 5739.01 to 5739.31 of the Revised Code;	64

(3) Property or services, the storage, use, or other	65
consumption of or benefit from which this state is prohibited from	66
taxing by the Constitution of the United States, laws of the	67
United States, or the Constitution of this state. This exemption	68
shall not exempt from the application of the tax imposed by this	69
section the storage, use, or consumption of tangible personal	70
property that was purchased in interstate commerce, but that has	71
come to rest in this state, provided that fuel to be used or	72
transported in carrying on interstate commerce that is stopped	73
within this state pending transfer from one conveyance to another	74
is exempt from the excise tax imposed by this section and section	75
5739.02 of the Revised Code;	76

(4) Transient use of tangible personal property in this state	77
by a nonresident tourist or vacationer, or a ~~non-business~~	78
nonbusiness use within this state by a nonresident of this state,	79
if the property so used was purchased outside this state for use	80
outside this state and is not required to be registered or	81
licensed under the laws of this state;	82

(5) Tangible personal property or services rendered, upon	83
which taxes have been paid to another jurisdiction to the extent	84
of the amount of the tax paid to such other jurisdiction. Where	85
the amount of the tax imposed by this section and imposed pursuant	86
to section 5741.021, 5741.022, or 5741.023 of the Revised Code	87
exceeds the amount paid to another jurisdiction, the difference	88
shall be allocated between the tax imposed by this section and any	89
tax imposed by a county or a transit authority pursuant to section	90
5741.021, 5741.022, or 5741.023 of the Revised Code, in proportion	91
to the respective rates of such taxes.	92

As used in this subdivision, "taxes paid to another	93
jurisdiction" means the total amount of retail sales or use tax or	94
similar tax based upon the sale, purchase, or use of tangible	95
personal property or services rendered legally, levied by and paid	96
to another state or political subdivision thereof, or to the	97
District of Columbia, where the payment of such tax does not	98
entitle the taxpayer to any refund or credit for such payment.	99

(6) The transfer of a used manufactured home or used mobile	100
home, as defined by section 5739.0210 of the Revised Code, made on	101
or after January 1, 2000;	102

(7) Drugs that are or are intended to be distributed free of	103
charge to a practitioner licensed to prescribe, dispense, and	104
administer drugs to a human being in the course of a professional	105
practice and that by law may be dispensed only by or upon the	106
order of such a practitioner.	107

(8) Computer equipment and related software leased from a	108
lessor located outside this state and initially received in this	109
state on behalf of the consumer by a third party that will retain	110
possession of such property for not more than ninety days and that	111
will, within that ninety-day period, deliver such property to the	112
consumer at a location outside this state. Division (C)(8) of this	113
section does not provide exemption from taxation for any otherwise	114
taxable charges associated with such property while it is in this	115
state or for any subsequent storage, use, or consumption of such	116
property in this state by or on behalf of the consumer.	117

(9) Cigarettes that have a wholesale value of three hundred	118
dollars or less used, stored, or consumed, but not for resale, in	119
any month.	120

(10) Tangible personal property held for sale by a person but	121
not for that person's own use and donated by that person, without	122
charge or other compensation, to either of the following:	123

(a) A nonprofit organization operated exclusively for	124
charitable purposes in this state, no part of the net income of	125
which inures to the benefit of any private shareholder or	126
individual and no substantial part of the activities of which	127
consists of carrying on propaganda or otherwise attempting to	128
influence legislation; or	129

(b) This state or any political subdivision of this state,	130
but only if donated for exclusively public purposes.	131

For the purposes of division (C)(10) of this section,	132
"charitable purposes" has the same meaning as in division (B)(12)	133
of section 5739.02 of the Revised Code.	134

(D) The tax applies to the storage, use, or other consumption	135
in this state of tangible personal property or services, the	136
acquisition of which at the time of sale was excepted under	137
division (E) of section 5739.01 of the Revised Code from the tax	138
imposed by section 5739.02 of the Revised Code, but which has	139
subsequently been temporarily or permanently stored, used, or	140
otherwise consumed in a taxable manner.	141

(E)(1)(a) If any transaction is claimed to be exempt under	142
division (E) of section 5739.01 of the Revised Code or under	143
section 5739.02 of the Revised Code, with the exception of	144
divisions (B)(1) to (11) or (28) of section 5739.02 of the Revised	145
Code, the consumer shall provide to the seller, and the seller	146
shall obtain from the consumer, a certificate specifying the	147
reason that the transaction is not subject to the tax. The	148
certificate shall be in such form, and shall be provided either in	149
a hard copy form or electronic form, as the tax commissioner	150
prescribes.	151

(b) A seller that obtains a fully completed exemption	152
certificate from a consumer is relieved of liability for	153
collecting and remitting tax on any sale covered by that	154
certificate. If it is determined the exemption was improperly	155
claimed, the consumer shall be liable for any tax due on that sale	156
under this chapter. Relief under this division from liability does	157
not apply to any of the following:	158

(ii) A seller that solicits consumers to participate in the	160
unlawful claim of an exemption;	161

(iii) A seller that accepts an exemption certificate from a	162
consumer that claims an exemption based on who purchases or who	163
sells property or a service, when the subject of the transaction	164
sought to be covered by the exemption certificate is actually	165
received by the consumer at a location operated by the seller in	166
this state, and this state has posted to its web site an exemption	167
certificate form that clearly and affirmatively indicates that the	168
claimed exemption is not available in this state;	169

(iv) A seller that accepts an exemption certificate from a	170
consumer who claims a multiple points of use exemption under	171
division (B) of section 5739.033 of the Revised Code, if the item	172
purchased is tangible personal property, other than prewritten	173
computer software.	174

(2) The seller shall maintain records, including exemption	175
certificates, of all sales on which a consumer has claimed an	176
exemption, and provide them to the tax commissioner on request.	177

(3) If no certificate is provided or obtained within ninety	178
days after the date on which the transaction is consummated, it	179
shall be presumed that the tax applies. Failure to have so	180
provided or obtained a certificate shall not preclude a seller,	181
within one hundred twenty days after the tax commissioner gives	182
written notice of intent to levy an assessment, from either	183
establishing that the transaction is not subject to the tax, or	184
obtaining, in good faith, a fully completed exemption certificate.	185

(4) If a transaction is claimed to be exempt under division	186
(B)(13) of section 5739.02 of the Revised Code, the contractor	187
shall obtain certification of the claimed exemption from the	188
contractee. This certification shall be in addition to an	189
exemption certificate provided by the contractor to the seller. A	190
contractee that provides a certification under this division shall	191
be deemed to be the consumer of all items purchased by the	192
contractor under the claim of exemption, if it is subsequently	193
determined that the exemption is not properly claimed. The	194
certification shall be in such form as the tax commissioner	195
prescribes.	196

(F) A seller who files a petition for reassessment contesting	197
the assessment of tax on transactions for which the seller	198
obtained no valid exemption certificates, and for which the seller	199
failed to establish that the transactions were not subject to the	200
tax during the one-hundred-twenty-day period allowed under	201
division (E) of this section, may present to the tax commissioner	202
additional evidence to prove that the transactions were exempt.	203
The seller shall file such evidence within ninety days of the	204
receipt by the seller of the notice of assessment, except that,	205
upon application and for reasonable cause, the tax commissioner	206
may extend the period for submitting such evidence thirty days.	207