As Passed by the Senate

126th General Assembly Regular Session 2005-2006

Sub. S. B. No. 26

Senators Amstutz, Austria, Clancy, Carey, Coughlin, Gardner, Goodman, Harris, Hottinger, Jacobson, Mumper, Padgett, Schuring, Spada, Wachtmann, Zurz, Cates, Grendell, Niehaus 

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A BILL

To amend sections 5739.031, 5739.033, 5739.034,

1

5739.035, 5739.123, and 5740.10 of the Revised

2

Code to phase-in destination-based sourcing of

3

sales for small businesses.

4

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

Section 1. That sections 5739.031, 5739.033, 5739.034,	5
5739.035, 5739.123, and 5740.10 of the Revised Code be amended to	6
read as follows:	7

Sec. 5739.031.  (A) Upon application, the tax commissioner	8
may issue a direct payment permit that authorizes a consumer to	9
pay the sales tax levied by or pursuant to section 5739.02,	10
5739.021, 5739.023, or 5739.026 of the Revised Code or the use tax	11
levied by or pursuant to section 5741.02, 5741.021, 5741.022, or	12
5741.023 of the Revised Code directly to the state and waives the	13
collection of the tax by the vendor or seller if payment directly	14
to the state would improve compliance and increase the efficiency	15
of the administration of the tax. The commissioner may adopt rules	16
establishing the criteria for the issuance of such permits.	17

(B) Each permit holder, on or before the twenty-third day of	18
each month, shall make and file with the treasurer of state a	19
return for the preceding month in such form as is prescribed by	20
the tax commissioner and shall pay the tax shown on the return to	21
be due. The return shall show the sum of the prices of taxable	22
merchandise used and taxable services received, the amount of tax	23
due from the permit holder, and such other information as the	24
commissioner deems necessary. The commissioner, upon written	25
request by the permit holder, may extend the time for making and	26
filing returns and paying the tax. If the commissioner determines	27
that a permit holder's tax liability is not such as to merit	28
monthly filing, the commissioner may authorize the permit holder	29
to file returns and pay the tax at less frequent intervals. The	30
treasurer of state shall show on the return the date it was filed	31
and the amount of the payment remitted to the treasurer.	32
Thereafter, the treasurer immediately shall transmit all returns	33
filed under this section to the tax commissioner.	34

Any permit holder required to file a return and pay the tax	35
under this section whose total payment for any calendar year	36
equals or exceeds the amount shown in section 5739.032 of the	37
Revised Code shall make each payment required by this section in	38
the second ensuing and each succeeding year by electronic funds	39
transfer as prescribed by, and on or before the dates specified	40
in, section 5739.032 of the Revised Code, except as otherwise	41
prescribed by that section.	42

(C) For purposes of reporting and remitting the tax, the	43
price of tangible personal property or services purchased by, or	44
of tangible personal property produced by, the permit holder shall	45
be determined under division (G) of section 5741.01 of the Revised	46
Code. Except as otherwise provided in division (C)(E) of section	47
5739.033 of the Revised Code, the situs of any purchase	48
transaction made by the permit holder is the location where the	49
tangible personal property or service is received by the permit	50
holder.	51

(D) It shall be the duty of every permit holder required to	52
make a return and pay its tax under this section to keep and	53
preserve suitable records of purchases together with invoices of	54
purchases, bills of lading, asset ledgers, depreciation schedules,	55
transfer journals, and such other primary and secondary records	56
and documents in such form as the commissioner requires. All such	57
records and other documents shall be open during business hours to	58
the inspection of the tax commissioner, and shall be preserved for	59
a period of four years, unless the commissioner, in writing, has	60
authorized their destruction or disposal at an earlier date, or by	61
order or by reason of a waiver of the four-year time limitation	62
pursuant to section 5739.16 of the Revised Code requires that they	63
be kept longer.	64

(E) A permit granted pursuant to this section shall continue	65
to be valid until surrendered by the holder or canceled for cause	66
by the tax commissioner.	67

(F) Persons who hold a direct payment permit that has not	68
been canceled shall not be required to issue exemption	69
certificates and shall not be required to pay the tax as	70
prescribed in sections 5739.03, 5739.033, and 5741.12 of the	71
Revised Code. Such persons shall notify vendors and sellers from	72
whom purchases of tangible personal property or services are made,	73
of their direct payment permit number and that the tax is being	74
paid directly to the state. Upon receipt of such notice, such	75
vendor or seller shall be absolved from all duties and liabilities	76
imposed by section 5739.03 or 5741.04 of the Revised Code with	77
respect to sales of tangible personal property or services to such	78
permit holder.	79

Vendors and sellers who make sales upon which the tax is not	80
collected by reason of the provisions of this section shall	81
maintain records in such manner that the amount involved and	82
identity of the purchaser may be ascertained. The receipts from	83
such sales shall not be subject to the tax levied in section	84
5739.10 of the Revised Code.	85

Upon the cancellation or surrender of a direct payment	86
permit, the provisions of sections 5739.03, 5741.04, and 5741.12	87
of the Revised Code shall immediately apply to all purchases made	88
subsequent to such cancellation or surrender by the person who	89
previously held such permit, and such person shall so notify	90
vendors and sellers from whom purchases of tangible personal	91
property or services are made, in writing, prior to or at the time	92
of the first purchase after such cancellation or surrender. Upon	93
receipt of such notice, the vendor shall be subject to the	94
provisions of sections 5739.03 and 5739.10 of the Revised Code and	95
the seller shall be subject to the provisions of section 5741.04	96
of the Revised Code, with respect to all sales subsequently made	97
to such person. Failure of any such person to notify vendors or	98
sellers from whom purchases of tangible personal property or	99
services are made of the cancellation or surrender of a direct	100
payment permit shall be considered as a refusal to pay the tax by	101
the person required to issue such notice.	102

Sec. 5739.033. This(A) Except as provided in division (B)	103
of this section, divisions (C) to (I) of this section applies	104
apply to sales made on and after July 1, 2005. Sales made before	105
July 1, 2005, are subject to section 5739.035 of the Revised Code.	106
On and after January 1, 2005, any vendor may irrevocably elect to	107
comply with divisions (C) to (I) of this section for all of the	108
vendor's sales and places of business in this state.	109

The amount of tax due pursuant to sections 5739.02, 5739.021,	110
5739.023, and 5739.026 of the Revised Code is the sum of the taxes	111
imposed pursuant to those sections at the sourcing location of the	112
sale as determined under this section or, if applicable, under	113
division (C) of section 5739.031 or section 5739.034 of the	114
Revised Code, or at the situs of the sale as determined under	115
section 5739.035 of the Revised Code. This section applies only to	116
a vendor's or seller's obligation to collect and remit sales taxes	117
under section 5739.02, 5739.021, 5739.023, or 5739.026 of the	118
Revised Code or use taxes under section 5741.02, 5741.021,	119
5741.022, or 5741.023 of the Revised Code. Division (A) of this	120
section does not apply in determining the jurisdiction for which	121
sellers are required to collect the use tax under section 5741.05	122
of the Revised Code. This section does not affect the obligation	123
of a consumer to remit use taxes on the storage, use, or other	124
consumption of tangible personal property or on the benefit	125
realized of any service provided, to the jurisdiction of that	126
storage, use, or consumption, or benefit realized.	127

(A)(B)(1) As used in this division, "delivery sale" means the	128
sale of tangible personal property or a service that is received	129
by a consumer, or a donee designated by the consumer, in a taxing	130
jurisdiction that is not the taxing jurisdiction in which the	131
vendor has a fixed place of business.	132

(2)(a) A vendor with total delivery sales in calendar year	133
2004 that are less than two million dollars may continue to situs	134
its sales under section 5739.035 of the Revised Code in calendar	135
years 2005 and 2006.	136

(b) A vendor with total delivery sales in calendar year 2006	137
that are less than one million dollars may continue to situs its	138
sales under section 5739.035 of the Revised Code in calendar year	139
2007.	140

(c) A vendor with total delivery sales in calendar year 2007	141
that are less than five hundred thousand dollars may continue to	142
situs its sales under section 5739.035 of the Revised Code in	143
calendar year 2008.	144

(d) In calendar year 2009 and thereafter, all vendors shall	145
source their sales under divisions (C) to (I) of this section.	146

(3) If, in calendar year 2004, 2005, 2006, 2007, or 2008, a	147
vendor has total delivery sales that exceed the dollar amount in	148
division (B)(2)(a), (b), or (c) of this section that is applicable	149
to that calendar year, the vendor shall source its sales under	150
divisions (C) to (I) of this section and shall continue to source	151
its sales under those divisions, regardless of the amount of the	152
vendor's total delivery sales in future years.	153

(C) Except for sales, other than leases, of titled motor	154
vehicles, titled watercraft, or titled outboard motors as provided	155
in section 5741.05 of the Revised Code, or as otherwise provided	156
in this section and section 5739.034 or 5740.10 of the Revised	157
Code, all sales shall be sourced as follows:	158

(1) If the consumer or a donee designated by the consumer	159
receives tangible personal property or a service at a vendor's	160
place of business, the sale shall be sourced to that place of	161
business.	162

(2) When the tangible personal property or service is not	163
received at a vendor's place of business, the sale shall be	164
sourced to the location known to the vendor where the consumer or	165
the donee designated by the consumer receives the tangible	166
personal property or service, including the location indicated by	167
instructions for delivery to the consumer or the consumer's donee.	168

(3) If divisions (A)(C)(1) and (2) of this section do not	169
apply, the sale shall be sourced to the location indicated by an	170
address for the consumer that is available from the vendor's	171
business records that are maintained in the ordinary course of the	172
vendor's business, when use of that address does not constitute	173
bad faith.	174

(4) If divisions (A)(C)(1), (2), and (3) of this section do	175
not apply, the sale shall be sourced to the location indicated by	176
an address for the consumer obtained during the consummation of	177
the sale, including the address associated with the consumer's	178
payment instrument, if no other address is available, when use of	179
that address does not constitute bad faith.	180

(5) If divisions (A)(C)(1), (2), (3), and (4) of this section	181
do not apply, including in the circumstance where the vendor is	182
without sufficient information to apply any of those divisions,	183
the sale shall be sourced to the address from which tangible	184
personal property was shipped, or from which the service was	185
provided, disregarding any location that merely provided the	186
electronic transfer of the property sold or service provided.	187

(6) As used in division (A)(C) of this section, "receive"	188
means taking possession of tangible personal property or making	189
first use of a service. "Receive" does not include possession by a	190
shipping company on behalf of a consumer.	191

(B)(D)(1) Notwithstanding divisions (A)(C)(1) to (5) of this	192
section, a consumer that is not a holder of a direct payment	193
permit granted under section 5739.031 of the Revised Code, that	194
purchases computer software delivered electronically or a service	195
for use in business, and that knows at the time of purchase that	196
such software or service will be concurrently available for use in	197
more than one taxing jurisdiction shall deliver to the vendor in	198
conjunction with its purchase a multiple points of use exemption	199
form prescribed by the tax commissioner disclosing this fact. On	200
receipt of the multiple points of use exemption form, the vendor	201
is relieved of its obligation to collect, pay, or remit the tax	202
due, and the consumer must pay the tax directly to the state.	203

(2) A consumer that delivers such form to a vendor may use	204
any reasonable, consistent, and uniform method of apportioning the	205
tax due on the computer software delivered electronically or	206
service for use in business that is supported by the consumer's	207
business records as they existed at the time of the sale.	208

(3) The multiple points of use exemption form shall remain in	209
effect for all future sales by the vendor to the consumer until it	210
is revoked in writing by the consumer, except as to the consumer's	211
specific apportionment of a subsequent sale under division	212
(B)(D)(2) of this section and the facts existing at the time of	213
the sale.	214

(C)(E) A person who holds a direct payment permit issued	215
under section 5739.031 of the Revised Code is not required to	216
deliver a multiple points of use exemption form to a vendor. But	217
such permit holder shall comply with division (B)(D)(2) of this	218
section in apportioning the tax due on computer software delivered	219
electronically or a service used in business that will be	220
concurrently available for use in more than one taxing	221
jurisdiction.	222

(D)(F)(1) Notwithstanding divisions (A)(C)(1) to (5) of this	223
section, the purchaser of direct mail that is not a holder of a	224
direct payment permit shall provide to the vendor in conjunction	225
with the purchase either a direct mail form prescribed by the tax	226
commissioner, or information to show the jurisdictions to which	227
the direct mail is delivered to recipients.	228

(2) Upon receipt of a direct mail form, the vendor is	229
relieved of all obligations to collect, pay, or remit the	230
applicable tax and the purchaser is obligated to pay that tax on a	231
direct pay basis. A direct mail form shall remain in effect for	232
all future sales of direct mail by the vendor to the purchaser	233
until it is revoked in writing.	234

(3) Upon receipt of information from the purchaser showing	235
the jurisdictions to which the direct mail is delivered to	236
recipients, the vendor shall collect the tax according to the	237
delivery information provided by the purchaser. In the absence of	238
bad faith, the vendor is relieved of any further obligation to	239
collect tax on any transaction where the vendor has collected tax	240
pursuant to the delivery information provided by the purchaser.	241

(4) If the purchaser of direct mail does not have a direct	242
payment permit and does not provide the vendor with either a	243
direct mail form or delivery information as required by division	244
(D)(F)(1) of this section, the vendor shall collect the tax	245
according to division (A)(C)(5) of this section. Nothing in	246
division (D)(F)(4) of this section shall limit a purchaser's	247
obligation to pay sales or use tax to any state to which the	248
direct mail is delivered.	249

(5) If a purchaser of direct mail provides the vendor with	250
documentation of direct payment authority, the purchaser shall not	251
be required to provide a direct mail form or delivery information	252
to the vendor.	253

(E)(G) If the vendor provides lodging to transient guests as	254
specified in division (B)(2) of section 5739.01 of the Revised	255
Code, the sale shall be sourced to the location where the lodging	256
is located.	257

(F)(H)(1) As used in this division and division (G)(I) of	258
this section, "transportation equipment" means any of the	259
following:	260

(a) Locomotives and railcars that are utilized for the	261
carriage of persons or property in interstate commerce.	262

(b) Trucks and truck-tractors with a gross vehicle weight	263
rating of greater than ten thousand pounds, trailers,	264
semi-trailers, or passenger buses that are registered through the	265
international registration plan and are operated under authority	266
of a carrier authorized and certificated by the United States	267
department of transportation or another federal authority to	268
engage in the carriage of persons or property in interstate	269
commerce.	270

(c) Aircraft that are operated by air carriers authorized and	271
certificated by the United States department of transportation or	272
another federal authority to engage in the carriage of persons or	273
property in interstate or foreign commerce.	274

(d) Containers designed for use on and component parts	275
attached to or secured on the items set forth in division	276
(F)(H)(1)(a), (b), or (c) of this section.	277

(2) A sale, lease, or rental of transportation equipment	278
shall be sourced pursuant to division (A)(C) of this section.	279

(G)(I)(1) A lease or rental of tangible personal property	280
that does not require recurring periodic payments shall be sourced	281
pursuant to division (A)(C) of this section.	282

(2) A lease or rental of tangible personal property that	283
requires recurring periodic payments shall be sourced as follows:	284

(a) In the case of a motor vehicle, other than a motor	285
vehicle that is transportation equipment, such lease or rental	286
shall be sourced to the primary property location as follows:	287

(i) For a lease or rental taxed pursuant to division (A)(2)	288
of section 5739.02 of the Revised Code, the primary property	289
location is the address of the lessee or renter used for titling	290
the motor vehicle pursuant to section 4505.06 of the Revised Code	291
at the time the lease or rental is consummated.	292

(ii) For a lease or rental taxed pursuant to division (A)(3)	293
of section 5739.02 of the Revised Code, the primary property	294
location for each lease or rental installment is the primary	295
property location for the period covered by the installment.	296

(b) In the case of an aircraft, other than an aircraft that	297
is transportation equipment, such lease or rental shall be sourced	298
to the primary property location as follows:	299

(i) For a lease or rental taxed pursuant to division (A)(2)	300
of section 5739.02 of the Revised Code, the primary property	301
location is the primary property location at the time the lease or	302
rental is consummated.	303

(ii) For a lease or rental taxed pursuant to division (A)(3)	304
of section 5739.02 of the Revised Code, the primary property	305
location for each lease or rental installment is the primary	306
property location for the period covered by the installment.	307

(c) In the case of a watercraft or an outboard motor required	308
to be titled in this state pursuant to Chapter 1548. of the	309
Revised Code, such lease or rental shall be sourced to the primary	310
property location as follows:	311

(i) For a lease or rental taxed pursuant to division (A)(2)	312
of section 5739.02 of the Revised Code, the primary property	313
location is the address of the lessee or renter shown on the	314
title.	315

(ii) For a lease or rental taxed pursuant to division (A)(3)	316
of section 5739.02 of the Revised Code, the primary property	317
location for the initial lease or rental installment is the	318
address of the lessee or renter shown on the title. For each	319
subsequent installment, the primary property location is the	320
primary property location for the period covered by the	321
installment.	322

(d) In the case of a lease or rental of all other tangible	323
personal property, other than transportation equipment, such lease	324
or rental shall be sourced as follows:	325

(i) For a lease or rental that is taxed pursuant to division	326
(A)(2) of section 5739.02 of the Revised Code, the lease or rental	327
shall be sourced pursuant to division (A)(C) of this section at	328
the time the lease or rental is consummated.	329

(ii) For a lease or rental that is taxed pursuant to division	330
(A)(3) of section 5739.02 of the Revised Code, the initial lease	331
or rental installment shall be sourced pursuant to division (A)(C)	332
of this section. Each subsequent installment shall be sourced to	333
the primary property location for the period covered by the	334
installment.	335

(3) As used in division (G)(I) of this section, "primary	336
property location" means an address for tangible personal property	337
provided by the lessee or renter that is available to the lessor	338
or owner from its records maintained in the ordinary course of	339
business, when use of that address does not constitute bad faith.	340

Sec. 5739.034. (A) As used in this section:

341

(1) "Air-to-ground radiotelephone service" means a radio	342
service, as defined in 47 C.F.R. 22.99, in which common carriers	343
are authorized to offer and provide radio telecommunications	344
service for hire to subscribers in aircraft.	345

(2) "Call-by-call basis" means any method of charging for	346
telecommunications services where the price is measured by	347
individual calls.	348

(3) "Customer" means the person or entity that contracts with	349
a seller of telecommunications service. If the end user of	350
telecommunications service is not the contracting party, the end	351
user of the telecommunications service is the customer of the	352
telecommunications service. "Customer" does not include a reseller	353
of telecommunications service or of mobile telecommunications	354
service of a serving carrier under an agreement to serve the	355
customer outside the home service provider's licensed service	356
area.	357

(4) "End user" means the person who utilizes the	358
telecommunications service. In the case of a person other than an	359
individual, "end user" means the individual who utilizes the	360
service on behalf of the person.	361

(5) "Home service provider" has the same meaning as in the	362
"Mobile Telecommunications Sourcing Act," Pub. L. No. 106-252, 114	363
Stat. 631 (2000), 4 U.S.C. 124(5), as amended.	364

(6) "Place of primary use" means the street address	365
representative of where the customer's use of the	366
telecommunications service primarily occurs, which must be the	367
residential street address or the primary business street address	368
of the customer. In the case of mobile telecommunications	369
services, "place of primary use" must be within the licensed	370
service area of the home service provider.	371

(7) "Post-paid calling service" means the telecommunications	372
service obtained by making a payment on a call-by-call basis	373
either through the use of a credit card or payment mechanism such	374
as a bank card, travel card, credit card, or debit card, or by	375
charge made to a telephone number that is not associated with the	376
origination or termination of the telecommunications service.	377
"Post-paid calling service" includes a telecommunications service	378
that would be a prepaid calling service, but for the fact that it	379
is not exclusively a telecommunications service.	380

(8) "Prepaid calling service" means the right to access	381
exclusively a telecommunications service that must be paid for in	382
advance, that enables the origination of calls using an access	383
number or authorization code, whether manually or electronically	384
dialed, and that is sold in predetermined units or dollars of	385
which the number declines with use in a known amount.	386

(9) "Service address" means:

387

(a) The location of the telecommunications equipment to which	388
a customer's call is charged and from which the call originates or	389
terminates, regardless of where the call is billed or paid.	390

(b) If the location in division (A)(9)(a) of this section is	391
not known, "service address" means the origination point of the	392
signal of the telecommunications service first identified by	393
either the seller's telecommunications system or in information	394
received by the seller from its service provider, where the system	395
used to transport such signals is not that of the seller.	396

(c) If the locations in divisions (A)(9)(a) and (b) of this	397
section are not known, "service address" means the location of the	398
customer's place of primary use.	399

(B) The amount of tax due pursuant to sections 5739.02,	400
5739.021, 5739.023, and 5739.026 of the Revised Code on sales of	401
telecommunications service, information service, or mobile	402
telecommunications service, is the sum of the taxes imposed	403
pursuant to those sections at the sourcing location of the sale as	404
determined under this section.	405

(C) Except for the telecommunications services described in	406
division (E) of this section, the sale of telecommunications	407
service sold on a call-by-call basis shall be sourced to each	408
level of taxing jurisdiction where the call originates and	409
terminates in that jurisdiction, or each level of taxing	410
jurisdiction where the call either originates or terminates and in	411
which the service address also is located.	412

(D) Except for the telecommunications services described in	413
division (E) of this section, a sale of telecommunications	414
services sold on a basis other than a call-by-call basis shall be	415
sourced to the customer's place of primary use.	416

(E) The sale of the following telecommunications services	417
shall be sourced to each level of taxing jurisdiction, as follows:	418

(1) A sale of mobile telecommunications service, other than	419
air-to-ground radiotelephone service and prepaid calling service,	420
shall be sourced to the customer's place of primary use as	421
required by the Mobile Telecommunications Sourcing Act.	422

(2) A sale of post-paid calling service shall be sourced to	423
the origination point of the telecommunications signal as first	424
identified by the service provider's telecommunications system, or	425
information received by the seller from its service provider,	426
where the system used to transport such signals is not that of the	427
seller.	428

(3) A sale of mobile telecommunications service that is a	429
prepaid telecommunications service shall be sourced under division	430
(A)(C) of section 5739.033 of the Revised Code, but inor, if	431
permitted by division (B) of that section, shall be sitused under	432
section 5739.035 of the Revised Code. In lieu of sourcing the sale	433
of thethat service under division (A)(C)(5) of that section	434
5739.033 of the Revised Code, it may be sourced to the location	435
associated with the mobile telephone number.	436

Sec. 5739.035. This section only applies to sales that are	437
required to be sitused under this section pursuant to division (A)	438
or (B) of section 5739.033 of the Revised Code.	439

(A) Except as otherwise provided in this section, the situs	440
of all sales is the vendor's place of business.	441

(1) If the consumer or the consumer's agent takes possession	442
of the tangible personal property at a place of business of the	443
vendor where the purchase contract or agreement was made, the	444
situs of the sale is that place of business.	445

(2) If the consumer or the consumer's agent takes possession	446
of the tangible personal property other than at a place of	447
business of the vendor, or takes possession at a warehouse or	448
similar facility of the vendor, the situs of the sale is the	449
vendor's place of business where the purchase contract or	450
agreement was made or the purchase order was received.	451

(3) If the vendor provides a service specified in division	452
(B)(3)(a), (b), (c), (d), (n), (o), (r), (s), or (t) of section	453
5739.01 or makes a sale specified in division (B)(8) of section	454
5739.01 of the Revised Code, the situs of the sale is the vendor's	455
place of business where the service is performed or the contract	456
or agreement for the service was made or the purchase order was	457
received.	458

(B) If the vendor is a transient vendor as specified in	459
division (B) of section 5739.17 of the Revised Code, the situs of	460
the sale is the vendor's temporary place of business or, if the	461
transient vendor is the lessor of titled motor vehicles, titled	462
watercraft, or titled outboard motors, at the location where the	463
lessee keeps the leased property.	464

(C) If the vendor makes sales of tangible personal property	465
from a stock of goods carried in a motor vehicle, from which the	466
purchaser makes selection and takes possession, or from which the	467
vendor sells tangible personal property the quantity of which has	468
not been determined prior to the time the purchaser takes	469
possession, the situs of the sale is the location of the motor	470
vehicle when the sale is made.	471

(D) If the vendor is a delivery vendor as specified in	472
division (D) of section 5739.17 of the Revised Code, the situs of	473
the sale is the place where the tangible personal property is	474
delivered, where the leased property is used, or where the service	475
is performed or received.	476

(E) If the vendor provides a service specified in division	477
(B)(3)(e), (g), (h), (j), (k), (l), (m), (q), or (u) of section	478
5739.01 of the Revised Code, the situs of the sale is the location	479
of the consumer where the service is performed or received.	480

(F) If the vendor provides lodging to transient guests as	481
specified in division (B)(2) of section 5739.01 of the Revised	482
Code, the situs of the sale is the location where the lodging is	483
located.	484

(G) If the vendor sells a warranty, maintenance or service	485
contract, or similar agreement as specified in division (B)(7) of	486
section 5739.01 of the Revised Code and the vendor is a delivery	487
vendor, the situs of the sale is the location of the consumer. If	488
the vendor is not a delivery vendor, the situs of the sale is the	489
vendor's place of business where the contract or agreement was	490
made, unless the warranty or contract is a component of the sale	491
of a titled motor vehicle, titled watercraft, or titled outboard	492
motor, in which case the situs of the sale is the county of	493
titling.	494

(H) Except as otherwise provided in this division, if the	495
vendor sells a prepaid authorization number or a prepaid telephone	496
calling card, the situs of the sale is the vendor's place of	497
business and shall be taxed at the time of sale. If the vendor	498
sells a prepaid authorization number or prepaid telephone calling	499
card through a telephone call, electronic commerce, or any other	500
form of remote commerce, the situs of the sale is the consumer's	501
shipping address, or, if there is no item shipped, at the	502
consumer's billing address.	503

Sec. 5739.123.  (A) As used in this section,	504
"destination-based sourcing requirements" means the manner in	505
which sales are required to be sourced under divisions (C) to (I)	506
of section 5739.033 of the Revised Code.	507

(B) A vendor who holds a license issued prior to July 1,	508
2005, under division (A) of section 5739.17 of the Revised Code	509
may apply for temporary compensation to assist the vendor in	510
complying with the destination-based sourcing requirements for the	511
first six months those sourcing requirements become applicable to	512
the vendor under section 5739.033 of the Revised Code. The vendor	513
shall file the application in accordance with division (C) of this	514
section. The compensation shall be calculated for each county each	515
month of the six-month period, and shall equal the amount of the	516
tax reported on the return for sales of tangible personal property	517
delivered to each county in which the vendor does not have a fixed	518
place of business and does not, or is not required to, hold a	519
license issued under division (A) of section 5739.17 of the	520
Revised Code for that business, not to exceed twenty-five dollars	521
per county for each month. Only amounts paid by the vendor for	522
which the vendor is eligible for a discount under division (B) of	523
section 5739.12 of the Revised Code and that are shown on returns	524
filed during that six-month period shall be considered in	525
calculating the compensation. In no event shall a vendor receive	526
compensation that exceeds its total cost of complying with the	527
destination-based sourcing requirements. For purposes of the	528
six-month compensation period, a partial month shall be considered	529
a month.	530

(C) A vendor that applies for compensation under this section	531
shall file an application with the tax commissioner on a form	532
prescribed by the commissioner. The application shall be filed	533
within sixty days after the last day of the last month of the	534
six-month period for which the vendor is requesting compensation.	535
The commissioner shall determine the amount of compensation to	536
which the vendor is entitled, and if that amount is equal to or	537
greater than the amount claimed on the application, the	538
commissioner shall certify that amount to the director of budget	539
and management and the treasurer of state for payment from the	540
general revenue fund. If the commissioner determines that the	541
amount of compensation to which the vendor is entitled is less	542
than the amount claimed on the vendor's application, the	543
commissioner shall proceed in accordance with section 5703.70 of	544
the Revised Code.	545

(D) The compensation provided under this section shall not	546
reduce the amount required to be returned to counties and transit	547
authorities under section 5739.21 of the Revised Code.	548

Sec. 5740.10. As used in this section, "vendors" means	549
persons licensed under division (A) of section 5739.17 of the	550
Revised Code that have limited Ohio taxabledelivery sales, as	551
defined by the tax commissioner under thisin division (B) of	552
section 5739.033 of the Revised Code.	553

To address the impact the change from origin-based sourcing	554
under section 5739.035 of the Revised Code to destination-based	555
sourcing under section 5739.033 of the Revised Code has on	556
vendors, the tax commissioner or the commissioner's designee shall	557
work with the states that are implementing the interstate	558
streamlined sales and use tax agreement to encourage the adoption	559
of an amendment to the agreement that allows states to mitigate	560
the impact by allowing vendors that have delivery sales to source	561
sales at the vendors' places of business. If the amendment is	562
adopted or if this change in sourcing is otherwise allowed without	563
amendment of the agreement, the commissioner shall adopt a rule	564
that excepts vendors from destination-based sourcing under section	565
5739.033 of the Revised Code, but that otherwise keeps Ohio in	566
substantial compliance with the agreement.	567

Section 2. That existing sections 5739.031, 5739.033,	568
5739.034, 5739.035, 5739.123, and 5740.10 of the Revised Code are	569
hereby repealed.	570

Section 3. Sections 5739.031, 5739.033, 5739.034, 5739.035,	571
5739.123, and 5740.10 of the Revised Code, as amended by this act,	572
provide for or are essential to the implementation of a tax levy.	573
Therefore, under Ohio Constitution, Article II, Section 1d, those	574
sections as amended by this act are not subject to the referendum	575
and go into immediate effect when this act becomes law.	576

This section provides for or is essential to the	577
implementation of a tax levy. Therefore, under Ohio Constitution,	578
Article II, Section 1d, this section is not subject to the	579
referendum and goes into immediate effect when this act becomes	580
law.	581