As Reported by the House Ways and Means Committee

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 

Representatives Hagan, Gibbs 

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A BILL

To amend sections 5739.01, 5739.031, 5739.033,

1

5739.034, 5739.035, 5739.123, 5739.24, and 5740.02

2

and to repeal section 5740.10 of the Revised Code

3

to phase-in destination-based sourcing of sales

4

for small businesses, by January 1, 2008.

5

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

Section 1. That sections 5739.01, 5739.031, 5739.033,	6
5739.034, 5739.035, 5739.123, 5739.24, and 5740.02 of the Revised	7
Code be amended to read as follows:	8

Sec. 5739.01.  As used in this chapter:

9

(A) "Person" includes individuals, receivers, assignees,	10
trustees in bankruptcy, estates, firms, partnerships,	11
associations, joint-stock companies, joint ventures, clubs,	12
societies, corporations, the state and its political subdivisions,	13
and combinations of individuals of any form.	14

(B) "Sale" and "selling" include all of the following	15
transactions for a consideration in any manner, whether absolutely	16
or conditionally, whether for a price or rental, in money or by	17
exchange, and by any means whatsoever:	18

(1) All transactions by which title or possession, or both,	19
of tangible personal property, is or is to be transferred, or a	20
license to use or consume tangible personal property is or is to	21
be granted;	22

(2) All transactions by which lodging by a hotel is or is to	23
be furnished to transient guests;	24

(3) All transactions by which:

25

(a) An item of tangible personal property is or is to be	26
repaired, except property, the purchase of which would not be	27
subject to the tax imposed by section 5739.02 of the Revised Code;	28

(b) An item of tangible personal property is or is to be	29
installed, except property, the purchase of which would not be	30
subject to the tax imposed by section 5739.02 of the Revised Code	31
or property that is or is to be incorporated into and will become	32
a part of a production, transmission, transportation, or	33
distribution system for the delivery of a public utility service;	34

(c) The service of washing, cleaning, waxing, polishing, or	35
painting a motor vehicle is or is to be furnished;	36

(d) Until August 1, 2003, industrial laundry cleaning	37
services are or are to be provided and, on and after August 1,	38
2003, laundry and dry cleaning services are or are to be provided;	39

(e) Automatic data processing, computer services, or	40
electronic information services are or are to be provided for use	41
in business when the true object of the transaction is the receipt	42
by the consumer of automatic data processing, computer services,	43
or electronic information services rather than the receipt of	44
personal or professional services to which automatic data	45
processing, computer services, or electronic information services	46
are incidental or supplemental. Notwithstanding any other	47
provision of this chapter, such transactions that occur between	48
members of an affiliated group are not sales. An affiliated group	49
means two or more persons related in such a way that one person	50
owns or controls the business operation of another member of the	51
group. In the case of corporations with stock, one corporation	52
owns or controls another if it owns more than fifty per cent of	53
the other corporation's common stock with voting rights.	54

(f) Telecommunications service, other than mobile	55
telecommunications service after July 31, 2002, is or is to be	56
provided, but does not include transactions by which local	57
telecommunications service is obtained from a coin-operated	58
telephone and paid for by using coin;	59

(g) Landscaping and lawn care service is or is to be	60
provided;	61

(h) Private investigation and security service is or is to be	62
provided;	63

(i) Information services or tangible personal property is	64
provided or ordered by means of a nine hundred telephone call;	65

(j) Building maintenance and janitorial service is or is to	66
be provided;	67

(k) Employment service is or is to be provided;

68

(l) Employment placement service is or is to be provided;

69

(m) Exterminating service is or is to be provided;

70

(n) Physical fitness facility service is or is to be	71
provided;	72

(o) Recreation and sports club service is or is to be	73
provided.	74

(p) After July 31, 2002, mobile telecommunications service is	75
or is to be provided when that service is sitused to this state	76
pursuant to the "Mobile Telecommunications Sourcing Act," Pub. L.	77
No. 106-252, 114 Stat. 626 to 632 (2000), 4 U.S.C.A. 116 to 126,	78
as amended.	79

(q) On and after August 1, 2003, satellite broadcasting	80
service is or is to be provided;	81

(r) On and after August 1, 2003, personal care service is or	82
is to be provided to an individual. As used in this division,	83
"personal care service" includes skin care, the application of	84
cosmetics, manicuring, pedicuring, hair removal, tattooing, body	85
piercing, tanning, massage, and other similar services. "Personal	86
care service" does not include a service provided by or on the	87
order of a licensed physician or licensed chiropractor, or the	88
cutting, coloring, or styling of an individual's hair.	89

(s) On and after August 1, 2003, the transportation of	90
persons by motor vehicle or aircraft is or is to be provided, when	91
the transportation is entirely within this state, except for	92
transportation provided by an ambulance service, by a transit bus,	93
as defined in section 5735.01 of the Revised Code, and	94
transportation provided by a citizen of the United States holding	95
a certificate of public convenience and necessity issued under 49	96
U.S.C. 41102;	97

(t) On and after August 1, 2003, motor vehicle towing service	98
is or is to be provided. As used in this division, "motor vehicle	99
towing service" means the towing or conveyance of a wrecked,	100
disabled, or illegally parked motor vehicle.	101

(u) On and after August 1, 2003, snow removal service is or	102
is to be provided. As used in this division, "snow removal	103
service" means the removal of snow by any mechanized means, but	104
does not include the providing of such service by a person that	105
has less than five thousand dollars in sales of such service	106
during the calendar year.	107

(4) All transactions by which printed, imprinted,	108
overprinted, lithographic, multilithic, blueprinted, photostatic,	109
or other productions or reproductions of written or graphic matter	110
are or are to be furnished or transferred;	111

(5) The production or fabrication of tangible personal	112
property for a consideration for consumers who furnish either	113
directly or indirectly the materials used in the production of	114
fabrication work; and include the furnishing, preparing, or	115
serving for a consideration of any tangible personal property	116
consumed on the premises of the person furnishing, preparing, or	117
serving such tangible personal property. Except as provided in	118
section 5739.03 of the Revised Code, a construction contract	119
pursuant to which tangible personal property is or is to be	120
incorporated into a structure or improvement on and becoming a	121
part of real property is not a sale of such tangible personal	122
property. The construction contractor is the consumer of such	123
tangible personal property, provided that the sale and	124
installation of carpeting, the sale and installation of	125
agricultural land tile, the sale and erection or installation of	126
portable grain bins, or the provision of landscaping and lawn care	127
service and the transfer of property as part of such service is	128
never a construction contract.	129

As used in division (B)(5) of this section:

130

(a) "Agricultural land tile" means fired clay or concrete	131
tile, or flexible or rigid perforated plastic pipe or tubing,	132
incorporated or to be incorporated into a subsurface drainage	133
system appurtenant to land used or to be used directly in	134
production by farming, agriculture, horticulture, or floriculture.	135
The term does not include such materials when they are or are to	136
be incorporated into a drainage system appurtenant to a building	137
or structure even if the building or structure is used or to be	138
used in such production.	139

(b) "Portable grain bin" means a structure that is used or to	140
be used by a person engaged in farming or agriculture to shelter	141
the person's grain and that is designed to be disassembled without	142
significant damage to its component parts.	143

(6) All transactions in which all of the shares of stock of a	144
closely held corporation are transferred, if the corporation is	145
not engaging in business and its entire assets consist of boats,	146
planes, motor vehicles, or other tangible personal property	147
operated primarily for the use and enjoyment of the shareholders;	148

(7) All transactions in which a warranty, maintenance or	149
service contract, or similar agreement by which the vendor of the	150
warranty, contract, or agreement agrees to repair or maintain the	151
tangible personal property of the consumer is or is to be	152
provided;	153

(8) ; (9) The transfer of copyrighted motion picture films	154
used solely for advertising purposes, except that the transfer of	155
such films for exhibition purposes is not a sale.	156

(9) On and after August 1, 2003, all transactions by which	157
tangible personal property is or is to be stored, except such	158
property that the consumer of the storage holds for sale in the	159
regular course of business.	160

Except Other than as provided in this section, "sale" and	161
"selling" do not include transfers of interest in leased property	162
where the original lessee and the terms of the original lease	163
agreement remain unchanged, or professional, insurance, or	164
personal service transactions that involve the transfer of	165
tangible personal property as an inconsequential element, for	166
which no separate charges are made.	167

(C) "Vendor" means the person providing the service or by	168
whom the transfer effected or license given by a sale is or is to	169
be made or given and, for sales described in division (B)(3)(i) of	170
this section, the telecommunications service vendor that provides	171
the nine hundred telephone service; if two or more persons are	172
engaged in business at the same place of business under a single	173
trade name in which all collections on account of sales by each	174
are made, such persons shall constitute a single vendor.	175

Physicians, dentists, hospitals, and veterinarians who are	176
engaged in selling tangible personal property as received from	177
others, such as eyeglasses, mouthwashes, dentifrices, or similar	178
articles, are vendors. Veterinarians who are engaged in	179
transferring to others for a consideration drugs, the dispensing	180
of which does not require an order of a licensed veterinarian or	181
physician under federal law, are vendors.	182

(D)(1) "Consumer" means the person for whom the service is	183
provided, to whom the transfer effected or license given by a sale	184
is or is to be made or given, to whom the service described in	185
division (B)(3)(f) or (i) of this section is charged, or to whom	186
the admission is granted.	187

(2) Physicians, dentists, hospitals, and blood banks operated	188
by nonprofit institutions and persons licensed to practice	189
veterinary medicine, surgery, and dentistry are consumers of all	190
tangible personal property and services purchased by them in	191
connection with the practice of medicine, dentistry, the rendition	192
of hospital or blood bank service, or the practice of veterinary	193
medicine, surgery, and dentistry. In addition to being consumers	194
of drugs administered by them or by their assistants according to	195
their direction, veterinarians also are consumers of drugs that	196
under federal law may be dispensed only by or upon the order of a	197
licensed veterinarian or physician, when transferred by them to	198
others for a consideration to provide treatment to animals as	199
directed by the veterinarian.	200

(3) A person who performs a facility management, or similar	201
service contract for a contractee is a consumer of all tangible	202
personal property and services purchased for use in connection	203
with the performance of such contract, regardless of whether title	204
to any such property vests in the contractee. The purchase of such	205
property and services is not subject to the exception for resale	206
under division (E)(1) of this section.	207

(4)(a) In the case of a person who purchases printed matter	208
for the purpose of distributing it or having it distributed to the	209
public or to a designated segment of the public, free of charge,	210
that person is the consumer of that printed matter, and the	211
purchase of that printed matter for that purpose is a sale.	212

(b) In the case of a person who produces, rather than	213
purchases, printed matter for the purpose of distributing it or	214
having it distributed to the public or to a designated segment of	215
the public, free of charge, that person is the consumer of all	216
tangible personal property and services purchased for use or	217
consumption in the production of that printed matter. That person	218
is not entitled to claim exemption under division (B)(43)(f) of	219
section 5739.02 of the Revised Code for any material incorporated	220
into the printed matter or any equipment, supplies, or services	221
primarily used to produce the printed matter.	222

(c) The distribution of printed matter to the public or to a	223
designated segment of the public, free of charge, is not a sale to	224
the members of the public to whom the printed matter is	225
distributed or to any persons who purchase space in the printed	226
matter for advertising or other purposes.	227

(5) A person who makes sales of any of the services listed in	228
division (B)(3) of this section is the consumer of any tangible	229
personal property used in performing the service. The purchase of	230
that property is not subject to the resale exception under	231
division (E)(1) of this section.	232

(6) A person who engages in highway transportation for hire	233
is the consumer of all packaging materials purchased by that	234
person and used in performing the service, except for packaging	235
materials sold by such person in a transaction separate from the	236
service.	237

(E) "Retail sale" and "sales at retail" include all sales,	238
except those in which the purpose of the consumer is to resell the	239
thing transferred or benefit of the service provided, by a person	240
engaging in business, in the form in which the same is, or is to	241
be, received by the person.	242

(F) "Business" includes any activity engaged in by any person	243
with the object of gain, benefit, or advantage, either direct or	244
indirect. "Business" does not include the activity of a person in	245
managing and investing the person's own funds.	246

(G) "Engaging in business" means commencing, conducting, or	247
continuing in business, and liquidating a business when the	248
liquidator thereof holds itself out to the public as conducting	249
such business. Making a casual sale is not engaging in business.	250

(H)(1)(a) "Price," except as provided in divisions (H)(2) and	251
(3) of this section, means the total amount of consideration,	252
including cash, credit, property, and services, for which tangible	253
personal property or services are sold, leased, or rented, valued	254
in money, whether received in money or otherwise, without any	255
deduction for any of the following:	256

(i) The vendor's cost of the property sold;

257

(ii) The cost of materials used, labor or service costs,	258
interest, losses, all costs of transportation to the vendor, all	259
taxes imposed on the vendor, and any other expense of the vendor;	260

(iii) Charges by the vendor for any services necessary to	261
complete the sale;	262

(iv) On and after August 1, 2003, delivery charges. As used	263
in this division, "delivery charges" means charges by the vendor	264
for preparation and delivery to a location designated by the	265
consumer of tangible personal property or a service, including	266
transportation, shipping, postage, handling, crating, and packing.	267

(v) Installation charges;

268

(vi) The value of exempt tangible personal property given to	269
the consumer where taxable and exempt tangible personal property	270
have been bundled together and sold by the vendor as a single	271
product or piece of merchandise.	272

(b) "Price" does not include any of the following:

273

(i) Discounts, including cash, term, or coupons that are not	274
reimbursed by a third party that are allowed by a vendor and taken	275
by a consumer on a sale;	276

(ii) Interest, financing, and carrying charges from credit	277
extended on the sale of tangible personal property or services, if	278
the amount is separately stated on the invoice, bill of sale, or	279
similar document given to the purchaser;	280

(iii) Any taxes legally imposed directly on the consumer that	281
are separately stated on the invoice, bill of sale, or similar	282
document given to the consumer.	283

(2) In the case of a sale of any new motor vehicle by a new	284
motor vehicle dealer, as defined in section 4517.01 of the Revised	285
Code, in which another motor vehicle is accepted by the dealer as	286
part of the consideration received, "price" has the same meaning	287
as in division (H)(1) of this section, reduced by the credit	288
afforded the consumer by the dealer for the motor vehicle received	289
in trade.	290

(3) In the case of a sale of any watercraft or outboard motor	291
by a watercraft dealer licensed in accordance with section	292
1547.543 of the Revised Code, in which another watercraft,	293
watercraft and trailer, or outboard motor is accepted by the	294
dealer as part of the consideration received, "price" has the same	295
meaning as in division (H)(1) of this section, reduced by the	296
credit afforded the consumer by the dealer for the watercraft,	297
watercraft and trailer, or outboard motor received in trade. As	298
used in this division, "watercraft" includes an outdrive unit	299
attached to the watercraft.	300

(4) In the case of a transaction in which telecommunications	301
service, mobile telecommunications service, or cable television	302
service is sold in a bundled transaction with other distinct	303
services for a single price that is not itemized, the entire price	304
is subject to the taxes levied under sections 5739.02, 5739.021,	305
5739.023, and 5739.026 of the Revised Code, unless the vendor can	306
reasonably identify the nontaxable portion from its books and	307
records kept in the regular course of business. Upon the request	308
of the consumer, the vendor shall disclose to the consumer the	309
selling price for the taxable services included in the selling	310
price for the taxable and nontaxable services billed on an	311
aggregated basis. The burden of proving any nontaxable charges is	312
on the vendor.	313

(I) "Receipts" means the total amount of the prices of the	314
sales of vendors, provided that cash discounts allowed and taken	315
on sales at the time they are consummated are not included, minus	316
any amount deducted as a bad debt pursuant to section 5739.121 of	317
the Revised Code. "Receipts" does not include the sale price of	318
property returned or services rejected by consumers when the full	319
sale price and tax are refunded either in cash or by credit.	320

(J) "Place of business" means any location at which a person	321
engages in business.	322

(K) "Premises" includes any real property or portion thereof	323
upon which any person engages in selling tangible personal	324
property at retail or making retail sales and also includes any	325
real property or portion thereof designated for, or devoted to,	326
use in conjunction with the business engaged in by such person.	327

(L) "Casual sale" means a sale of an item of tangible	328
personal property that was obtained by the person making the sale,	329
through purchase or otherwise, for the person's own use and was	330
previously subject to any state's taxing jurisdiction on its sale	331
or use, and includes such items acquired for the seller's use that	332
are sold by an auctioneer employed directly by the person for such	333
purpose, provided the location of such sales is not the	334
auctioneer's permanent place of business. As used in this	335
division, "permanent place of business" includes any location	336
where such auctioneer has conducted more than two auctions during	337
the year.	338

(M) "Hotel" means every establishment kept, used, maintained,	339
advertised, or held out to the public to be a place where sleeping	340
accommodations are offered to guests, in which five or more rooms	341
are used for the accommodation of such guests, whether the rooms	342
are in one or several structures.	343

(N) "Transient guests" means persons occupying a room or	344
rooms for sleeping accommodations for less than thirty consecutive	345
days.	346

(O) "Making retail sales" means the effecting of transactions	347
wherein one party is obligated to pay the price and the other	348
party is obligated to provide a service or to transfer title to or	349
possession of the item sold. "Making retail sales" does not	350
include the preliminary acts of promoting or soliciting the retail	351
sales, other than the distribution of printed matter which	352
displays or describes and prices the item offered for sale, nor	353
does it include delivery of a predetermined quantity of tangible	354
personal property or transportation of property or personnel to or	355
from a place where a service is performed, regardless of whether	356
the vendor is a delivery vendor.	357

(P) "Used directly in the rendition of a public utility	358
service" means that property that is to be incorporated into and	359
will become a part of the consumer's production, transmission,	360
transportation, or distribution system and that retains its	361
classification as tangible personal property after such	362
incorporation; fuel or power used in the production, transmission,	363
transportation, or distribution system; and tangible personal	364
property used in the repair and maintenance of the production,	365
transmission, transportation, or distribution system, including	366
only such motor vehicles as are specially designed and equipped	367
for such use. Tangible personal property and services used	368
primarily in providing highway transportation for hire are not	369
used directly in the rendition of a public utility service.	370

(Q) "Refining" means removing or separating a desirable	371
product from raw or contaminated materials by distillation or	372
physical, mechanical, or chemical processes.	373

(R) "Assembly" and "assembling" mean attaching or fitting	374
together parts to form a product, but do not include packaging a	375
product.	376

(S) "Manufacturing operation" means a process in which	377
materials are changed, converted, or transformed into a different	378
state or form from which they previously existed and includes	379
refining materials, assembling parts, and preparing raw materials	380
and parts by mixing, measuring, blending, or otherwise committing	381
such materials or parts to the manufacturing process.	382
"Manufacturing operation" does not include packaging.	383

(T) "Fiscal officer" means, with respect to a regional	384
transit authority, the secretary-treasurer thereof, and with	385
respect to a county that is a transit authority, the fiscal	386
officer of the county transit board if one is appointed pursuant	387
to section 306.03 of the Revised Code or the county auditor if the	388
board of county commissioners operates the county transit system.	389

(U) "Transit authority" means a regional transit authority	390
created pursuant to section 306.31 of the Revised Code or a county	391
in which a county transit system is created pursuant to section	392
306.01 of the Revised Code. For the purposes of this chapter, a	393
transit authority must extend to at least the entire area of a	394
single county. A transit authority that includes territory in more	395
than one county must include all the area of the most populous	396
county that is a part of such transit authority. County population	397
shall be measured by the most recent census taken by the United	398
States census bureau.	399

(V) "Legislative authority" means, with respect to a regional	400
transit authority, the board of trustees thereof, and with respect	401
to a county that is a transit authority, the board of county	402
commissioners.	403

(W) "Territory of the transit authority" means all of the	404
area included within the territorial boundaries of a transit	405
authority as they from time to time exist. Such territorial	406
boundaries must at all times include all the area of a single	407
county or all the area of the most populous county that is a part	408
of such transit authority. County population shall be measured by	409
the most recent census taken by the United States census bureau.	410

(X) "Providing a service" means providing or furnishing	411
anything described in division (B)(3) of this section for	412
consideration.	413

(Y)(1)(a) "Automatic data processing" means processing of	414
others' data, including keypunching or similar data entry services	415
together with verification thereof, or providing access to	416
computer equipment for the purpose of processing data.	417

(b) "Computer services" means providing services consisting	418
of specifying computer hardware configurations and evaluating	419
technical processing characteristics, computer programming, and	420
training of computer programmers and operators, provided in	421
conjunction with and to support the sale, lease, or operation of	422
taxable computer equipment or systems.	423

(c) "Electronic information services" means providing access	424
to computer equipment by means of telecommunications equipment for	425
the purpose of either of the following:	426

(i) Examining or acquiring data stored in or accessible to	427
the computer equipment;	428

(ii) Placing data into the computer equipment to be retrieved	429
by designated recipients with access to the computer equipment.	430

(d) "Automatic data processing, computer services, or	431
electronic information services" shall not include personal or	432
professional services.	433

(2) As used in divisions (B)(3)(e) and (Y)(1) of this	434
section, "personal and professional services" means all services	435
other than automatic data processing, computer services, or	436
electronic information services, including but not limited to:	437

(a) Accounting and legal services such as advice on tax	438
matters, asset management, budgetary matters, quality control,	439
information security, and auditing and any other situation where	440
the service provider receives data or information and studies,	441
alters, analyzes, interprets, or adjusts such material;	442

(b) Analyzing business policies and procedures;

443

(c) Identifying management information needs;

444

(d) Feasibility studies, including economic and technical	445
analysis of existing or potential computer hardware or software	446
needs and alternatives;	447

(e) Designing policies, procedures, and custom software for	448
collecting business information, and determining how data should	449
be summarized, sequenced, formatted, processed, controlled, and	450
reported so that it will be meaningful to management;	451

(f) Developing policies and procedures that document how	452
business events and transactions are to be authorized, executed,	453
and controlled;	454

(g) Testing of business procedures;

455

(h) Training personnel in business procedure applications;

456

(i) Providing credit information to users of such information	457
by a consumer reporting agency, as defined in the "Fair Credit	458
Reporting Act," 84 Stat. 1114, 1129 (1970), 15 U.S.C. 1681a(f), or	459
as hereafter amended, including but not limited to gathering,	460
organizing, analyzing, recording, and furnishing such information	461
by any oral, written, graphic, or electronic medium;	462

(j) Providing debt collection services by any oral, written,	463
graphic, or electronic means.	464

The services listed in divisions (Y)(2)(a) to (j) of this	465
section are not automatic data processing or computer services.	466

(Z) "Highway transportation for hire" means the	467
transportation of personal property belonging to others for	468
consideration by any of the following:	469

(1) The holder of a permit or certificate issued by this	470
state or the United States authorizing the holder to engage in	471
transportation of personal property belonging to others for	472
consideration over or on highways, roadways, streets, or any	473
similar public thoroughfare;	474

(2) A person who engages in the transportation of personal	475
property belonging to others for consideration over or on	476
highways, roadways, streets, or any similar public thoroughfare	477
but who could not have engaged in such transportation on December	478
11, 1985, unless the person was the holder of a permit or	479
certificate of the types described in division (Z)(1) of this	480
section;	481

(3) A person who leases a motor vehicle to and operates it	482
for a person described by division (Z)(1) or (2) of this section.	483

(AA) "Telecommunications service" means the transmission of	484
any interactive, two-way electromagnetic communications, including	485
voice, image, data, and information, through the use of any medium	486
such as wires, cables, microwaves, cellular radio, radio waves,	487
light waves, or any combination of those or similar media.	488
"Telecommunications service" includes message toll service even	489
though the vendor provides the message toll service by means of	490
wide area transmission type service or private communications	491
service purchased from another telecommunications service	492
provider, and other related fees and ancillary services, including	493
universal service fees, detailed billing service, directory	494
assistance, service initiation, voice mail service, and vertical	495
services, such as caller ID and three-way calling.	496
"Telecommunications service" does not include any of the	497
following:	498

(1) Sales of telecommunications service billed to persons	499
before January 1, 2004, by telephone companies subject to the	500
excise tax imposed by Chapter 5727. of the Revised Code;	501

(2) Sales of telecommunications service to a provider of	502
telecommunications service or of mobile telecommunications	503
service, including access services, for use in providing	504
telecommunications service or mobile telecommunications service;	505

(3) Value-added nonvoice services in which computer	506
processing applications are used to act on the form, content,	507
code, or protocol of the information to be transmitted;	508

(4) Transmission of interactive video programming by a cable	509
television system as defined in section 505.90 of the Revised	510
Code;	511

(5) After July 31, 2002, mobile telecommunications service.

512

(BB) "Laundry and dry cleaning services" means removing soil	513
or dirt from towels, linens, articles of clothing, or other fabric	514
items that belong to others and supplying towels, linens, articles	515
of clothing, or other fabric items. "Laundry and dry cleaning	516
services" does not include the provision of self-service	517
facilities for use by consumers to remove soil or dirt from	518
towels, linens, articles of clothing, or other fabric items.	519

(CC) "Magazines distributed as controlled circulation	520
publications" means magazines containing at least twenty-four	521
pages, at least twenty-five per cent editorial content, issued at	522
regular intervals four or more times a year, and circulated	523
without charge to the recipient, provided that such magazines are	524
not owned or controlled by individuals or business concerns which	525
conduct such publications as an auxiliary to, and essentially for	526
the advancement of the main business or calling of, those who own	527
or control them.	528

(DD) "Landscaping and lawn care service" means the services	529
of planting, seeding, sodding, removing, cutting, trimming,	530
pruning, mulching, aerating, applying chemicals, watering,	531
fertilizing, and providing similar services to establish, promote,	532
or control the growth of trees, shrubs, flowers, grass, ground	533
cover, and other flora, or otherwise maintaining a lawn or	534
landscape grown or maintained by the owner for ornamentation or	535
other nonagricultural purpose. However, "landscaping and lawn care	536
service" does not include the providing of such services by a	537
person who has less than five thousand dollars in sales of such	538
services during the calendar year.	539

(EE) "Private investigation and security service" means the	540
performance of any activity for which the provider of such service	541
is required to be licensed pursuant to Chapter 4749. of the	542
Revised Code, or would be required to be so licensed in performing	543
such services in this state, and also includes the services of	544
conducting polygraph examinations and of monitoring or overseeing	545
the activities on or in, or the condition of, the consumer's home,	546
business, or other facility by means of electronic or similar	547
monitoring devices. "Private investigation and security service"	548
does not include special duty services provided by off-duty police	549
officers, deputy sheriffs, and other peace officers regularly	550
employed by the state or a political subdivision.	551

(FF) "Information services" means providing conversation,	552
giving consultation or advice, playing or making a voice or other	553
recording, making or keeping a record of the number of callers,	554
and any other service provided to a consumer by means of a nine	555
hundred telephone call, except when the nine hundred telephone	556
call is the means by which the consumer makes a contribution to a	557
recognized charity.	558

(GG) "Research and development" means designing, creating, or	559
formulating new or enhanced products, equipment, or manufacturing	560
processes, and also means conducting scientific or technological	561
inquiry and experimentation in the physical sciences with the goal	562
of increasing scientific knowledge which may reveal the bases for	563
new or enhanced products, equipment, or manufacturing processes.	564

(HH) "Qualified research and development equipment" means	565
capitalized tangible personal property, and leased personal	566
property that would be capitalized if purchased, used by a person	567
primarily to perform research and development. Tangible personal	568
property primarily used in testing, as defined in division (A)(4)	569
of section 5739.011 of the Revised Code, or used for recording or	570
storing test results, is not qualified research and development	571
equipment unless such property is primarily used by the consumer	572
in testing the product, equipment, or manufacturing process being	573
created, designed, or formulated by the consumer in the research	574
and development activity or in recording or storing such test	575
results.	576

(II) "Building maintenance and janitorial service" means	577
cleaning the interior or exterior of a building and any tangible	578
personal property located therein or thereon, including any	579
services incidental to such cleaning for which no separate charge	580
is made. However, "building maintenance and janitorial service"	581
does not include the providing of such service by a person who has	582
less than five thousand dollars in sales of such service during	583
the calendar year.	584

(JJ) "Employment service" means providing or supplying	585
personnel, on a temporary or long-term basis, to perform work or	586
labor under the supervision or control of another, when the	587
personnel so supplied receive their wages, salary, or other	588
compensation from the provider of the service. "Employment	589
service" does not include:	590

(1) Acting as a contractor or subcontractor, where the	591
personnel performing the work are not under the direct control of	592
the purchaser.	593

(2) Medical and health care services.

594

(3) Supplying personnel to a purchaser pursuant to a contract	595
of at least one year between the service provider and the	596
purchaser that specifies that each employee covered under the	597
contract is assigned to the purchaser on a permanent basis.	598

(4) Transactions between members of an affiliated group, as	599
defined in division (B)(3)(e) of this section.	600

(KK) "Employment placement service" means locating or finding	601
employment for a person or finding or locating an employee to fill	602
an available position.	603

(LL) "Exterminating service" means eradicating or attempting	604
to eradicate vermin infestations from a building or structure, or	605
the area surrounding a building or structure, and includes	606
activities to inspect, detect, or prevent vermin infestation of a	607
building or structure.	608

(MM) "Physical fitness facility service" means all	609
transactions by which a membership is granted, maintained, or	610
renewed, including initiation fees, membership dues, renewal fees,	611
monthly minimum fees, and other similar fees and dues, by a	612
physical fitness facility such as an athletic club, health spa, or	613
gymnasium, which entitles the member to use the facility for	614
physical exercise.	615

(NN) "Recreation and sports club service" means all	616
transactions by which a membership is granted, maintained, or	617
renewed, including initiation fees, membership dues, renewal fees,	618
monthly minimum fees, and other similar fees and dues, by a	619
recreation and sports club, which entitles the member to use the	620
facilities of the organization. "Recreation and sports club" means	621
an organization that has ownership of, or controls or leases on a	622
continuing, long-term basis, the facilities used by its members	623
and includes an aviation club, gun or shooting club, yacht club,	624
card club, swimming club, tennis club, golf club, country club,	625
riding club, amateur sports club, or similar organization.	626

(OO) "Livestock" means farm animals commonly raised for food	627
or food production, and includes but is not limited to cattle,	628
sheep, goats, swine, and poultry. "Livestock" does not include	629
invertebrates, fish, amphibians, reptiles, horses, domestic pets,	630
animals for use in laboratories or for exhibition, or other	631
animals not commonly raised for food or food production.	632

(PP) "Livestock structure" means a building or structure used	633
exclusively for the housing, raising, feeding, or sheltering of	634
livestock, and includes feed storage or handling structures and	635
structures for livestock waste handling.	636

(QQ) "Horticulture" means the growing, cultivation, and	637
production of flowers, fruits, herbs, vegetables, sod, mushrooms,	638
and nursery stock. As used in this division, "nursery stock" has	639
the same meaning as in section 927.51 of the Revised Code.	640

(RR) "Horticulture structure" means a building or structure	641
used exclusively for the commercial growing, raising, or	642
overwintering of horticultural products, and includes the area	643
used for stocking, storing, and packing horticultural products	644
when done in conjunction with the production of those products.	645

(SS) "Newspaper" means an unbound publication bearing a title	646
or name that is regularly published, at least as frequently as	647
biweekly, and distributed from a fixed place of business to the	648
public in a specific geographic area, and that contains a	649
substantial amount of news matter of international, national, or	650
local events of interest to the general public.	651

(TT) "Professional racing team" means a person that employs	652
at least twenty full-time employees for the purpose of conducting	653
a motor vehicle racing business for profit. The person must	654
conduct the business with the purpose of racing one or more motor	655
racing vehicles in at least ten competitive professional racing	656
events each year that comprise all or part of a motor racing	657
series sanctioned by one or more motor racing sanctioning	658
organizations. A "motor racing vehicle" means a vehicle for which	659
the chassis, engine, and parts are designed exclusively for motor	660
racing, and does not include a stock or production model vehicle	661
that may be modified for use in racing. For the purposes of this	662
division:	663

(1) A "competitive professional racing event" is a motor	664
vehicle racing event sanctioned by one or more motor racing	665
sanctioning organizations, at which aggregate cash prizes in	666
excess of eight hundred thousand dollars are awarded to the	667
competitors.	668

(2) "Full-time employee" means an individual who is employed	669
for consideration for thirty-five or more hours a week, or who	670
renders any other standard of service generally accepted by custom	671
or specified by contract as full-time employment.	672

(UU)(1) "Lease" or "rental" means any transfer of the	673
possession or control of tangible personal property for a fixed or	674
indefinite term, for consideration. "Lease" or "rental" includes	675
future options to purchase or extend, and agreements described in	676
26 U.S.C. 7701(h)(1) covering motor vehicles and trailers where	677
the amount of consideration may be increased or decreased by	678
reference to the amount realized upon the sale or disposition of	679
the property. "Lease" or "rental" does not include:	680

(a) A transfer of possession or control of tangible personal	681
property under a security agreement or a deferred payment plan	682
that requires the transfer of title upon completion of the	683
required payments;	684

(b) A transfer of possession or control of tangible personal	685
property under an agreement that requires the transfer of title	686
upon completion of required payments and payment of an option	687
price that does not exceed the greater of one hundred dollars or	688
one per cent of the total required payments;	689

(c) Providing tangible personal property along with an	690
operator for a fixed or indefinite period of time, if the operator	691
is necessary for the property to perform as designed. For purposes	692
of this division, the operator must do more than maintain,	693
inspect, or set-up the tangible personal property.	694

(2) "Lease" and "rental," as defined in division (UU) of this	695
section, shall not apply to leases or rentals that exist before	696
the effective date of this amendmentJune 26, 2003.	697

(3) "Lease" and "rental" have the same meaning as in division	698
(UU)(1) of this section regardless of whether a transaction is	699
characterized as a lease or rental under generally accepted	700
accounting principles, the Internal Revenue Code, Title XIII of	701
the Revised Code, or other federal, state, or local laws.	702

(VV) "Mobile telecommunications service" has the same meaning	703
as in the "Mobile Telecommunications Sourcing Act," Pub. L. No.	704
106-252, 114 Stat. 631 (2000), 4 U.S.C.A. 124(7), as amended, and,	705
on and after August 1, 2003, includes related fees and ancillary	706
services, including universal service fees, detailed billing	707
service, directory assistance, service initiation, voice mail	708
service, and vertical services, such as caller ID and three-way	709
calling.	710

(WW) "Certified service provider" has the same meaning as in	711
section 5740.01 of the Revised Code.	712

(XX) "Satellite broadcasting service" means the distribution	713
or broadcasting of programming or services by satellite directly	714
to the subscriber's receiving equipment without the use of ground	715
receiving or distribution equipment, except the subscriber's	716
receiving equipment or equipment used in the uplink process to the	717
satellite, and includes all service and rental charges, premium	718
channels or other special services, installation and repair	719
service charges, and any other charges having any connection with	720
the provision of the satellite broadcasting service.	721

(YY) "Tangible personal property" means personal property	722
that can be seen, weighed, measured, felt, or touched, or that is	723
in any other manner perceptible to the senses. For purposes of	724
this chapter and Chapter 5741. of the Revised Code, "tangible	725
personal property" includes motor vehicles, electricity, water,	726
gas, steam, and prewritten computer software.	727

(ZZ) "Direct mail" means printed material delivered or	728
distributed by United States mail or other delivery service to a	729
mass audience or to addressees on a mailing list provided by the	730
consumer or at the direction of the consumer when the cost of the	731
items are not billed directly to the recipients. "Direct mail"	732
includes tangible personal property supplied directly or	733
indirectly by the consumer to the direct mail vendor for inclusion	734
in the package containing the printed material. "Direct mail" does	735
not include multiple items of printed material delivered to a	736
single address.	737

(AAA) "Computer" means an electronic device that accepts	738
information in digital or similar form and manipulates it for a	739
result based on a sequence of instructions.	740

(BBB) "Computer software" means a set of coded instructions	741
designed to cause a computer or automatic data processing	742
equipment to perform a task.	743

(CCC) "Delivered electronically" means delivery of computer	744
software from the seller to the purchaser by means other than	745
tangible storage media.	746

(DDD) "Prewritten computer software" means computer software,	747
including prewritten upgrades, that is not designed and developed	748
by the author or other creator to the specifications of a specific	749
purchaser. The combining of two or more prewritten computer	750
software programs or prewritten portions thereof does not cause	751
the combination to be other than prewritten computer software.	752
"Prewritten computer software" includes software designed and	753
developed by the author or other creator to the specifications of	754
a specific purchaser when it is sold to a person other than the	755
purchaser. If a person modifies or enhances computer software of	756
which the person is not the author or creator, the person shall be	757
deemed to be the author or creator only of such person's	758
modifications or enhancements. Prewritten computer software or a	759
prewritten portion thereof that is modified or enhanced to any	760
degree, where such modification or enhancement is designed and	761
developed to the specifications of a specific purchaser, remains	762
prewritten computer software; provided, however, that where there	763
is a reasonable, separately stated charge or an invoice or other	764
statement of the price given to the purchaser for the modification	765
or enhancement, the modification or enhancement shall not	766
constitute prewritten computer software.	767

(EEE)(1) Prior to July 1, 2004, "food" means cereals and	768
cereal products, milk and milk products including ice cream, meat	769
and meat products, fish and fish products, eggs and egg products,	770
vegetables and vegetable products, fruits, fruit products, and	771
pure fruit juices, condiments, sugar and sugar products, coffee	772
and coffee substitutes, tea, and cocoa and cocoa products. "Food"	773
does not include spirituous liquors, wine, mixed beverages, or	774
beer; soft drinks; sodas and beverages that are ordinarily	775
dispensed at or in connection with bars and soda fountains, other	776
than coffee, tea, and cocoa; root beer and root beer extracts;	777
malt and malt extracts; mineral oils, cod liver oils, and halibut	778
liver oil; medicines, including tonics, vitamin preparations, and	779
other products sold primarily for their medicinal properties; and	780
water, including mineral, bottled, and carbonated waters, and ice.	781

(2) On and after July 1, 2004, "food" means substances,	782
whether in liquid, concentrated, solid, frozen, dried, or	783
dehydrated form, that are sold for ingestion or chewing by humans	784
and are consumed for their taste or nutritional value. "Food" does	785
not include alcoholic beverages, dietary supplements, soft drinks,	786
or tobacco.	787

(3) As used in division (EEE)(2) of this section:

788

(a) "Alcoholic beverages" means beverages that are suitable	789
for human consumption and contain one-half of one per cent or more	790
of alcohol by volume.	791

(b) "Dietary supplements" means any product, other than	792
tobacco, that is intended to supplement the diet and that is	793
intended for ingestion in tablet, capsule, powder, softgel,	794
gelcap, or liquid form, or, if not intended for ingestion in such	795
a form, is not represented as conventional food for use as a sole	796
item of a meal or of the diet; that is required to be labeled as a	797
dietary supplement, identifiable by the "supplement facts" box	798
found on the label, as required by 21 C.F.R. 101.36; and that	799
contains one or more of the following dietary ingredients:	800

(i) A vitamin;

801

(ii) A mineral;

802

(iii) An herb or other botanical;

803

(iv) An amino acid;

804

(v) A dietary substance for use by humans to supplement the	805
diet by increasing the total dietary intake;	806

(vi) A concentrate, metabolite, constituent, extract, or	807
combination of any ingredient described in divisions	808
(EEE)(3)(b)(i) to (v) of this section.	809

(c) "Soft drinks" means nonalcoholic beverages that contain	810
natural or artificial sweeteners. "Soft drinks" does not include	811
beverages that contain milk or milk products, soy, rice, or	812
similar milk substitutes, or that contains greater than fifty per	813
cent vegetable or fruit juice by volume.	814

(d) "Tobacco" means cigarettes, cigars, chewing or pipe	815
tobacco, or any other item that contains tobacco.	816

(FFF) "Drug" means a compound, substance, or preparation, and	817
any component of a compound, substance, or preparation, other than	818
food, dietary supplements, or alcoholic beverages that is	819
recognized in the official United States pharmacopoeia, official	820
homeopathic pharmacopoeia of the United States, or official	821
national formulary, and supplements to them; is intended for use	822
in the diagnosis, cure, mitigation, treatment, or prevention of	823
disease; or is intended to affect the structure or any function of	824
the body.	825

(GGG) "Prescription" means an order, formula, or recipe	826
issued in any form of oral, written, electronic, or other means of	827
transmission by a duly licensed practitioner authorized by the	828
laws of this state to issue a prescription.	829

(HHH) "Durable medical equipment" means equipment, including	830
repair and replacement parts for such equipment, that can	831
withstand repeated use, is primarily and customarily used to serve	832
a medical purpose, generally is not useful to a person in the	833
absence of illness or injury, and is not worn in or on the body.	834
"Durable medical equipment" does not include mobility enhancing	835
equipment.	836

(III) "Mobility enhancing equipment" means equipment,	837
including repair and replacement parts for such equipment, that is	838
primarily and customarily used to provide or increase the ability	839
to move from one place to another and is appropriate for use	840
either in a home or a motor vehicle, that is not generally used by	841
persons with normal mobility, and that does not include any motor	842
vehicle or equipment on a motor vehicle normally provided by a	843
motor vehicle manufacturer. "Mobility enhancing equipment" does	844
not include durable medical equipment.	845

(JJJ) "Prosthetic device" means a replacement, corrective, or	846
supportive device, including repair and replacement parts for the	847
device, worn on or in the human body to artificially replace a	848
missing portion of the body, prevent or correct physical deformity	849
or malfunction, or support a weak or deformed portion of the body.	850
As used in this division, "prosthetic device" does not include	851
corrective eyeglasses, contact lenses, or dental prosthesis.	852

(KKK)(1) "Fractional aircraft ownership program" means a	853
program in which persons within an affiliated group sell and	854
manage fractional ownership program aircraft, provided that at	855
least one hundred airworthy aircraft are operated in the program	856
and the program meets all of the following criteria:	857

(a) Management services are provided by at least one program	858
manager within an affiliated group on behalf of the fractional	859
owners.	860

(b) Each program aircraft is owned or possessed by at least	861
one fractional owner.	862

(c) Each fractional owner owns or possesses at least a	863
one-sixteenth interest in at least one fixed-wing program	864
aircraft.	865

(d) A dry-lease aircraft interchange arrangement is in effect	866
among all of the fractional owners.	867

(e) Multi-year program agreements are in effect regarding the	868
fractional ownership, management services, and dry-lease aircraft	869
interchange arrangement aspects of the program.	870

(2) As used in division (KKK)(1) of this section:

871

(a) "Affiliated group" has the same meaning as in division	872
(B)(3)(e) of this section.	873

(b) "Fractional owner" means a person that owns or possesses	874
at least a one-sixteenth interest in a program aircraft and has	875
entered into the agreements described in division (KKK)(1)(e) of	876
this section.	877

(c) "Fractional ownership program aircraft" or "program	878
aircraft" means a turbojet aircraft that is owned or possessed by	879
a fractional owner and that has been included in a dry-lease	880
aircraft interchange arrangement and agreement under divisions	881
(KKK)(1)(d) and (e) of this section, or an aircraft a program	882
manager owns or possesses primarily for use in a fractional	883
aircraft ownership program.	884

(d) "Management services" means administrative and aviation	885
support services furnished under a fractional aircraft ownership	886
program in accordance with a management services agreement under	887
division (KKK)(1)(e) of this section, and offered by the program	888
manager to the fractional owners, including, at a minimum, the	889
establishment and implementation of safety guidelines; the	890
coordination of the scheduling of the program aircraft and crews;	891
program aircraft maintenance; program aircraft insurance; crew	892
training for crews employed, furnished, or contracted by the	893
program manager or the fractional owner; the satisfaction of	894
record-keeping requirements; and the development and use of an	895
operations manual and a maintenance manual for the fractional	896
aircraft ownership program.	897

(e) "Program manager" means the person that offers management	898
services to fractional owners pursuant to a management services	899
agreement under division (KKK)(1)(e) of this section.	900

Sec. 5739.031.  (A) Upon application, the tax commissioner	901
may issue a direct payment permit that authorizes a consumer to	902
pay the sales tax levied by or pursuant to section 5739.02,	903
5739.021, 5739.023, or 5739.026 of the Revised Code or the use tax	904
levied by or pursuant to section 5741.02, 5741.021, 5741.022, or	905
5741.023 of the Revised Code directly to the state and waives the	906
collection of the tax by the vendor or seller if payment directly	907
to the state would improve compliance and increase the efficiency	908
of the administration of the tax. The commissioner may adopt rules	909
establishing the criteria for the issuance of such permits.	910

(B) Each permit holder, on or before the twenty-third day of	911
each month, shall make and file with the treasurer of state a	912
return for the preceding month in such form as is prescribed by	913
the tax commissioner and shall pay the tax shown on the return to	914
be due. The return shall show the sum of the prices of taxable	915
merchandise used and taxable services received, the amount of tax	916
due from the permit holder, and such other information as the	917
commissioner deems necessary. The commissioner, upon written	918
request by the permit holder, may extend the time for making and	919
filing returns and paying the tax. If the commissioner determines	920
that a permit holder's tax liability is not such as to merit	921
monthly filing, the commissioner may authorize the permit holder	922
to file returns and pay the tax at less frequent intervals. The	923
treasurer of state shall show on the return the date it was filed	924
and the amount of the payment remitted to the treasurer.	925
Thereafter, the treasurer immediately shall transmit all returns	926
filed under this section to the tax commissioner.	927

Any permit holder required to file a return and pay the tax	928
under this section whose total payment for any calendar year	929
equals or exceeds the amount shown in section 5739.032 of the	930
Revised Code shall make each payment required by this section in	931
the second ensuing and each succeeding year by electronic funds	932
transfer as prescribed by, and on or before the dates specified	933
in, section 5739.032 of the Revised Code, except as otherwise	934
prescribed by that section.	935

(C) For purposes of reporting and remitting the tax, the	936
price of tangible personal property or services purchased by, or	937
of tangible personal property produced by, the permit holder shall	938
be determined under division (G) of section 5741.01 of the Revised	939
Code. Except as otherwise provided in division (C)(E) of section	940
5739.033 of the Revised Code, the situs of any purchase	941
transaction made by the permit holder is the location where the	942
tangible personal property or service is received by the permit	943
holder.	944

(D) It shall be the duty of every permit holder required to	945
make a return and pay its tax under this section to keep and	946
preserve suitable records of purchases together with invoices of	947
purchases, bills of lading, asset ledgers, depreciation schedules,	948
transfer journals, and such other primary and secondary records	949
and documents in such form as the commissioner requires. All such	950
records and other documents shall be open during business hours to	951
the inspection of the tax commissioner, and shall be preserved for	952
a period of four years, unless the commissioner, in writing, has	953
authorized their destruction or disposal at an earlier date, or by	954
order or by reason of a waiver of the four-year time limitation	955
pursuant to section 5739.16 of the Revised Code requires that they	956
be kept longer.	957

(E) A permit granted pursuant to this section shall continue	958
to be valid until surrendered by the holder or canceled for cause	959
by the tax commissioner.	960

(F) Persons who hold a direct payment permit that has not	961
been canceled shall not be required to issue exemption	962
certificates and shall not be required to pay the tax as	963
prescribed in sections 5739.03, 5739.033, and 5741.12 of the	964
Revised Code. Such persons shall notify vendors and sellers from	965
whom purchases of tangible personal property or services are made,	966
of their direct payment permit number and that the tax is being	967
paid directly to the state. Upon receipt of such notice, such	968
vendor or seller shall be absolved from all duties and liabilities	969
imposed by section 5739.03 or 5741.04 of the Revised Code with	970
respect to sales of tangible personal property or services to such	971
permit holder.	972

Vendors and sellers who make sales upon which the tax is not	973
collected by reason of the provisions of this section shall	974
maintain records in such manner that the amount involved and	975
identity of the purchaser may be ascertained. The receipts from	976
such sales shall not be subject to the tax levied in section	977
5739.10 of the Revised Code.	978

Upon the cancellation or surrender of a direct payment	979
permit, the provisions of sections 5739.03, 5741.04, and 5741.12	980
of the Revised Code shall immediately apply to all purchases made	981
subsequent to such cancellation or surrender by the person who	982
previously held such permit, and such person shall so notify	983
vendors and sellers from whom purchases of tangible personal	984
property or services are made, in writing, prior to or at the time	985
of the first purchase after such cancellation or surrender. Upon	986
receipt of such notice, the vendor shall be subject to the	987
provisions of sections 5739.03 and 5739.10 of the Revised Code and	988
the seller shall be subject to the provisions of section 5741.04	989
of the Revised Code, with respect to all sales subsequently made	990
to such person. Failure of any such person to notify vendors or	991
sellers from whom purchases of tangible personal property or	992
services are made of the cancellation or surrender of a direct	993
payment permit shall be considered as a refusal to pay the tax by	994
the person required to issue such notice.	995

Sec. 5739.033. This(A) Except as provided in division (B)	996
of this section, divisions (C) to (I) of this section applies	997
apply to sales made on and after JulyMay 1, 20052006. Sales made	998
before JulyMay 1, 20052006, are subject to section 5739.035 of	999
the Revised Code. On and after January 1, 2005, any vendor may	1000
irrevocably elect to comply with divisions (C) to (I) of this	1001
section for all of the vendor's sales and places of business in	1002
this state.	1003

The amount of tax due pursuant to sections 5739.02, 5739.021,	1004
5739.023, and 5739.026 of the Revised Code is the sum of the taxes	1005
imposed pursuant to those sections at the sourcing location of the	1006
sale as determined under this section or, if applicable, under	1007
division (C) of section 5739.031 or section 5739.034 of the	1008
Revised Code, or at the situs of the sale as determined under	1009
section 5739.035 of the Revised Code. This section applies only to	1010
a vendor's or seller's obligation to collect and remit sales taxes	1011
under section 5739.02, 5739.021, 5739.023, or 5739.026 of the	1012
Revised Code or use taxes under section 5741.02, 5741.021,	1013
5741.022, or 5741.023 of the Revised Code. Division (A) of this	1014
section does not apply in determining the jurisdiction for which	1015
sellers are required to collect the use tax under section 5741.05	1016
of the Revised Code. This section does not affect the obligation	1017
of a consumer to remit use taxes on the storage, use, or other	1018
consumption of tangible personal property or on the benefit	1019
realized of any service provided, to the jurisdiction of that	1020
storage, use, or consumption, or benefit realized.	1021

(A)(B)(1) As used in this division, "delivery sale" means the	1022
taxable sale of tangible personal property or a service that is	1023
received by a consumer, or a donee designated by the consumer, in	1024
a taxing jurisdiction that is not the taxing jurisdiction in which	1025
the vendor has a fixed place of business.	1026

(2)(a) A vendor with total delivery sales in calendar year	1027
2005 that are less than thirty million dollars may continue to	1028
situs its sales under section 5739.035 of the Revised Code from	1029
May 1, 2006, through April 30, 2007.	1030

(b) A vendor with total delivery sales in calendar year 2006	1031
that are less than five million dollars may continue to situs its	1032
sales under section 5739.035 of the Revised Code from May 1, 2007,	1033
through December 31, 2007.	1034

(c) Beginning January 1, 2008, all vendors shall source their	1035
sales under divisions (C) to (I) of this section.	1036

(3) Once a vendor has total delivery sales that exceed the	1037
dollar amount in division (B)(2)(a) or (b) of this section, the	1038
vendor shall source its sales under divisions (C) to (I) of this	1039
section and shall continue to source its sales under those	1040
divisions, regardless of the amount of the vendor's total delivery	1041
sales in future years.	1042

(C) Except for sales, other than leases, of titled motor	1043
vehicles, titled watercraft, or titled outboard motors as provided	1044
in section 5741.05 of the Revised Code, or as otherwise provided	1045
in this section and section 5739.034 or 5740.10 of the Revised	1046
Code, all sales shall be sourced as follows:	1047

(1) If the consumer or a donee designated by the consumer	1048
receives tangible personal property or a service at a vendor's	1049
place of business, the sale shall be sourced to that place of	1050
business.	1051

(2) When the tangible personal property or service is not	1052
received at a vendor's place of business, the sale shall be	1053
sourced to the location known to the vendor where the consumer or	1054
the donee designated by the consumer receives the tangible	1055
personal property or service, including the location indicated by	1056
instructions for delivery to the consumer or the consumer's donee.	1057

(3) If divisions (A)(C)(1) and (2) of this section do not	1058
apply, the sale shall be sourced to the location indicated by an	1059
address for the consumer that is available from the vendor's	1060
business records that are maintained in the ordinary course of the	1061
vendor's business, when use of that address does not constitute	1062
bad faith.	1063

(4) If divisions (A)(C)(1), (2), and (3) of this section do	1064
not apply, the sale shall be sourced to the location indicated by	1065
an address for the consumer obtained during the consummation of	1066
the sale, including the address associated with the consumer's	1067
payment instrument, if no other address is available, when use of	1068
that address does not constitute bad faith.	1069

(5) If divisions (A)(C)(1), (2), (3), and (4) of this section	1070
do not apply, including in the circumstance where the vendor is	1071
without sufficient information to apply any of those divisions,	1072
the sale shall be sourced to the address from which tangible	1073
personal property was shipped, or from which the service was	1074
provided, disregarding any location that merely provided the	1075
electronic transfer of the property sold or service provided.	1076

(6) As used in division (A)(C) of this section, "receive"	1077
means taking possession of tangible personal property or making	1078
first use of a service. "Receive" does not include possession by a	1079
shipping company on behalf of a consumer.	1080

(B)(D)(1) Notwithstanding divisions (A)(C)(1) to (5) of this	1081
section, a consumer that is not a holder of a direct payment	1082
permit granted under section 5739.031 of the Revised Code, that	1083
purchases computer software delivered electronically or a service	1084
for use in business, and that knows at the time of purchase that	1085
such software or service will be concurrently available for use in	1086
more than one taxing jurisdiction shall deliver to the vendor in	1087
conjunction with its purchase a multiple points of use exemption	1088
form prescribed by the tax commissioner disclosing this fact. On	1089
receipt of the multiple points of use exemption form, the vendor	1090
is relieved of its obligation to collect, pay, or remit the tax	1091
due, and the consumer must pay the tax directly to the state.	1092

(2) A consumer that delivers such form to a vendor may use	1093
any reasonable, consistent, and uniform method of apportioning the	1094
tax due on the computer software delivered electronically or	1095
service for use in business that is supported by the consumer's	1096
business records as they existed at the time of the sale.	1097

(3) The multiple points of use exemption form shall remain in	1098
effect for all future sales by the vendor to the consumer until it	1099
is revoked in writing by the consumer, except as to the consumer's	1100
specific apportionment of a subsequent sale under division	1101
(B)(D)(2) of this section and the facts existing at the time of	1102
the sale.	1103

(C)(E) A person who holds a direct payment permit issued	1104
under section 5739.031 of the Revised Code is not required to	1105
deliver a multiple points of use exemption form to a vendor. But	1106
such permit holder shall comply with division (B)(D)(2) of this	1107
section in apportioning the tax due on computer software delivered	1108
electronically or a service used in business that will be	1109
concurrently available for use in more than one taxing	1110
jurisdiction.	1111

(D)(F)(1) Notwithstanding divisions (A)(C)(1) to (5) of this	1112
section, the purchaser of direct mail that is not a holder of a	1113
direct payment permit shall provide to the vendor in conjunction	1114
with the purchase either a direct mail form prescribed by the tax	1115
commissioner, or information to show the jurisdictions to which	1116
the direct mail is delivered to recipients.	1117

(2) Upon receipt of a direct mail form, the vendor is	1118
relieved of all obligations to collect, pay, or remit the	1119
applicable tax and the purchaser is obligated to pay that tax on a	1120
direct pay basis. A direct mail form shall remain in effect for	1121
all future sales of direct mail by the vendor to the purchaser	1122
until it is revoked in writing.	1123

(3) Upon receipt of information from the purchaser showing	1124
the jurisdictions to which the direct mail is delivered to	1125
recipients, the vendor shall collect the tax according to the	1126
delivery information provided by the purchaser. In the absence of	1127
bad faith, the vendor is relieved of any further obligation to	1128
collect tax on any transaction where the vendor has collected tax	1129
pursuant to the delivery information provided by the purchaser.	1130

(4) If the purchaser of direct mail does not have a direct	1131
payment permit and does not provide the vendor with either a	1132
direct mail form or delivery information as required by division	1133
(D)(F)(1) of this section, the vendor shall collect the tax	1134
according to division (A)(C)(5) of this section. Nothing in	1135
division (D)(F)(4) of this section shall limit a purchaser's	1136
obligation to pay sales or use tax to any state to which the	1137
direct mail is delivered.	1138

(5) If a purchaser of direct mail provides the vendor with	1139
documentation of direct payment authority, the purchaser shall not	1140
be required to provide a direct mail form or delivery information	1141
to the vendor.	1142

(E)(G) If the vendor provides lodging to transient guests as	1143
specified in division (B)(2) of section 5739.01 of the Revised	1144
Code, the sale shall be sourced to the location where the lodging	1145
is located.	1146

(F)(H)(1) As used in this division and division (G)(I) of	1147
this section, "transportation equipment" means any of the	1148
following:	1149

(a) Locomotives and railcars that are utilized for the	1150
carriage of persons or property in interstate commerce.	1151

(b) Trucks and truck-tractors with a gross vehicle weight	1152
rating of greater than ten thousand pounds, trailers,	1153
semi-trailers, or passenger buses that are registered through the	1154
international registration plan and are operated under authority	1155
of a carrier authorized and certificated by the United States	1156
department of transportation or another federal authority to	1157
engage in the carriage of persons or property in interstate	1158
commerce.	1159

(c) Aircraft that are operated by air carriers authorized and	1160
certificated by the United States department of transportation or	1161
another federal authority to engage in the carriage of persons or	1162
property in interstate or foreign commerce.	1163

(d) Containers designed for use on and component parts	1164
attached to or secured on the items set forth in division	1165
(F)(H)(1)(a), (b), or (c) of this section.	1166

(2) A sale, lease, or rental of transportation equipment	1167
shall be sourced pursuant to division (A)(C) of this section.	1168

(G)(I)(1) A lease or rental of tangible personal property	1169
that does not require recurring periodic payments shall be sourced	1170
pursuant to division (A)(C) of this section.	1171

(2) A lease or rental of tangible personal property that	1172
requires recurring periodic payments shall be sourced as follows:	1173

(a) In the case of a motor vehicle, other than a motor	1174
vehicle that is transportation equipment, such lease or rental	1175
shall be sourced to the primary property location as follows:	1176

(i) For a lease or rental taxed pursuant to division (A)(2)	1177
of section 5739.02 of the Revised Code, the primary property	1178
location is the address of the lessee or renter used for titling	1179
the motor vehicle pursuant to section 4505.06 of the Revised Code	1180
at the time the lease or rental is consummated.	1181

(ii) For a lease or rental taxed pursuant to division (A)(3)	1182
of section 5739.02 of the Revised Code, the primary property	1183
location for each lease or rental installment is the primary	1184
property location for the period covered by the installment.	1185

(b) In the case of an aircraft, other than an aircraft that	1186
is transportation equipment, such lease or rental shall be sourced	1187
to the primary property location as follows:	1188

(i) For a lease or rental taxed pursuant to division (A)(2)	1189
of section 5739.02 of the Revised Code, the primary property	1190
location is the primary property location at the time the lease or	1191
rental is consummated.	1192

(ii) For a lease or rental taxed pursuant to division (A)(3)	1193
of section 5739.02 of the Revised Code, the primary property	1194
location for each lease or rental installment is the primary	1195
property location for the period covered by the installment.	1196

(c) In the case of a watercraft or an outboard motor required	1197
to be titled in this state pursuant to Chapter 1548. of the	1198
Revised Code, such lease or rental shall be sourced to the primary	1199
property location as follows:	1200

(i) For a lease or rental taxed pursuant to division (A)(2)	1201
of section 5739.02 of the Revised Code, the primary property	1202
location is the address of the lessee or renter shown on the	1203
title.	1204

(ii) For a lease or rental taxed pursuant to division (A)(3)	1205
of section 5739.02 of the Revised Code, the primary property	1206
location for the initial lease or rental installment is the	1207
address of the lessee or renter shown on the title. For each	1208
subsequent installment, the primary property location is the	1209
primary property location for the period covered by the	1210
installment.	1211

(d) In the case of a lease or rental of all other tangible	1212
personal property, other than transportation equipment, such lease	1213
or rental shall be sourced as follows:	1214

(i) For a lease or rental that is taxed pursuant to division	1215
(A)(2) of section 5739.02 of the Revised Code, the lease or rental	1216
shall be sourced pursuant to division (A)(C) of this section at	1217
the time the lease or rental is consummated.	1218

(ii) For a lease or rental that is taxed pursuant to division	1219
(A)(3) of section 5739.02 of the Revised Code, the initial lease	1220
or rental installment shall be sourced pursuant to division (A)(C)	1221
of this section. Each subsequent installment shall be sourced to	1222
the primary property location for the period covered by the	1223
installment.	1224

(3) As used in division (G)(I) of this section, "primary	1225
property location" means an address for tangible personal property	1226
provided by the lessee or renter that is available to the lessor	1227
or owner from its records maintained in the ordinary course of	1228
business, when use of that address does not constitute bad faith.	1229

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

1230

(1) "Air-to-ground radiotelephone service" means a radio	1231
service, as defined in 47 C.F.R. 22.99, in which common carriers	1232
are authorized to offer and provide radio telecommunications	1233
service for hire to subscribers in aircraft.	1234

(2) "Call-by-call basis" means any method of charging for	1235
telecommunications services where the price is measured by	1236
individual calls.	1237

(3) "Customer" means the person or entity that contracts with	1238
a seller of telecommunications service. If the end user of	1239
telecommunications service is not the contracting party, the end	1240
user of the telecommunications service is the customer of the	1241
telecommunications service. "Customer" does not include a reseller	1242
of telecommunications service or of mobile telecommunications	1243
service of a serving carrier under an agreement to serve the	1244
customer outside the home service provider's licensed service	1245
area.	1246

(4) "End user" means the person who utilizes the	1247
telecommunications service. In the case of a person other than an	1248
individual, "end user" means the individual who utilizes the	1249
service on behalf of the person.	1250

(5) "Home service provider" has the same meaning as in the	1251
"Mobile Telecommunications Sourcing Act," Pub. L. No. 106-252, 114	1252
Stat. 631 (2000), 4 U.S.C. 124(5), as amended.	1253

(6) "Place of primary use" means the street address	1254
representative of where the customer's use of the	1255
telecommunications service primarily occurs, which must be the	1256
residential street address or the primary business street address	1257
of the customer. In the case of mobile telecommunications	1258
services, "place of primary use" must be within the licensed	1259
service area of the home service provider.	1260

(7) "Post-paid calling service" means the telecommunications	1261
service obtained by making a payment on a call-by-call basis	1262
either through the use of a credit card or payment mechanism such	1263
as a bank card, travel card, credit card, or debit card, or by	1264
charge made to a telephone number that is not associated with the	1265
origination or termination of the telecommunications service.	1266
"Post-paid calling service" includes a telecommunications service	1267
that would be a prepaid calling service, but for the fact that it	1268
is not exclusively a telecommunications service.	1269

(8) "Prepaid calling service" means the right to access	1270
exclusively a telecommunications service that must be paid for in	1271
advance, that enables the origination of calls using an access	1272
number or authorization code, whether manually or electronically	1273
dialed, and that is sold in predetermined units or dollars of	1274
which the number declines with use in a known amount.	1275

(9) "Service address" means:

1276

(a) The location of the telecommunications equipment to which	1277
a customer's call is charged and from which the call originates or	1278
terminates, regardless of where the call is billed or paid.	1279

(b) If the location in division (A)(9)(a) of this section is	1280
not known, "service address" means the origination point of the	1281
signal of the telecommunications service first identified by	1282
either the seller's telecommunications system or in information	1283
received by the seller from its service provider, where the system	1284
used to transport such signals is not that of the seller.	1285

(c) If the locations in divisions (A)(9)(a) and (b) of this	1286
section are not known, "service address" means the location of the	1287
customer's place of primary use.	1288

(B) The amount of tax due pursuant to sections 5739.02,	1289
5739.021, 5739.023, and 5739.026 of the Revised Code on sales of	1290
telecommunications service, information service, or mobile	1291
telecommunications service, is the sum of the taxes imposed	1292
pursuant to those sections at the sourcing location of the sale as	1293
determined under this section.	1294

(C) Except for the telecommunications services described in	1295
division (E) of this section, the sale of telecommunications	1296
service sold on a call-by-call basis shall be sourced to each	1297
level of taxing jurisdiction where the call originates and	1298
terminates in that jurisdiction, or each level of taxing	1299
jurisdiction where the call either originates or terminates and in	1300
which the service address also is located.	1301

(D) Except for the telecommunications services described in	1302
division (E) of this section, a sale of telecommunications	1303
services sold on a basis other than a call-by-call basis shall be	1304
sourced to the customer's place of primary use.	1305

(E) The sale of the following telecommunications services	1306
shall be sourced to each level of taxing jurisdiction, as follows:	1307

(1) A sale of mobile telecommunications service, other than	1308
air-to-ground radiotelephone service and prepaid calling service,	1309
shall be sourced to the customer's place of primary use as	1310
required by the Mobile Telecommunications Sourcing Act.	1311

(2) A sale of post-paid calling service shall be sourced to	1312
the origination point of the telecommunications signal as first	1313
identified by the service provider's telecommunications system, or	1314
information received by the seller from its service provider,	1315
where the system used to transport such signals is not that of the	1316
seller.	1317

(3) A sale of mobile telecommunications service that is a	1318
prepaid telecommunications service shall be sourced under division	1319
(A)(C) of section 5739.033 of the Revised Code, but inor, if	1320
permitted by division (B) of that section, shall be sitused under	1321
section 5739.035 of the Revised Code. In lieu of sourcing the sale	1322
of thethat service under division (A)(C)(5) of that section	1323
5739.033 of the Revised Code, it may be sourced to the location	1324
associated with the mobile telephone number.	1325

Sec. 5739.035. This section only applies to sales that are	1326
required to be sitused under this section pursuant to division (A)	1327
or (B) of section 5739.033 of the Revised Code.	1328

(A) Except as otherwise provided in this section, the situs	1329
of all sales is the vendor's place of business.	1330

(1) If the consumer or the consumer's agent takes possession	1331
of the tangible personal property at a place of business of the	1332
vendor where the purchase contract or agreement was made, the	1333
situs of the sale is that place of business.	1334

(2) If the consumer or the consumer's agent takes possession	1335
of the tangible personal property other than at a place of	1336
business of the vendor, or takes possession at a warehouse or	1337
similar facility of the vendor, the situs of the sale is the	1338
vendor's place of business where the purchase contract or	1339
agreement was made or the purchase order was received.	1340

(3) If the vendor provides a service specified in division	1341
(B)(3)(a), (b), (c), (d), (n), (o), (r), (s), or (t) of section	1342
5739.01 or makes a sale specified in division (B)(8) of section	1343
5739.01 of the Revised Code, the situs of the sale is the vendor's	1344
place of business where the service is performed or the contract	1345
or agreement for the service was made or the purchase order was	1346
received.	1347

(B) If the vendor is a transient vendor as specified in	1348
division (B) of section 5739.17 of the Revised Code, the situs of	1349
the sale is the vendor's temporary place of business or, if the	1350
transient vendor is the lessor of titled motor vehicles, titled	1351
watercraft, or titled outboard motors, at the location where the	1352
lessee keeps the leased property.	1353

(C) If the vendor makes sales of tangible personal property	1354
from a stock of goods carried in a motor vehicle, from which the	1355
purchaser makes selection and takes possession, or from which the	1356
vendor sells tangible personal property the quantity of which has	1357
not been determined prior to the time the purchaser takes	1358
possession, the situs of the sale is the location of the motor	1359
vehicle when the sale is made.	1360

(D) If the vendor is a delivery vendor as specified in	1361
division (D) of section 5739.17 of the Revised Code, the situs of	1362
the sale is the place where the tangible personal property is	1363
delivered, where the leased property is used, or where the service	1364
is performed or received.	1365

(E) If the vendor provides a service specified in division	1366
(B)(3)(e), (g), (h), (j), (k), (l), (m), (q), or (u) of section	1367
5739.01 of the Revised Code, the situs of the sale is the location	1368
of the consumer where the service is performed or received.	1369

(F) If the vendor provides lodging to transient guests as	1370
specified in division (B)(2) of section 5739.01 of the Revised	1371
Code, the situs of the sale is the location where the lodging is	1372
located.	1373

(G) If the vendor sells a warranty, maintenance or service	1374
contract, or similar agreement as specified in division (B)(7) of	1375
section 5739.01 of the Revised Code and the vendor is a delivery	1376
vendor, the situs of the sale is the location of the consumer. If	1377
the vendor is not a delivery vendor, the situs of the sale is the	1378
vendor's place of business where the contract or agreement was	1379
made, unless the warranty or contract is a component of the sale	1380
of a titled motor vehicle, titled watercraft, or titled outboard	1381
motor, in which case the situs of the sale is the county of	1382
titling.	1383

(H) Except as otherwise provided in this division, if the	1384
vendor sells a prepaid authorization number or a prepaid telephone	1385
calling card, the situs of the sale is the vendor's place of	1386
business and shall be taxed at the time of sale. If the vendor	1387
sells a prepaid authorization number or prepaid telephone calling	1388
card through a telephone call, electronic commerce, or any other	1389
form of remote commerce, the situs of the sale is the consumer's	1390
shipping address, or, if there is no item shipped, at the	1391
consumer's billing address.	1392

Sec. 5739.123.  (A) As used in this section,	1393
"destination-based sourcing requirements" means the manner in	1394
which sales are required to be sourced under divisions (C) to (I)	1395
of section 5739.033 of the Revised Code.	1396

(B) A vendor who holds a license issued prior to JulyMay 1,	1397
20052006, under division (A) of section 5739.17 of the Revised	1398
Code may apply for temporary compensation to assist the vendor in	1399
complying with the destination-based sourcing requirements for the	1400
first six months those sourcing requirements become applicable to	1401
the vendor under section 5739.033 of the Revised Code. The vendor	1402
shall file the application in accordance with division (C) of this	1403
section. The compensation shall be calculated for eachthe actual	1404
amount of tax collected per county for each month of the six-month	1405
period, and shall equal the amount of the tax reported on the	1406
returnnot to exceed twenty-five dollars per county per month, for	1407
sales of tangible personal property delivered to each county in	1408
which the vendor does not have a fixed place of business and does	1409
not, or is not required to, hold a license issued under division	1410
(A) of section 5739.17 of the Revised Code for that business, not	1411
to exceed twenty-five dollars per county for each month. Only	1412
amounts paid by the vendor for which the vendor is eligible for a	1413
discount under division (B) of section 5739.12 of the Revised Code	1414
and that are shown on returns filed during that six-month period	1415
shall be considered in calculating the compensation. In no event	1416
shall a vendor receive compensation that exceeds its total cost of	1417
complying with the destination-based sourcing requirements. For	1418
purposes of the six-month compensation period, a partial month	1419
shall be considered a month.	1420

(C) A vendor that applies for compensation under this section	1421
shall file an application with the tax commissioner on a form	1422
prescribed by the commissioner. The application shall be filed	1423
within sixty days after the end of the reporting period that	1424
includes the last day of the last month of the six-month period	1425
for which the vendor is requesting compensation. The commissioner	1426
shall determine the amount of compensation to which the vendor is	1427
entitled, and if that amount is equal to or greater than the	1428
amount claimed on the application, the commissioner shall certify	1429
that amount to the director of budget and management and the	1430
treasurer of state for payment from the general revenue fund. If	1431
the commissioner determines that the amount of compensation to	1432
which the vendor is entitled is less than the amount claimed on	1433
the vendor's application, the commissioner shall proceed in	1434
accordance with section 5703.70 of the Revised Code.	1435

(D) The compensation provided under this section shall not	1436
reduce the amount required to be returned to counties and transit	1437
authorities under section 5739.21 of the Revised Code.	1438

Sec. 5739.24.  (A) As used in this section:

1439

(1) "Destination-based sourcing requirements" has the same	1440
meaning as in section 5739.123 of the Revised Code.	1441

(2) "Impacted county" means a county having a population of	1442
less than seventy-five thousand as of the decennial census of 2000	1443
taken by the United States census bureau.	1444

(3) "Master account holder" means a person that holds more	1445
than one vendor's license under division (A) of section 5739.17 of	1446
the Revised Code, operates in multiple tax jurisdictions under the	1447
same ownership, and files or is required to file a consolidated	1448
return under section 5739.12 of the Revised Code.	1449

(4) "Tax jurisdiction" means a county or, if applicable, the	1450
portion of a county in which a transit authority has territory.	1451

(B)(1) WithinBeginning in 2006, within thirty days after the	1452
thirtieth day of June and the thirty-first day of December of each	1453
year, a master account holder that makes a sale that is subject to	1454
the destination-based sourcing requirements shall file with the	1455
tax commissioner a report that details the total taxable sales it	1456
made for the prior six-month period in each tax jurisdiction and	1457
at each fixed place of business for which the master account	1458
holder holds or should hold a license, irrespective of where those	1459
sales were sourced under those requirements. The commissioner may	1460
extend the time for filing the report under this section.	1461

(2) If the report required by division (B)(1) of this section	1462
is not timely filed by a master account holder, the tax	1463
commissioner shall mail notice of a delinquent report to the	1464
holder. In addition to any other penalties or additional charges	1465
imposed under this chapter, the commissioner may impose a penalty	1466
of up to fifty dollars for each fixed place of business of the	1467
master account holder. If the report is filed within fifteen days	1468
after the commissioner mails the delinquency notice, the penalty	1469
may be remitted in full or in part by the commissioner. But if the	1470
master account holder fails to file the report within fifteen days	1471
after the commissioner mails the notice, the commissioner shall	1472
impose a penalty of up to one hundred dollars for each fixed place	1473
of business of the master account holder. This penalty may not be	1474
remitted in full by the commissioner. A penalty imposed under this	1475
division is subject to collection and assessment in the same	1476
manner as any tax levied under this chapter.	1477

(C)(1) WithinBeginning in 2006, within seventy-five days	1478
after the thirtieththirty-first day of JuneJuly each year and	1479
the thirty-first day of DecemberJanuary of eachthe following	1480
year, the tax commissioner shall determine for each county both of	1481
the following:	1482

(a) The amount of taxes paidreported on returns filed by all	1483
vendors licensed under division (A) of section 5739.17 of the	1484
Revised Code that were levied by sections 5739.021 and 5739.026 of	1485
the Revised Code and were collected by the countyreported as due	1486
in accordance with the destination-based sourcing requirements;	1487

(b) The amount of taxes levied by those sections that would	1488
have been paid to the county by vendors licensed under division	1489
(A) of section 5739.17 of the Revised Code if the taxes had been	1490
collected by the county in accordance with section 5739.035 of the	1491
Revised Code.	1492

The commissioner may make any adjustments that are necessary	1493
to account for delinquent tax returns or reports.	1494

(2) In making the determination required by division (C)(1)	1495
of this section, the commissioner shall use the lesser of the	1496
county's tax rate in effect as of January 1, 20052006, or the	1497
actual tax rate in effect for the six-month period for which the	1498
compensation was calculated.	1499

(3) The commissioner also shall calculate the percentage	1500
difference between the amounts determined under divisions	1501
(C)(1)(a) and (b) of this section by using a fraction, with the	1502
amount determined under division (C)(1)(a) of this section in the	1503
numerator, and the amount determined under division (C)(1)(b) of	1504
this section in the denominator.	1505

(D)(1) If the percentage difference calculated under division	1506
(C)(3) of this section for a county is ninety-six per cent or	1507
less, and the county is an impacted county under this section, the	1508
county shall receive compensation. WithinBeginning in 2006,	1509
within ninety days after the thirtieththirty-first day of June	1510
July each year and the thirty-first day of DecemberJanuary of	1511
eachthe following year, the tax commissioner, in the next ensuing	1512
payment to be made under division (B)(1) of section 5739.21 of the	1513
Revised Code, shall in addition provide from the general revenue	1514
fund to such county compensation in the amount of ninety-eight per	1515
cent of the denominator calculated under division (C)(3) of this	1516
section, minus the numerator calculated under division (C)(3) of	1517
this section.	1518

(2) A county that is entitled to compensation under division	1519
(D)(1) of this section may request an advance payment of that	1520
compensation. The commissioner shall adopt rules that establish	1521
the manner by which such county may make the request and the	1522
method the commissioner will use to determine the amount of the	1523
advance payment to be made to the county. Compensation provided	1524
under division (D)(1) of this section shall be adjusted	1525
accordingly to account for advance payments made under division	1526
(D)(2) of this section.	1527

(E) If, under division (C)(1) of this section, the tax	1528
commissioner determines that a county collectedreceived more	1529
taxes under the destination-based sourcing requirements than it	1530
would have collectedreceived if taxes had been paid in accordance	1531
with section 5739.035 of the Revised Code, the county is a	1532
windfall county under this division. WithinBeginning in 2006,	1533
within ninety days after the thirtieththirty-first day of June	1534
July each year and the thirty-first day of DecemberJanuary of	1535
eachthe following year, the commissioner, in the next ensuing	1536
payment to be made under division (B)(1) of section 5739.21 of the	1537
Revised Code, shall reduce the amount to be returned to each	1538
windfall county by the total amount of excess taxes that would	1539
have been received by all windfall counties in proportion to the	1540
total amount needed to compensate counties under division (D) of	1541
this section.	1542

(F) The commissioner shall make available to the public the	1543
determinations made under division (C) of this section, but any	1544
data obtained from taxpayers under this section or that would	1545
identify those taxpayers shall remain confidential.	1546

(G) There is hereby created the county compensation tax study	1547
committee. The committee shall consist of the following seven	1548
members: the tax commissioner, three members of the senate	1549
appointed by the president of the senate, and three members of the	1550
house of representatives appointed by the speaker of the house of	1551
representatives. The appointments shall be made not later than	1552
January 31, 2006. The tax commissioner shall be the chairperson of	1553
the committee and the department of taxation shall provide any	1554
information and assistance that is required by the committee to	1555
carry out its duties. The committee shall study the extent to	1556
which each county has been impacted by the destination-based	1557
sourcing requirements. Not later than June 30, 2006, the committee	1558
shall issue a report of its findings and shall make	1559
recommendations to the president of the senate and the speaker of	1560
the house of representatives, at which time the committee shall	1561
cease to exist.	1562

Sec. 5740.02. (A)(1) The state of Ohio shall participate in	1563
discussions with other states regarding the development of a	1564
streamlined sales and use tax system to reduce the burden and cost	1565
for all sellers to collect this state's sales and use taxes.	1566

(2) Subject to division (B) of this section, the state also	1567
shall participate in meetings of the implementing states or the	1568
governing board of the agreement to review or, amend, or	1569
administer the terms of the agreement to simplify and modernize	1570
sales and use tax administration that embodies the requirements	1571
set forth in section 5740.05 of the Revised Code. For purposes of	1572
these meetings, the state shall be represented by three delegates.	1573
The tax commissioner or the commissioner's designee shall be the	1574
chairperson of the delegation. The other delegates shall be one	1575
delegate chosen by the speaker of the house of representatives and	1576
one delegate chosen by the president of the senate. In all matters	1577
where voting by the member states or the governing board is	1578
required to amend the agreement, the chairperson, based on the	1579
votes of the majority of the delegation, shall cast this state's	1580
vote.	1581

(B) The state shall not participate in the meetings of the	1582
implementing states or the governing board referred to in division	1583
(A)(2) of this section unless the meetings are conducted in	1584
accordance with requirements substantially similar to those	1585
described in divisions (C) and (F) of section 121.22 of the	1586
Revised Code, as if the participants of the meetings were a public	1587
body as defined in that section, except such meetings may be	1588
closed during any discussion pertaining to proprietary information	1589
of a person if the person so requests, personnel matters,	1590
competitive bidding, certification of service providers, or	1591
matters substantially similar to those described in divisions	1592
(G)(2), (3), or (5) of section 121.22 of the Revised Code. The	1593
state may participate in teleconferences, special meetings,	1594
meetings of working groups, committees, or steering committees if	1595
they are conducted in accordance with the public participation	1596
rules applicable to such meetings, as established by the	1597
implementing states entitled to participate in discussions to	1598
finalize the agreement, or the governing board.	1599

(C) As used in this section, "meetings:

1600

(1) "Meetings of the implementing states" means meetings of	1601
the entire body of the states that are entitled to participate in	1602
discussions to finalize the agreement because they have enacted	1603
legislation based on the uniform sales and use tax administration	1604
act, approved January 24, 2001, or the simplified sales and use	1605
tax administration act, approved January 27, 2001.	1606

(2) "Governing board" means the board that, under the terms	1607
of the agreement, is responsible for the administration and	1608
operation of the agreement.	1609

Section 2. That existing sections 5739.01, 5739.031,	1610
5739.033, 5739.034, 5739.035, 5739.123, 5739.24, and 5740.02 and	1611
section 5740.10 of the Revised Code are hereby repealed.	1612

Section 3. (A)(1) Sections 5739.01, 5739.031, 5739.033,	1613
5739.034, 5739.035, 5739.123, 5739.24, and 5740.02 of the Revised	1614
Code, as amended by this act, provide for or are essential to the	1615
implementation of a tax levy. Therefore, under Ohio Constitution,	1616
Article II, Section 1d, those sections as amended by this act are	1617
not subject to the referendum and go into immediate effect when	1618
this act becomes law.	1619

(2) The repeal by this act of section 5740.10 of the Revised	1620
Code provides for or is essential to the implementation of a tax	1621
levy. Therefore, under Ohio Constitution, Article II, Section 1d,	1622
the repeal is not subject to the referendum and goes into	1623
immediate effect when this act becomes law.	1624

(B) This section provides for or is essential to the	1625
implementation of a tax levy. Therefore, under Ohio Constitution,	1626
Article II, Section 1d, this section is not subject to the	1627
referendum and goes into immediate effect when this act becomes	1628
law.	1629

Section 4. Section 5739.01 of the Revised Code is presented	1630
in this act as a composite of the section as amended by both Am.	1631
Sub. H.B. 95 and Am. Sub. S.B. 37 of the 125th General Assembly.	1632
The General Assembly, applying the principle stated in division	1633
(B) of section 1.52 of the Revised Code that amendments are to be	1634
harmonized if reasonably capable of simultaneous operation, finds	1635
that the composite is the resulting version of the section in	1636
effect prior to the effective date of the section as presented in	1637
this act.	1638