As Reported by the House Ways and Means Committee

127th General Assembly Regular Session 2007-2008

Sub. H. B. No. 165

Representative Gibbs 

Cosponsors: Representatives McGregor, J., Hagan, J., Adams, Carmichael, Schindel, Foley, Bolon, Chandler, Miller 

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A BILL

To amend sections 5739.033, 5739.035, 5739.123,

1

5741.03, and 5741.05 and to enact section 5740.10

2

of the Revised Code to authorize retail vendors

3

with annual delivery sales in Ohio of less than

4

$500,000 to continue to use origin-based situsing

5

rules for determining the appropriate sales tax

6

jurisdiction in which a sale is taxable, to

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authorize all retail vendors currently using

8

origin-based situsing to continue to do so if the

9

Tax Commissioner determines that the Streamlined

10

Sales and Use Tax Agreement does not allow

11

origin-based situsing by vendors with delivery

12

sales of less than $500,000, to authorize

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out-of-state sellers with annual delivery sales in

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Ohio of less than $500,000 to collect Ohio use

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taxes at a single uniform rate if the Commissioner

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makes that determination, and to provide for the

17

distribution of use tax collected at a single

18

uniform rate to counties and transit authorities.

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

Section 1. That sections 5739.033, 5739.035, 5739.123,	20
5741.03, and 5741.05 be amended and section 5740.10 of the Revised	21
Code be enacted to read as follows:	22

Sec. 5739.033.  (A) Except as provided in division (B) of	23
this section, divisions (C) to (I) of this section apply to sales	24
made on and after May 1, 2006. Sales made before May 1, 2006, are	25
subject to section 5739.035 of the Revised Code. On and after	26
January 1, 2005, anyJanuary 1, 2008. Any vendor may irrevocably	27
elect to comply with divisions (C) to (I) of this section for all	28
of the vendor's sales and places of business in this state.	29

The amount of tax due pursuant to sections 5739.02, 5739.021,	30
5739.023, and 5739.026 of the Revised Code is the sum of the taxes	31
imposed pursuant to those sections at the sourcing location of the	32
sale as determined under this section or, if applicable, under	33
division (C) of section 5739.031 or section 5739.034 of the	34
Revised Code, or at the situs of the sale as determined under	35
section 5739.035 of the Revised Code. This section applies only to	36
a vendor's or seller's obligation to collect and remit sales taxes	37
under section 5739.02, 5739.021, 5739.023, or 5739.026 of the	38
Revised Code or use taxes under section 5741.02, 5741.021,	39
5741.022, or 5741.023 of the Revised Code. Division (A) of this	40
section does not apply in determining the jurisdiction for which	41
sellers are required to collect the use tax under section 5741.05	42
of the Revised Code. This section does not affect the obligation	43
of a consumer to remit use taxes on the storage, use, or other	44
consumption of tangible personal property or on the benefit	45
realized of any service provided, to the jurisdiction of that	46
storage, use, or consumption, or benefit realized.	47

(B)(1) As used in this division:

48

(a) "Delivery sale" means the taxable sale of tangible	49
personal property or a service that is received by a consumer, or	50
a donee designated by the consumer, in a taxing jurisdiction that	51
is not the taxing jurisdiction in which the vendor has a fixed	52
place of business.	53

(b) "Agreement" has the same meaning as in section 5740.01 of	54
the Revised Code.	55

(c) "Governing board" has the same meaning as in section	56
5740.02 of the Revised Code.	57

(2)(a) AIf the tax commissioner does not determine and	58
certify under section 5740.10 of the Revised Code that the	59
agreement allows a vendor with total annual delivery sales in this	60
state of less than five hundred thousand dollars in calendar year	61
2007 and thereafter to situs its sales under section 5739.035 of	62
the Revised Code, a vendor that is not required to situs sales	63
under divisions (C) to (I) of this section on the date of the	64
commissioner's certification may continue after that date to situs	65
its sales under section 5739.035 of the Revised Code.	66

(3) If the tax commissioner makes the certification under	67
section 5740.10 of the Revised Code, and except as otherwise	68
provided in divisions (B)(4) and (5) of this section, a vendor	69
with total delivery sales in calendar year 2005 that are2007 and	70
each calendar year thereafter of less than thirty millionfive	71
hundred thousand dollars may continue to situs its sales under	72
section 5739.035 of the Revised Code from May 1, 2006, through	73
April 30, 2007, except that, if the tax commissioner does not	74
enter a determination in the commissioner's journal under division	75
(B)(2)(b) of this section, those dates shall be May 1, 2006,	76
through December 31, 2007.	77

(b) On or before February 1, 2007, the tax commissioner shall	78
determine whether certified service provider services are being	79
provided by the governing board of the streamlined sales and use	80
tax agreement for all delivery sales. If the commissioner	81
determines that such services are being so provided, the	82
commissioner shall enter the determination in the commissioner's	83
journal and shall provide notice of the determination on the	84
department of taxation's official internet web site. If the	85
commissioner makes such an entry in the journal, then a vendor	86
with total delivery sales in calendar year 2006 that are less than	87
five million dollars may continue to situs its sales under section	88
5739.035 of the Revised Code from May 1, 2007, through December	89
31, 2007.	90

(3) Beginning January 1, 2008, all vendors shall source their	91
sales under divisions (C) to (I) of this section.	92

(4) OnceIf the tax commissioner makes the determination and	93
certification under section 5740.10 of the Revised Code, then,	94
once a vendor has total delivery sales that exceed the dollar	95
amount in division (B)(2)(a) or (b) of this sectionin this state	96
of five hundred thousand dollars or more for a calendar year, the	97
vendor shall source its sales under divisions (C) to (I) of this	98
section and shall continue to source its sales under those	99
divisions, regardless of the amount of the vendor's total delivery	100
sales in future years.	101

(5) If a vendor permitted under division (B)(3) of this	102
section to situs its sales under section 5739.035 of the Revised	103
Code is required to provide the notices under division (I)(1) of	104
that section but fails to provide the notices as required, the	105
vendor shall situs all subsequent sales as required under	106
divisions (C) to (I) of this section.	107

(C) Except for sales, other than leases, of titled motor	108
vehicles, titled watercraft, or titled outboard motors as provided	109
in section 5741.05 of the Revised Code, or as otherwise provided	110
in this section and section 5739.034 of the Revised Code, all	111
sales shall be sourced as follows:	112

(1) If the consumer or a donee designated by the consumer	113
receives tangible personal property or a service at a vendor's	114
place of business, the sale shall be sourced to that place of	115
business.	116

(2) When the tangible personal property or service is not	117
received at a vendor's place of business, the sale shall be	118
sourced to the location known to the vendor where the consumer or	119
the donee designated by the consumer receives the tangible	120
personal property or service, including the location indicated by	121
instructions for delivery to the consumer or the consumer's donee.	122

(3) If divisions (C)(1) and (2) of this section do not apply,	123
the sale shall be sourced to the location indicated by an address	124
for the consumer that is available from the vendor's business	125
records that are maintained in the ordinary course of the	126
vendor's business, when use of that address does not constitute	127
bad faith.	128

(4) If divisions (C)(1), (2), and (3) of this section do not	129
apply, the sale shall be sourced to the location indicated by an	130
address for the consumer obtained during the consummation of the	131
sale, including the address associated with the consumer's payment	132
instrument, if no other address is available, when use of that	133
address does not constitute bad faith.	134

(5) If divisions (C)(1), (2), (3), and (4) of this section do	135
not apply, including in the circumstance where the vendor is	136
without sufficient information to apply any of those divisions,	137
the sale shall be sourced to the address from which tangible	138
personal property was shipped, or from which the service was	139
provided, disregarding any location that merely provided the	140
electronic transfer of the property sold or service provided.	141

(6) As used in division (C) of this section, "receive" means	142
taking possession of tangible personal property or making first	143
use of a service. "Receive" does not include possession by a	144
shipping company on behalf of a consumer.	145

(D)(1)(a) Notwithstanding divisions (C)(1) to (5) of this	146
section, a business consumer that is not a holder of a direct	147
payment permit granted under section 5739.031 of the Revised Code,	148
that purchases a digital good, computer software, except computer	149
software received in person by a business consumer at a vendor's	150
place of business, or a service, and that knows at the time of	151
purchase that such digital good, software, or service will be	152
concurrently available for use in more than one taxing	153
jurisdiction shall deliver to the vendor in conjunction with its	154
purchase an exemption certificate claiming multiple points of use,	155
or shall meet the requirements of division (D)(2) of this section.	156
On receipt of the exemption certificate claiming multiple points	157
of use, the vendor is relieved of its obligation to collect, pay,	158
or remit the tax due, and the business consumer must pay the tax	159
directly to the state.	160

(b) A business consumer that delivers the exemption	161
certificate claiming multiple points of use to a vendor may use	162
any reasonable, consistent, and uniform method of apportioning the	163
tax due on the digital good, computer software, or service that is	164
supported by the consumer's business records as they existed at	165
the time of the sale. The business consumer shall report and pay	166
the appropriate tax to each jurisdiction where concurrent use	167
occurs. The tax due shall be calculated as if the apportioned	168
amount of the digital good, computer software, or service had been	169
delivered to each jurisdiction to which the sale is apportioned	170
under this division.	171

(c) The exemption certificate claiming multiple points of use	172
shall remain in effect for all future sales by the vendor to the	173
business consumer until it is revoked in writing by the business	174
consumer, except as to the business consumer's specific	175
apportionment of a subsequent sale under division (D)(1)(b) of	176
this section and the facts existing at the time of the sale.	177

(2) When the vendor knows that a digital good, computer	178
software, or service sold will be concurrently available for use	179
by the business consumer in more than one jurisdiction, but the	180
business consumer does not provide an exemption certificate	181
claiming multiple points of use as required by division (D)(1) of	182
this section, the vendor may work with the business consumer to	183
produce the correct apportionment. Governed by the principles of	184
division (D)(1)(b) of this section, the vendor and business	185
consumer may use any reasonable, but consistent and uniform,	186
method of apportionment that is supported by the vendor's and	187
business consumer's books and records as they exist at the time	188
the sale is reported for purposes of the taxes levied under this	189
chapter. If the business consumer certifies to the accuracy of the	190
apportionment and the vendor accepts the certification, the vendor	191
shall collect and remit the tax accordingly. In the absence of bad	192
faith, the vendor is relieved of any further obligation to collect	193
tax on any transaction where the vendor has collected tax pursuant	194
to the information certified by the business consumer.	195

(3) When the vendor knows that the digital good, computer	196
software, or service will be concurrently available for use in	197
more than one jurisdiction, and the business consumer does not	198
have a direct pay permit and does not provide to the vendor an	199
exemption certificate claiming multiple points of use as required	200
in division (D)(1) of this section, or certification pursuant to	201
division (D)(2) of this section, the vendor shall collect and	202
remit the tax based on division (C) of this section.	203

(4) Nothing in this section shall limit a person's obligation	204
for sales or use tax to any state in which a digital good,	205
computer software, or service is concurrently available for use,	206
nor limit a person's ability under local, state, or federal law,	207
to claim a credit for sales or use taxes legally due and paid to	208
other jurisdictions.	209

(E) A person who holds a direct payment permit issued under	210
section 5739.031 of the Revised Code is not required to deliver an	211
exemption certificate claiming multiple points of use to a vendor.	212
But such permit holder shall comply with division (D)(2) of this	213
section in apportioning the tax due on a digital good, computer	214
software, or a service for use in business that will be	215
concurrently available for use in more than one taxing	216
jurisdiction.	217

(F)(1) Notwithstanding divisions (C)(1) to (5) of this	218
section, the consumer of direct mail that is not a holder of a	219
direct payment permit shall provide to the vendor in conjunction	220
with the sale either an exemption certificate claiming direct mail	221
prescribed by the tax commissioner, or information to show the	222
jurisdictions to which the direct mail is delivered to recipients.	223

(2) Upon receipt of such exemption certificate, the vendor is	224
relieved of all obligations to collect, pay, or remit the	225
applicable tax and the consumer is obligated to pay that tax on a	226
direct pay basis. An exemption certificate claiming direct mail	227
shall remain in effect for all future sales of direct mail by the	228
vendor to the consumer until it is revoked in writing.	229

(3) Upon receipt of information from the consumer showing the	230
jurisdictions to which the direct mail is delivered to recipients,	231
the vendor shall collect the tax according to the delivery	232
information provided by the consumer. In the absence of bad faith,	233
the vendor is relieved of any further obligation to collect tax on	234
any transaction where the vendor has collected tax pursuant to the	235
delivery information provided by the consumer.	236

(4) If the consumer of direct mail does not have a direct	237
payment permit and does not provide the vendor with either an	238
exemption certificate claiming direct mail or delivery information	239
as required by division (F)(1) of this section, the vendor shall	240
collect the tax according to division (C)(5) of this section.	241
Nothing in division (F)(4) of this section shall limit a	242
consumer's obligation to pay sales or use tax to any state to	243
which the direct mail is delivered.	244

(5) If a consumer of direct mail provides the vendor with	245
documentation of direct payment authority, the consumer shall not	246
be required to provide an exemption certificate claiming direct	247
mail or delivery information to the vendor.	248

(G) If the vendor provides lodging to transient guests as	249
specified in division (B)(2) of section 5739.01 of the Revised	250
Code, the sale shall be sourced to the location where the lodging	251
is located.	252

(H)(1) As used in this division and division (I) of this	253
section, "transportation equipment" means any of the following:	254

(a) Locomotives and railcars that are utilized for the	255
carriage of persons or property in interstate commerce.	256

(b) Trucks and truck-tractors with a gross vehicle weight	257
rating of greater than ten thousand pounds, trailers,	258
semi-trailers, or passenger buses that are registered through the	259
international registration plan and are operated under authority	260
of a carrier authorized and certificated by the United States	261
department of transportation or another federal authority to	262
engage in the carriage of persons or property in interstate	263
commerce.	264

(c) Aircraft that are operated by air carriers authorized and	265
certificated by the United States department of transportation or	266
another federal authority to engage in the carriage of persons or	267
property in interstate or foreign commerce.	268

(d) Containers designed for use on and component parts	269
attached to or secured on the items set forth in division	270
(H)(1)(a), (b), or (c) of this section.	271

(2) A sale, lease, or rental of transportation equipment	272
shall be sourced pursuant to division (C) of this section.	273

(I)(1) A lease or rental of tangible personal property that	274
does not require recurring periodic payments shall be sourced	275
pursuant to division (C) of this section.	276

(2) A lease or rental of tangible personal property that	277
requires recurring periodic payments shall be sourced as follows:	278

(a) In the case of a motor vehicle, other than a motor	279
vehicle that is transportation equipment, or an aircraft, other	280
than an aircraft that is transportation equipment, such lease or	281
rental shall be sourced as follows:	282

(i) An accelerated tax payment on a lease or rental taxed	283
pursuant to division (A)(2) of section 5739.02 of the Revised Code	284
shall be sourced to the primary property location at the time the	285
lease or rental is consummated. Any subsequent taxable charges on	286
the lease or rental shall be sourced to the primary property	287
location for the period in which the charges are incurred.	288

(ii) For a lease or rental taxed pursuant to division (A)(3)	289
of section 5739.02 of the Revised Code, each lease or rental	290
installment shall be sourced to the primary property location for	291
the period covered by the installment.	292

(b) In the case of a lease or rental of all other tangible	293
personal property, other than transportation equipment, such lease	294
or rental shall be sourced as follows:	295

(i) An accelerated tax payment on a lease or rental that is	296
taxed pursuant to division (A)(2) of section 5739.02 of the	297
Revised Code shall be sourced pursuant to division (C) of this	298
section at the time the lease or rental is consummated. Any	299
subsequent taxable charges on the lease or rental shall be sourced	300
to the primary property location for the period in which the	301
charges are incurred.	302

(ii) For a lease or rental that is taxed pursuant to division	303
(A)(3) of section 5739.02 of the Revised Code, the initial lease	304
or rental installment shall be sourced pursuant to division (C) of	305
this section. Each subsequent installment shall be sourced to the	306
primary property location for the period covered by the	307
installment.	308

(3) As used in division (I) of this section, "primary	309
property location" means an address for tangible personal property	310
provided by the lessee or renter that is available to the lessor	311
or owner from its records maintained in the ordinary course of	312
business, when use of that address does not constitute bad faith.	313

Sec. 5739.035. This section only applies to sales that are	314
required tomay be sitused under this section pursuant to division	315
(A) or (B) of section 5739.033 of the Revised Code.	316

(A) Except as otherwise provided in this section, the situs	317
of all sales is the vendor's place of business.	318

(1) If the consumer or the consumer's agent takes possession	319
of the tangible personal property at a place of business of the	320
vendor where the purchase contract or agreement was made, the	321
situs of the sale is that place of business.	322

(2) If the consumer or the consumer's agent takes possession	323
of the tangible personal property other than at a place of	324
business of the vendor, or takes possession at a warehouse or	325
similar facility of the vendor, the situs of the sale is the	326
vendor's place of business where the purchase contract or	327
agreement was made or the purchase order was received.	328

(3) If the vendor provides a service specified in division	329
(B)(3)(a), (b), (c), (d), (n), (o), (q), (r), or (s) of section	330
5739.01 or makes a sale specified in division (B)(8) of section	331
5739.01 of the Revised Code, the situs of the sale is the vendor's	332
place of business where the service is performed or the contract	333
or agreement for the service was made or the purchase order was	334
received.	335

(B) If the vendor is a transient vendor as specified in	336
division (B) of section 5739.17 of the Revised Code, the situs of	337
the sale is the vendor's temporary place of business or, if the	338
transient vendor is the lessor of titled motor vehicles, titled	339
watercraft, or titled outboard motors, at the location where the	340
lessee keeps the leased property.	341

(C) If the vendor makes sales of tangible personal property	342
from a stock of goods carried in a motor vehicle, from which the	343
purchaser makes selection and takes possession, or from which the	344
vendor sells tangible personal property the quantity of which has	345
not been determined prior to the time the purchaser takes	346
possession, the situs of the sale is the location of the motor	347
vehicle when the sale is made.	348

(D) If the vendor is a delivery vendor as specified in	349
division (D) of section 5739.17 of the Revised Code, the situs of	350
the sale is the place where the tangible personal property is	351
delivered, where the leased property is used, or where the service	352
is performed or received.	353

(E) If the vendor provides a service specified in division	354
(B)(3)(e), (g), (h), (j), (k), (l), (m), (p), or (t) of section	355
5739.01 of the Revised Code, the situs of the sale is the location	356
of the consumer where the service is performed or received.	357

(F) If the vendor provides lodging to transient guests as	358
specified in division (B)(2) of section 5739.01 of the Revised	359
Code, the situs of the sale is the location where the lodging is	360
located.	361

(G) If the vendor sells a warranty, maintenance or service	362
contract, or similar agreement as specified in division (B)(7) of	363
section 5739.01 of the Revised Code and the vendor is a delivery	364
vendor, the situs of the sale is the location of the consumer. If	365
the vendor is not a delivery vendor, the situs of the sale is the	366
vendor's place of business where the contract or agreement was	367
made, unless the warranty or contract is a component of the sale	368
of a titled motor vehicle, titled watercraft, or titled outboard	369
motor, in which case the situs of the sale is the county of	370
titling.	371

(H) Except as otherwise provided in this division, if the	372
vendor sells a prepaid authorization number or a prepaid telephone	373
calling card, the situs of the sale is the vendor's place of	374
business and shall be taxed at the time of sale. If the vendor	375
sells a prepaid authorization number or prepaid telephone calling	376
card through a telephone call, electronic commerce, or any other	377
form of remote commerce, the situs of the sale is the consumer's	378
shipping address, or, if there is no item shipped, at the	379
consumer's billing address.	380

(I) Division (I) of this section applies only if the tax	381
commissioner makes the certification under section 5740.10 of the	382
Revised Code.	383

(1)(a) In each delivery sale by a vendor permitted to situs	384
its sales under this section, the vendor shall clearly indicate on	385
the invoice or other similar document provided to the purchaser at	386
the time of the sale that the vendor is a vendor permitted to	387
situs its sales under this section, and that the purchaser may	388
claim a partial refund of the sales tax collected on the	389
transaction if the tax rate for the tax jurisdiction in which the	390
vendor is located exceeds the tax rate for the tax jurisdiction in	391
which the purchaser receives the property.	392

(b) In each sale by a vendor permitted to situs its sales	393
under this section, the vendor shall clearly indicate on the	394
invoice or other similar document provided to the purchaser at the	395
time of the sale that the vendor is a vendor permitted to situs	396
its sales under this section, and that the purchaser may be liable	397
for additional sales or use tax if the purchaser removes the	398
property from the tax jurisdiction in which the purchaser receives	399
the property to a tax jurisdiction with a tax rate that exceeds	400
the rate in the tax jurisdiction in which the purchaser received	401
the property.	402

(2) A purchaser that receives tangible personal property or	403
services in a delivery sale from a vendor permitted to situs its	404
sales under this section may claim a refund of the tax the vendor	405
collected and remitted on the sale in an amount equal to the	406
excess of the tax collected and remitted over the tax that would	407
have been due if the sale had been sitused to the tax jurisdiction	408
in which the purchaser received the property or service.	409

A refund is authorized under this division only if the	410
invoice or other similar document provided to the purchaser at the	411
time of the sale includes the notice required under division	412
(I)(1) of this section.	413

Refunds shall be claimed in the manner prescribed by section	414
5739.07 of the Revised Code.	415

(3) A purchaser of tangible personal property from a vendor	416
permitted to situs its sales under this section that removes the	417
property from the tax jurisdiction in which the purchaser received	418
the property is liable for additional tax in an amount equal to	419
the excess of the tax that would have been due on the sale if the	420
sale had been sitused to the tax jurisdiction to which the	421
purchaser removed the property over the tax that the vendor	422
collected and remitted on the sale.	423

(4) For the purposes of division (I) of this section,	424
"delivery sale" has the same meaning as in section 5739.033 of the	425
Revised Code, and "tax jurisdiction" has the same meaning as in	426
section 5739.24 of the Revised Code.	427

(J) Nothing in this section relieves a person claiming to be	428
authorized to situs sales under this section, but not so	429
authorized, from liability for tax, penalty, interest, or	430
additional charges imposed under this chapter for failure to	431
collect the amount of tax lawfully due applying the situsing	432
provisions of divisions (C) to (I) of section 5739.033 of the	433
Revised Code.	434

Sec. 5739.123.  (A) As used in this section,	435
"destination-based sourcing requirements" means the manner in	436
which sales are required to be sourced under divisions (C) to (I)	437
of section 5739.033 of the Revised Code.	438

(B) A vendor who holds a license issued prior to May 1, 2006,	439
under division (A) of section 5739.17 of the Revised Code may	440
apply for temporary compensation to assist the vendor in complying	441
with the destination-based sourcing requirements for the first six	442
months those sourcing requirements become applicable to the vendor	443
under section 5739.033 of the Revised Code. The vendor shall file	444
the application in accordance with division (C) of this section.	445
The compensation shall be the actual amount of tax collected per	446
county for each month of the six-month period, not to exceed	447
twenty-five dollars per county per month, for sales of tangible	448
personal property delivered to each county in which the vendor	449
does not have a fixed place of business and does not, or is not	450
required to, hold a license issued under division (A) of section	451
5739.17 of the Revised Code for that business. Only amounts paid	452
by the vendor for which the vendor is eligible for a discount	453
under division (B) of section 5739.12 of the Revised Code and that	454
are shown on returns filed during that six-month period shall be	455
considered in calculating the compensation. In no event shall a	456
vendor receive compensation that exceeds its total cost of	457
complying with the destination-based sourcing requirements. For	458
purposes of the six-month compensation period, a partial month	459
shall be considered a month.	460

(C) A vendor that applies for compensation under this section	461
shall file an application with the tax commissioner on a form	462
prescribed by the commissioner. The application shall be filed	463
within sixty days after the end of the reporting period that	464
includes the last day of the last month of the six-month period	465
for which the vendor is requesting compensation. The commissioner	466
shall determine the amount of compensation to which the vendor is	467
entitled, and if that amount is equal to or greater than the	468
amount claimed on the application, the commissioner shall certify	469
that amount to the director of budget and management and the	470
treasurer of state for payment from the general revenue fund. If	471
the commissioner determines that the amount of compensation to	472
which the vendor is entitled is less than the amount claimed on	473
the vendor's application, the commissioner shall proceed in	474
accordance with section 5703.70 of the Revised Code.	475

(D) The compensation provided under this section shall not	476
reduce the amount required to be returned to counties and transit	477
authorities under section 5739.21 of the Revised Code.	478

Sec. 5740.10.  (A) As used in this section, "delivery sale"	479
has the same meaning as in section 5739.033 of the Revised Code.	480

(B) It is the intent of the General Assembly for this state	481
to become a full member in the streamlined sales and use tax	482
agreement to enhance collection of the taxes imposed under	483
Chapters 5739. and 5741. of the Revised Code by remote multi-state	484
sellers. This state's participation has been jeopardized, however,	485
because the agreement does not resolve issues relating to the	486
situsing of certain sales and because of the impact the agreement	487
has on businesses located within and outside this state that have	488
annual delivery sales in this state of less than five hundred	489
thousand dollars.	490

If the tax commissioner determines, on or before October 1,	491
2007, that the agreement has been amended or interpreted by the	492
streamlined sales tax governing board to allow a vendor with total	493
annual delivery sales of less than five hundred thousand dollars	494
to situs its sales under section 5739.035 of the Revised Code, the	495
commissioner shall certify that determination by journal entry on	496
or before that date, shall provide notice of the determination on	497
the department of taxation's web site, and shall notify vendors	498
and sellers the commissioner reasonably believes to be affected by	499
the certification.	500

Sec. 5741.03.  (A) Four and two-tenthsOne hundred per cent	501
of all money deposited into the state treasury under sections	502
5741.01 to 5741.22 of the Revised Code that is not required to be	503
distributed as provided in division (B) or (C) of this section	504
shall be credited to the local government fund for distribution in	505
accordance with section 5747.50 of the Revised Code, six-tenths of	506
one per cent shall be credited to the local government revenue	507
assistance fund for distribution in accordance with section	508
5747.61 of the Revised Code, and ninety-five and two-tenths per	509
cent shall be credited to the general revenue fund.	510

(B) In any case where any county or transit authority has	511
levied a tax or taxes pursuant to section 5741.021, 5741.022, or	512
5741.023 of the Revised Code, the tax commissioner shall, within	513
forty-five days after the end of each month, determine and certify	514
to the director of budget and management the amount of the	515
proceeds of such tax or taxes from billings and assessments	516
received during that month, or shown on tax returns or reports	517
filed during that month, to be returned to the county or transit	518
authority levying the tax or taxes, which amounts shall be	519
determined in the manner provided in section 5739.21 of the	520
Revised Code. The director of budget and management shall	521
transfer, from the same funds and in the same proportions	522
specified in division (A) of this sectiongeneral revenue fund, to	523
the permissive tax distribution fund created by division (B)(1) of	524
section 4301.423 of the Revised Code and to the local sales tax	525
administrative fund created by division (B)(C) of section 5739.21	526
of the Revised Code, the amounts certified by the tax	527
commissioner. The tax commissioner shall then, on or before the	528
twentieth day of the month in which such certification is made,	529
provide for payment of such respective amounts to the county	530
treasurer or to the fiscal officer of the transit authority	531
levying the tax or taxes. The amount transferred to the local	532
sales tax administrative fund is for use by the tax commissioner	533
in defraying costs the commissioner incurs in administering such	534
taxes levied by a county or transit authority.	535

(C) Of the revenue deposited into the state treasury from	536
taxes paid under division (B) of section 5741.05 of the Revised	537
Code, a percentage shall be distributed each fiscal year to all	538
counties and transit authorities that levy a tax under section	539
5739.021, 5739.023, or 5739.026 of the Revised Code. The	540
percentage to be distributed each fiscal year shall be computed by	541
dividing the amount described in division (C)(1) by the amount	542
described in division (C)(2) of this section:	543

(1) The total sales and use tax revenue distributed to	544
counties and transit authorities in the calendar year that ended	545
in the preceding fiscal year;	546

(2) The sum of the total sales and use tax revenue	547
distributed to such counties and transit authorities in that	548
calendar year plus the total revenue collected in that calendar	549
year from the taxes levied under sections 5739.02 and 5741.02 of	550
the Revised Code.	551

(D) Each county and transit authority shall receive a monthly	552
distribution each fiscal year from the revenue to be distributed	553
as provided in division (C) of this section. The amount of the	554
distribution for each such county and transit authority shall	555
equal a percentage of the revenue to be distributed in the fiscal	556
year under that division. The percentage shall be computed by	557
dividing the amount described in division (D)(1) by the amount	558
described in division (D)(2) of this section:	559

(1) The total sales and use tax revenue distributed to the	560
county or transit authority under division (B) of section 5739.21	561
of the Revised Code in the calendar year that ended in the	562
preceding fiscal year;	563

(2) The total sales and use tax revenue distributed to all	564
counties and transit authorities under division (B) of section	565
5739.21 of the Revised Code in that calendar year.	566

Sec. 5741.05. (A) Beginning January 1, 2005Except as	567
provided in division (B) of this section, a seller that collects	568
the tax levied by sections 5741.02, 5741.021, 5741.022, or	569
5741.023 of the Revised Code on transactions, other than sales of	570
titled motor vehicles, titled watercraft, or titled outboard	571
motors, shall determine under section 5739.033 or 5739.034 of the	572
Revised Code the jurisdiction for which to collect the tax. A	573
vendor or seller of motor vehicles, watercraft, or outboard motors	574
required to be titled in this state shall collect the tax levied	575
by section 5739.02 or 5741.02 of the Revised Code and the	576
additional taxes levied by division (A)(1) of section 5741.021,	577
division (A)(1) of section 5741.022, and division (A)(1) of	578
section 5741.023 of the Revised Code for the consumer's county of	579
residence as provided in section 1548.06 and division (B) of	580
section 4505.06 of the Revised Code.	581

(B)(1) Divisions (B) and (C) of this section apply only if	582
the tax commissioner makes the certification under section 5740.10	583
of the Revised Code.	584

(2) For the purposes of this division and division (C) of	585
this section, "delivery sale" has the same meaning as in section	586
5739.033 of the Revised Code, and "tax jurisdiction" has the same	587
meaning as in section 5739.24 of the Revised Code.	588

(3) Except as otherwise provided in division (B)(4) of this	589
section, and notwithstanding sections 5741.02, 5741.021, 5741.022,	590
and 5741.023 of the Revised Code, a seller with total delivery	591
sales in this state in calendar year 2007 and each calendar year	592
thereafter of less than five hundred thousand dollars may elect to	593
collect the tax due under this chapter at a rate equal to the sum	594
of the tax levied under section 5741.02 of the Revised Code and	595
the lowest combined rate of tax levied in any tax jurisdiction in	596
this state under sections 5741.021, 5741.022, and 5741.023 of the	597
Revised Code.	598

(4) Once a seller has total delivery sales in this state of	599
five hundred thousand dollars or more for a calendar year, the	600
seller shall source its sales pursuant to division (A) of this	601
section regardless of the amount of the seller's total delivery	602
sales in future years.	603

(C)(1) In each sale by a seller permitted to collect use tax	604
under division (B) of this section, the seller shall clearly	605
indicate on each invoice or other similar document provided to the	606
purchaser at the time of the sale that the seller is authorized to	607
collect use tax at the rate prescribed in division (B)(3) of this	608
section and that the purchaser may be liable for additional use	609
tax if the purchaser removes the property from the tax	610
jurisdiction in which the purchaser receives the property to a tax	611
jurisdiction with a tax rate exceeding the rate in the tax	612
jurisdiction in which the purchaser receives the property.	613

(2) If a purchaser purchases tangible personal property from	614
a seller permitted to collect use tax pursuant to division (B) of	615
this section and pays the tax due under that division to the	616
seller, no assessment may be made against the purchaser for	617
additional tax due under section 5741.021, 5741.022, or 5741.023	618
of the Revised Code unless the purchaser subsequently removes the	619
property from the tax jurisdiction in which the resident received	620
the property to another tax jurisdiction with a higher tax rate.	621

(3) Nothing in this section relieves a person that claims to	622
be authorized to collect the tax as provided in division (B) of	623
this section, but that is not so authorized, from liability for	624
tax, penalties, interest, or additional charges imposed under this	625
chapter for failure to collect the amount of tax lawfully due	626
applying the situsing provisions of division (A) of this section.	627

(D) A vendor or seller is not responsible for collecting or	628
remitting additional tax if a consumer subsequently stores, uses,	629
or consumes the tangible personal property or service in another	630
jurisdiction with a rate of tax imposed by sections 5741.02,	631
5741.021, 5741.022, or 5741.023 of the Revised Code that is higher	632
than the amount collected by the vendor or seller pursuant to	633
Chapter 5739. or 5741. of the Revised Code.	634

Section 2.  That existing sections 5739.033, 5739.035,	635
5739.123, 5741.03, and 5741.05 of the Revised Code are hereby	636
repealed.	637

Section 3. That the amendment or enactment by this act of	638
sections 5739.033, 5739.035, 5740.10, 5741.03, and 5741.05 of the	639
Revised Code applies to sales occurring on or after January 1,	640
2008.	641

Section 4.  Section 5739.035 of the Revised Code is presented	642
in this act as a composite of the section as amended by both Am.	643
Sub. H.B. 66 and Am. Sub. S.B. 26 of the 126th General Assembly.	644
The General Assembly, applying the principle stated in division	645
(B) of section 1.52 of the Revised Code that amendments are to be	646
harmonized if reasonably capable of simultaneous operation, finds	647
that the composite is the resulting version of the section in	648
effect prior to the effective date of the section as presented in	649
this act.	650