As Passed by the House

127th General Assembly Regular Session 2007-2008

Sub. H. B. No. 429

Representative Gibbs 

Cosponsors: Representatives Schindel, Bolon, Foley, Hagan, J., Letson, Patton, Aslanides, Bacon, Batchelder, Blessing, Chandler, Collier, Combs, Domenick, Fessler, Flowers, Gardner, Hughes, McGregor, J., Raussen, Schneider, Setzer, Wachtmann, Webster 

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A BILL

To amend sections 5739.033, 5739.034, and 5739.24 of

1

the Revised Code and later to repeal sections

2

5739.035, 5739.213, 5739.24, and 5741.10 of the

3

Revised Code to require vendors to utilize

4

origin-based sourcing for intrastate sales

5

beginning January 1, 2010, to discontinue

6

compensation of impacted counties for sales tax

7

losses incurred under destination-based sourcing,

8

and to authorize the Tax Commissioner to

9

compensate vendors required to convert from

10

destination-based sourcing to origin-based

11

sourcing.

12

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

Section 1. That sections 5739.033, 5739.034, and 5739.24 of	13
the Revised Code be amended to read as follows:	14

Sec. 5739.033.  (A) Except as provided in division (B) of	15
this section, divisions (C) to (I) of this section apply to sales	16
made on and after January 1, 2008. Any vendor previously required	17
to comply with divisions (C) to (I) of this section and any	18
vendor that irrevocably elects to comply with divisions (C) to	19
(I) of this section for all of the vendor's sales and places of	20
business in this state shall continue to source its sales under	21
those divisions.	22

The amount of tax due pursuant to sections 5739.02, 5739.021,	23
5739.023, and 5739.026 of the Revised Code is the sum of the taxes	24
imposed pursuant to those sections at the sourcing location of the	25
sale as determined under this section or, if applicable, under	26
division (C) of section 5739.031 or section 5739.034 of the	27
Revised Code, or at the situs of the sale as determined under	28
section 5739.035 of the Revised Code. This section applies only to	29
a vendor's or seller's obligation to collect and remit sales taxes	30
under section 5739.02, 5739.021, 5739.023, or 5739.026 of the	31
Revised Code or use taxes under section 5741.02, 5741.021,	32
5741.022, or 5741.023 of the Revised Code. Division (A) of this	33
section does not apply in determining the jurisdiction for which	34
sellers are required to collect the use tax under section 5741.05	35
of the Revised Code. This section does not affect the obligation	36
of a consumer to remit use taxes on the storage, use, or other	37
consumption of tangible personal property or on the benefit	38
realized of any service provided, to the jurisdiction of that	39
storage, use, or consumption, or benefit realized.	40

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

41

(a) "Delivery sale" means the taxable sale of tangible	42
personal property or a service that is received by a consumer, or	43
a donee designated by the consumer, in a taxing jurisdiction that	44
is not the taxing jurisdiction in which the vendor has a fixed	45
place of business.	46

(b) "Agreement" has the same meaning as in section 5740.01 of	47
the Revised Code.	48

(c) "Governing board" has the same meaning as in section	49
5740.02 of the Revised Code.	50

(2) If the tax commissioner does not make the certification	51
under section 5740.10 of the Revised Code, a vendor that is not	52
required by division (A) of this section to situs sales under	53
divisions (C) to (I) of this section on the date of the	54
commissioner's certification may continue after that date to	55
situs its sales under section 5739.035 of the Revised Code unless	56
it is required, under division (B)(5) of this section, to situs	57
its sales under divisions (C) to (I) of this section.	58

(3) Except as otherwise provided in divisions (B)(4) and (5)	59
of this section, a vendor with total delivery sales within this	60
state in prior calendar years, beginning with calendar year 2007,	61
of less than five hundred thousand dollars may situs its sales	62
under section 5739.035 of the Revised Code.	63

(4) Once a vendor has total delivery sales in this state of	64
five hundred thousand dollars or more for a prior calendar year,	65
the vendor shall source its sales under divisions (C) to (I) of	66
this section and shall continue to source its sales under those	67
divisions regardless of the amount of the vendor's total delivery	68
sales in future years.	69

(5) A vendor permitted under division (B)(3) of this section	70
to situs its sales under section 5739.035 of the Revised Code that	71
fails to provide, absent a clerical error, the notices required	72
under division (I)(1) of section 5739.035 of the Revised Code	73
shall situs all subsequent sales as required under divisions (C)	74
to (I) of this sectionBeginning January 1, 2010, the situs of	75
retail sales, excluding lease or rental, of tangible personal	76
property or digital goods shall be sourced to the location where	77
the vendor receives the order if:	78

(a) The vendor receives the order in the same state in which	79
the consumer receives the property or goods;	80

(b) The location where the consumer receives the property or	81
goods is determined under division (C)(2), (3), or (4) of this	82
section; and	83

(c) The record-keeping system used by the vendor to calculate	84
the tax imposed captures the location where the order is received	85
at the time the order is received.	86

(2) A consumer has no additional liability to this state for	87
tax, penalty, or interest on a sale for which the consumer remits	88
tax to the vendor in the amount invoiced by the vendor if the	89
invoice amount is calculated at either the rate applicable to the	90
location where the consumer receives the product or digital good	91
or at the rate applicable to the location where the order is	92
received by the vendor. A consumer may rely on a written	93
representation by the vendor as to the location where the order	94
for the sale was received by the vendor. If the consumer does not	95
have a written representation by the vendor as to the location	96
where the order was received by the vendor, the consumer may use a	97
location indicated by a business address for the vendor that is	98
available from records that are maintained in the ordinary course	99
of the consumer's business to determine the rate applicable to the	100
location where the order was received.	101

(3) For the purposes of division (B) of this section, the	102
location where an order is received by or on behalf of a vendor	103
means the physical location of the vendor or a third party such as	104
an established outlet, office location, or automated order receipt	105
system operated by or on behalf of the vendor, where an order is	106
initially received by or on behalf of the vendor, and not where	107
the order may be subsequently accepted, completed, or fulfilled.	108
An order is received when all necessary information to determine	109
whether the order can be accepted has been received by or on	110
behalf of the vendor. The location from which a product is shipped	111
shall not be used to determine the location where the order is	112
received by the vendor.	113

(4) For the purposes of division (B) of this section, if	114
services subject to taxation under this chapter or Chapter 5741.	115
of the Revised Code are sold with tangible personal property or	116
digital goods pursuant to a single contract or in the same	117
transaction, the services are billed on the same billing statement	118
or invoice, and, because of the application of this section, the	119
transaction would be sourced to more than one jurisdiction, the	120
situs of the transaction shall be the location where the order is	121
received by or on behalf of the vendor.	122

(C) Except for sales, other than leases, of titled motor	123
vehicles, titled watercraft, or titled outboard motors as provided	124
in section 5741.05 of the Revised Code, or as otherwise provided	125
in this section and section 5739.034 of the Revised Code, all	126
sales shall be sourced as follows:	127

(1) If the consumer or a donee designated by the consumer	128
receives tangible personal property or a service at a vendor's	129
place of business, the sale shall be sourced to that place of	130
business.	131

(2) When the tangible personal property or service is not	132
received at a vendor's place of business, the sale shall be	133
sourced to the location known to the vendor where the consumer or	134
the donee designated by the consumer receives the tangible	135
personal property or service, including the location indicated by	136
instructions for delivery to the consumer or the consumer's donee.	137

(3) If divisions (C)(1) and (2) of this section do not apply,	138
the sale shall be sourced to the location indicated by an address	139
for the consumer that is available from the vendor's business	140
records that are maintained in the ordinary course of the	141
vendor's business, when use of that address does not constitute	142
bad faith.	143

(4) If divisions (C)(1), (2), and (3) of this section do not	144
apply, the sale shall be sourced to the location indicated by an	145
address for the consumer obtained during the consummation of the	146
sale, including the address associated with the consumer's payment	147
instrument, if no other address is available, when use of that	148
address does not constitute bad faith.	149

(5) If divisions (C)(1), (2), (3), and (4) of this section do	150
not apply, including in the circumstance where the vendor is	151
without sufficient information to apply any of those divisions,	152
the sale shall be sourced to the address from which tangible	153
personal property was shipped, or from which the service was	154
provided, disregarding any location that merely provided the	155
electronic transfer of the property sold or service provided.	156

(6) As used in division (C) of this section, "receive" means	157
taking possession of tangible personal property or making first	158
use of a service. "Receive" does not include possession by a	159
shipping company on behalf of a consumer.	160

(D)(1)(a) Notwithstanding divisions (C)(1) to (5) of this	161
section, a business consumer that is not a holder of a direct	162
payment permit granted under section 5739.031 of the Revised Code,	163
that purchases a digital good, computer software, except computer	164
software received in person by a business consumer at a vendor's	165
place of business, or a service, and that knows at the time of	166
purchase that such digital good, software, or service will be	167
concurrently available for use in more than one taxing	168
jurisdiction shall deliver to the vendor in conjunction with its	169
purchase an exemption certificate claiming multiple points of use,	170
or shall meet the requirements of division (D)(2) of this section.	171
On receipt of the exemption certificate claiming multiple points	172
of use, the vendor is relieved of its obligation to collect, pay,	173
or remit the tax due, and the business consumer must pay the tax	174
directly to the state.	175

(b) A business consumer that delivers the exemption	176
certificate claiming multiple points of use to a vendor may use	177
any reasonable, consistent, and uniform method of apportioning the	178
tax due on the digital good, computer software, or service that is	179
supported by the consumer's business records as they existed at	180
the time of the sale. The business consumer shall report and pay	181
the appropriate tax to each jurisdiction where concurrent use	182
occurs. The tax due shall be calculated as if the apportioned	183
amount of the digital good, computer software, or service had been	184
delivered to each jurisdiction to which the sale is apportioned	185
under this division.	186

(c) The exemption certificate claiming multiple points of use	187
shall remain in effect for all future sales by the vendor to the	188
business consumer until it is revoked in writing by the business	189
consumer, except as to the business consumer's specific	190
apportionment of a subsequent sale under division (D)(1)(b) of	191
this section and the facts existing at the time of the sale.	192

(2) When the vendor knows that a digital good, computer	193
software, or service sold will be concurrently available for use	194
by the business consumer in more than one jurisdiction, but the	195
business consumer does not provide an exemption certificate	196
claiming multiple points of use as required by division (D)(1) of	197
this section, the vendor may work with the business consumer to	198
produce the correct apportionment. Governed by the principles of	199
division (D)(1)(b) of this section, the vendor and business	200
consumer may use any reasonable, but consistent and uniform,	201
method of apportionment that is supported by the vendor's and	202
business consumer's books and records as they exist at the time	203
the sale is reported for purposes of the taxes levied under this	204
chapter. If the business consumer certifies to the accuracy of the	205
apportionment and the vendor accepts the certification, the vendor	206
shall collect and remit the tax accordingly. In the absence of bad	207
faith, the vendor is relieved of any further obligation to collect	208
tax on any transaction where the vendor has collected tax pursuant	209
to the information certified by the business consumer.	210

(3) When the vendor knows that the digital good, computer	211
software, or service will be concurrently available for use in	212
more than one jurisdiction, and the business consumer does not	213
have a direct pay permit and does not provide to the vendor an	214
exemption certificate claiming multiple points of use as required	215
in division (D)(1) of this section, or certification pursuant to	216
division (D)(2) of this section, the vendor shall collect and	217
remit the tax based on division (C) of this section.	218

(4) Nothing in this section shall limit a person's obligation	219
for sales or use tax to any state in which a digital good,	220
computer software, or service is concurrently available for use,	221
nor limit a person's ability under local, state, or federal law,	222
to claim a credit for sales or use taxes legally due and paid to	223
other jurisdictions.	224

(E) A person who holds a direct payment permit issued under	225
section 5739.031 of the Revised Code is not required to deliver an	226
exemption certificate claiming multiple points of use to a vendor.	227
But such permit holder shall comply with division (D)(2) of this	228
section in apportioning the tax due on a digital good, computer	229
software, or a service for use in business that will be	230
concurrently available for use in more than one taxing	231
jurisdiction.	232

(F)(1) Notwithstanding divisions (C)(1) to (5) of this	233
section, the consumer of direct mail that is not a holder of a	234
direct payment permit shall provide to the vendor in conjunction	235
with the sale either an exemption certificate claiming direct mail	236
prescribed by the tax commissioner, or information to show the	237
jurisdictions to which the direct mail is delivered to recipients.	238

(2) Upon receipt of such exemption certificate, the vendor is	239
relieved of all obligations to collect, pay, or remit the	240
applicable tax and the consumer is obligated to pay that tax on a	241
direct pay basis. An exemption certificate claiming direct mail	242
shall remain in effect for all future sales of direct mail by the	243
vendor to the consumer until it is revoked in writing.	244

(3) Upon receipt of information from the consumer showing the	245
jurisdictions to which the direct mail is delivered to recipients,	246
the vendor shall collect the tax according to the delivery	247
information provided by the consumer. In the absence of bad faith,	248
the vendor is relieved of any further obligation to collect tax on	249
any transaction where the vendor has collected tax pursuant to the	250
delivery information provided by the consumer.	251

(4) If the consumer of direct mail does not have a direct	252
payment permit and does not provide the vendor with either an	253
exemption certificate claiming direct mail or delivery information	254
as required by division (F)(1) of this section, the vendor shall	255
collect the tax according to division (C)(5) of this section.	256
Nothing in division (F)(4) of this section shall limit a	257
consumer's obligation to pay sales or use tax to any state to	258
which the direct mail is delivered.	259

(5) If a consumer of direct mail provides the vendor with	260
documentation of direct payment authority, the consumer shall not	261
be required to provide an exemption certificate claiming direct	262
mail or delivery information to the vendor.	263

(G) If the vendor provides lodging to transient guests as	264
specified in division (B)(2) of section 5739.01 of the Revised	265
Code, the sale shall be sourced to the location where the lodging	266
is located.	267

(H)(1) As used in this division and division (I) of this	268
section, "transportation equipment" means any of the following:	269

(a) Locomotives and railcars that are utilized for the	270
carriage of persons or property in interstate commerce.	271

(b) Trucks and truck-tractors with a gross vehicle weight	272
rating of greater than ten thousand pounds, trailers,	273
semi-trailers, or passenger buses that are registered through the	274
international registration plan and are operated under authority	275
of a carrier authorized and certificated by the United States	276
department of transportation or another federal authority to	277
engage in the carriage of persons or property in interstate	278
commerce.	279

(c) Aircraft that are operated by air carriers authorized and	280
certificated by the United States department of transportation or	281
another federal authority to engage in the carriage of persons or	282
property in interstate or foreign commerce.	283

(d) Containers designed for use on and component parts	284
attached to or secured on the items set forth in division	285
(H)(1)(a), (b), or (c) of this section.	286

(2) A sale, lease, or rental of transportation equipment	287
shall be sourced pursuant to division (C) of this section.	288

(I)(1) A lease or rental of tangible personal property that	289
does not require recurring periodic payments shall be sourced	290
pursuant to division (C) of this section.	291

(2) A lease or rental of tangible personal property that	292
requires recurring periodic payments shall be sourced as follows:	293

(a) In the case of a motor vehicle, other than a motor	294
vehicle that is transportation equipment, or an aircraft, other	295
than an aircraft that is transportation equipment, such lease or	296
rental shall be sourced as follows:	297

(i) An accelerated tax payment on a lease or rental taxed	298
pursuant to division (A)(2) of section 5739.02 of the Revised Code	299
shall be sourced to the primary property location at the time the	300
lease or rental is consummated. Any subsequent taxable charges on	301
the lease or rental shall be sourced to the primary property	302
location for the period in which the charges are incurred.	303

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

(b) In the case of a lease or rental of all other tangible	308
personal property, other than transportation equipment, such lease	309
or rental shall be sourced as follows:	310

(i) An accelerated tax payment on a lease or rental that is	311
taxed pursuant to division (A)(2) of section 5739.02 of the	312
Revised Code shall be sourced pursuant to division (C) of this	313
section at the time the lease or rental is consummated. Any	314
subsequent taxable charges on the lease or rental shall be sourced	315
to the primary property location for the period in which the	316
charges are incurred.	317

(ii) For a lease or rental that is taxed pursuant to division	318
(A)(3) of section 5739.02 of the Revised Code, the initial lease	319
or rental installment shall be sourced pursuant to division (C) of	320
this section. Each subsequent installment shall be sourced to the	321
primary property location for the period covered by the	322
installment.	323

(3) As used in division (I) of this section, "primary	324
property location" means an address for tangible personal property	325
provided by the lessee or renter that is available to the lessor	326
or owner from its records maintained in the ordinary course of	327
business, when use of that address does not constitute bad faith.	328

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

329

(1) "Air-to-ground radiotelephone service" means a radio	330
service, as defined in 47 C.F.R. 22.99, in which common carriers	331
are authorized to offer and provide radio telecommunications	332
service for hire to subscribers in aircraft.	333

(2) "Call-by-call basis" means any method of charging for	334
telecommunications services where the price is measured by	335
individual calls.	336

(3) "Customer" means the person or entity that contracts with	337
a seller of telecommunications service. If the end user of	338
telecommunications service is not the contracting party, the end	339
user of the telecommunications service is the customer of the	340
telecommunications service. "Customer" does not include a reseller	341
of telecommunications service or of mobile telecommunications	342
service of a serving carrier under an agreement to serve the	343
customer outside the home service provider's licensed service	344
area.	345

(4) "End user" means the person who utilizes the	346
telecommunications service. In the case of a person other than an	347
individual, "end user" means the individual who utilizes the	348
service on behalf of the person.	349

(5) "Home service provider" has the same meaning as in the	350
"Mobile Telecommunications Sourcing Act," Pub. L. No. 106-252, 114	351
Stat. 631 (2000), 4 U.S.C. 124(5), as amended.	352

(6) "Place of primary use" means the street address	353
representative of where the customer's use of the	354
telecommunications service primarily occurs, which must be the	355
residential street address or the primary business street address	356
of the customer. In the case of mobile telecommunications	357
services, "place of primary use" must be within the licensed	358
service area of the home service provider.	359

(7) "Post-paid calling service" means the telecommunications	360
service obtained by making a payment on a call-by-call basis	361
either through the use of a credit card or payment mechanism such	362
as a bank card, travel card, credit card, or debit card, or by	363
charge made to a telephone number that is not associated with the	364
origination or termination of the telecommunications service.	365
"Post-paid calling service" includes a telecommunications service,	366
except a prepaid wireless calling service, that would be a prepaid	367
calling service, but for the fact that it is not exclusively a	368
telecommunications service.	369

(8) "Prepaid calling service" and "prepaid wireless calling	370
service" have the same meanings as in section 5739.01 of the	371
Revised Code.	372

(9) "Service address" means:

373

(a) The location of the telecommunications equipment to which	374
a customer's call is charged and from which the call originates or	375
terminates, regardless of where the call is billed or paid.	376

(b) If the location in division (A)(9)(a) of this section is	377
not known, "service address" means the origination point of the	378
signal of the telecommunications service first identified by	379
either the seller's telecommunications system or in information	380
received by the seller from its service provider, where the system	381
used to transport such signals is not that of the seller.	382

(c) If the locations in divisions (A)(9)(a) and (b) of this	383
section are not known, "service address" means the location of the	384
customer's place of primary use.	385

(10) "Private communication service" means a	386
telecommunications service that entitles a customer to exclusive	387
or priority use of a communications channel or group of channels	388
between or among termination points, regardless of the manner in	389
which the channel or channels are connected, and includes	390
switching capacity, extension lines, stations, and any other	391
associated services that are provided in connection with the use	392
of such channel or channels.	393

(B) The amount of tax due pursuant to sections 5739.02,	394
5739.021, 5739.023, and 5739.026 of the Revised Code on sales of	395
telecommunications service, information service, or mobile	396
telecommunications service, is the sum of the taxes imposed	397
pursuant to those sections at the sourcing location of the sale as	398
determined under this section.	399

(C) Except for the telecommunications services described in	400
division (E) of this section, the sale of telecommunications	401
service sold on a call-by-call basis shall be sourced to each	402
level of taxing jurisdiction where the call originates and	403
terminates in that jurisdiction, or each level of taxing	404
jurisdiction where the call either originates or terminates and in	405
which the service address also is located.	406

(D) Except for the telecommunications services described in	407
division (E) of this section, a sale of telecommunications	408
services sold on a basis other than a call-by-call basis shall be	409
sourced to the customer's place of primary use.	410

(E) The sale of the following telecommunications services	411
shall be sourced to each level of taxing jurisdiction, as follows:	412

(1) A sale of mobile telecommunications service, other than	413
air-to-ground radiotelephone service and prepaid calling service,	414
shall be sourced to the customer's place of primary use as	415
required by the Mobile Telecommunications Sourcing Act.	416

(2) A sale of post-paid calling service shall be sourced to	417
the origination point of the telecommunications signal as first	418
identified by the service provider's telecommunications system, or	419
information received by the seller from its service provider,	420
where the system used to transport such signals is not that of the	421
seller.	422

(3) A sale of prepaid calling service or prepaid wireless	423
calling service shall be sourced under division (C) of section	424
5739.033 of the Revised Code or, if permitted by division (B) of	425
that section, shall be sitused under section 5739.035 of the	426
Revised Code. But in the case of prepaid wireless calling service,	427
in lieu of sourcing the sale of the service under division (C)(5)	428
of section 5739.033 of the Revised Code, the service provider may	429
elect to source the sale to the location associated with the	430
mobile telephone number.	431

(4) A sale of a private communication service shall be	432
sourced as follows:	433

(a) Service for a separate charge related to a customer	434
channel termination point shall be sourced to each level of	435
jurisdiction in which the customer channel termination point is	436
located;	437

(b) Service where all customer channel termination points are	438
located entirely within one jurisdiction or level of jurisdiction	439
shall be sourced in the jurisdiction in which the customer channel	440
termination points are located;	441

(c) Service for segments of a channel between two customer	442
channel termination points located in different jurisdictions and	443
which segments of a channel are separately charged shall be	444
sourced fifty per cent in each level of jurisdiction in which the	445
customer channel termination points are located;	446

(d) Service for segments of a channel located in more than	447
one jurisdiction or level of jurisdiction and which segments are	448
not separately billed shall be sourced in each jurisdiction based	449
on the percentage determined by dividing the number of customer	450
channel termination points in the jurisdiction by the total number	451
of customer channel termination points.	452

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

453

(1) "Destination-based sourcing requirements" has the same	454
meaning as in section 5739.123 of the Revised Code.	455

(2) "Impacted county" means a county having a population of	456
less than seventy-five thousand as of the decennial census of 2000	457
taken by the United States census bureau.	458

(3) "Master account holder" means a person that holds more	459
than one vendor's license under division (A) of section 5739.17 of	460
the Revised Code, operates in multiple tax jurisdictions under the	461
same ownership, and files or is required to file a consolidated	462
return under section 5739.12 of the Revised Code.	463

(4) "Tax jurisdiction" means a county or, if applicable, the	464
portion of a county in which a transit authority has territory.	465

(B)(1) Beginning in 2006 and ending January 31, 2009, within	466
thirty days after the thirtieth day of June and the thirty-first	467
day of December of each year, a master account holder that makes a	468
sale that is subject to the destination-based sourcing	469
requirements shall file with the tax commissioner a report that	470
details the total taxable sales it made for the prior six-month	471
period in each tax jurisdiction and at each fixed place of	472
business for which the master account holder holds or should hold	473
a license, irrespective of where those sales were sourced under	474
those requirements. The commissioner may extend the time for	475
filing the report under this section.	476

(2) If the report required by division (B)(1) of this section	477
is not timely filed by a master account holder, the tax	478
commissioner shall mail notice of a delinquent report to the	479
holder. In addition to any other penalties or additional charges	480
imposed under this chapter, the commissioner may impose a penalty	481
of up to fifty dollars for each fixed place of business of the	482
master account holder. If the report is filed within fifteen days	483
after the commissioner mails the delinquency notice, the penalty	484
may be remitted in full or in part by the commissioner. But if the	485
master account holder fails to file the report within fifteen days	486
after the commissioner mails the notice, the commissioner shall	487
impose a penalty of up to one hundred dollars for each fixed place	488
of business of the master account holder. This penalty may not be	489
remitted in full by the commissioner. A penalty imposed under this	490
division is subject to collection and assessment in the same	491
manner as any tax levied under this chapter.	492

(C)(1) Beginning in 2006 and ending April 17, 2009, within	493
seventy-five days after the thirty-first day of July each year and	494
the thirty-first day of January of the following year, the tax	495
commissioner shall determine for each county both of the	496
following:	497

(a) The amount of taxes reported on returns filed by all	498
vendors licensed under division (A) of section 5739.17 of the	499
Revised Code that were levied by sections 5739.021 and 5739.026 of	500
the Revised Code and were reported as due in accordance with the	501
destination-based sourcing requirements;	502

(b) The amount of taxes levied by those sections that would	503
have been paid to the county by vendors licensed under division	504
(A) of section 5739.17 of the Revised Code if the taxes had been	505
collected in accordance with section 5739.035 of the Revised Code,	506
as that section exists when the determination is made.	507

The commissioner may make any adjustments that are necessary	508
to account for delinquent tax returns or reports.	509

(2) In making the determination required by division (C)(1)	510
of this section, the commissioner shall use the lesser of the	511
county's tax rate in effect as of January 1, 2006, or the actual	512
tax rate in effect for the six-month period for which the	513
compensation was calculated.	514

(3) The commissioner also shall calculate the percentage	515
difference between the amounts determined under divisions	516
(C)(1)(a) and (b) of this section by using a fraction, with the	517
amount determined under division (C)(1)(a) of this section in the	518
numerator, and the amount determined under division (C)(1)(b) of	519
this section in the denominator.	520

(D)(1) If the percentage difference calculated under division	521
(C)(3) of this section for a county is ninety-six per cent or	522
less, and the county is an impacted county under this section, the	523
county shall receive compensation. Beginning in 2006 and ending	524
May 1, 2009, within ninety days after the thirty-first day of July	525
each year and the thirty-first day of January of the following	526
year, the tax commissioner, in the next ensuing payment to be made	527
under division (B)(1) of section 5739.21 of the Revised Code,	528
shall in addition provide from the general revenue fund to such	529
county compensation in the amount of ninety-eight per cent of the	530
denominator calculated under division (C)(3) of this section,	531
minus the numerator calculated under division (C)(3) of this	532
section.	533

(2) A county that is entitled to compensation under division	534
(D)(1) of this section may request an advance payment of that	535
compensation. The commissioner shall adopt rules that establish	536
the manner by which such county may make the request and the	537
method the commissioner will use to determine the amount of the	538
advance payment to be made to the county. Compensation provided	539
under division (D)(1) of this section shall be adjusted	540
accordingly to account for advance payments made under division	541
(D)(2) of this section.	542

(E) If, under division (C)(1) of this section, the tax	543
commissioner determines that a county received more taxes under	544
the destination-based sourcing requirements than it would have	545
received if taxes had been paid in accordance with section	546
5739.035 of the Revised Code, as that section existed when the	547
determination was made, the county is a windfall county under	548
this division. Beginning in 2006, within ninety days after the	549
thirty-first day of July each year and the thirty-first day of	550
January of the following year, the commissioner, in the next	551
ensuing payment to be made under division (B)(1) of section	552
5739.21 of the Revised Code, shall reduce the amount to be	553
returned to each windfall county by the total amount of excess	554
taxes that would have been received by all windfall counties in	555
proportion to the total amount needed to compensate counties under	556
division (D) of this section.	557

(F) The commissioner shall make available to the public the	558
determinations made under division (C) of this section, but any	559
data obtained from taxpayers under this section or that would	560
identify those taxpayers shall remain confidential.	561

(G) There is hereby created the county compensation tax study	562
committee. The committee shall consist of the following seven	563
members: the tax commissioner, three members of the senate	564
appointed by the president of the senate, and three members of the	565
house of representatives appointed by the speaker of the house of	566
representatives. The appointments shall be made not later than	567
January 31, 2007. The tax commissioner shall be the chairperson of	568
the committee and the department of taxation shall provide any	569
information and assistance that is required by the committee to	570
carry out its duties. The committee shall study the extent to	571
which each county has been impacted by the destination-based	572
sourcing requirements. Not later than June 30, 2007, the committee	573
shall issue a report of its findings and shall make	574
recommendations to the president of the senate and the speaker of	575
the house of representatives, at which time the committee shall	576
cease to exist.	577

Section 2. That existing sections 5739.033, 5739.034, and	578
5739.24 of the Revised Code are hereby repealed.	579

Section 3. That section 5739.24 of the Revised Code is hereby	580
repealed effective May 1, 2009. No payments or reductions in	581
payments required by division (D) of section 5739.24 of the	582
Revised Code shall be effected after May 1, 2009. No request for	583
an advance of the payment that, but for this act, would have been	584
made after May 1, 2009, shall be honored.	585

Section 4.  That the amendment by this act of sections	586
5739.033 and 5739.034 of the Revised Code shall take effect	587
January 1, 2010.	588

Section 5. The Tax Commissioner is hereby authorized to	589
devise and implement, not later than January 1, 2010, a plan to	590
compensate vendors that are required to convert from	591
destination-based sourcing to origin-based sourcing for	592
transactions occurring within this state as provided under	593
division (B) of section 5739.033 of the Revised Code, as amended	594
by this act.	595

Section 6. That a vendor may source sales in the manner	596
prescribed by division (B)(1) of section 5739.033 of the Revised	597
Code, as amended by this act, before the effective date specified	598
in Section 4 of this act. Once a vendor sources sales in the	599
manner so prescribed the vendor shall continue to source all sales	600
described in that division as so prescribed.	601

Section 7. That sections 5739.035, 5739.213, and 5741.10 of	602
the Revised Code are hereby repealed effective January 1, 2010.	603

Section 8.  Section 5739.034 of the Revised Code is	604
presented in this act as a composite of the section as amended by	605
both Am. Sub. H.B. 66 and Am. Sub. S.B. 26 of the 126th General	606
Assembly. The General Assembly, applying the principle stated in	607
division (B) of section 1.52 of the Revised Code that amendments	608
are to be harmonized if reasonably capable of simultaneous	609
operation, finds that the composite is the resulting version of	610
the section in effect prior to the effective date of the section	611
as presented in this act.	612