As Introduced

129th General Assembly Regular Session 2011-2012

H. B. No. 581

Representatives Lundy, Gerberry 

Cosponsors: Representatives Murray, Driehaus, Yuko, Winburn, Clyde, Garland, Boyd 

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A BILL

To amend sections 5739.02 and 5739.05 of the Revised

1

Code to provide a two-day sales tax "holiday" each

2

August during which sales of back-to-school

3

clothing, school supplies, computers, and computer

4

accessories are exempt from sales and use taxes.

5

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

Section 1. That sections 5739.02 and 5739.05 of the Revised	6
Code be amended to read as follows:	7

Sec. 5739.02.  For the purpose of providing revenue with	8
which to meet the needs of the state, for the use of the general	9
revenue fund of the state, for the purpose of securing a thorough	10
and efficient system of common schools throughout the state, for	11
the purpose of affording revenues, in addition to those from	12
general property taxes, permitted under constitutional	13
limitations, and from other sources, for the support of local	14
governmental functions, and for the purpose of reimbursing the	15
state for the expense of administering this chapter, an excise tax	16
is hereby levied on each retail sale made in this state.	17

(A)(1) The tax shall be collected as provided in section	18
5739.025 of the Revised Code. The rate of the tax shall be five	19
and one-half per cent. The tax applies and is collectible when the	20
sale is made, regardless of the time when the price is paid or	21
delivered.	22

(2) In the case of the lease or rental, with a fixed term of	23
more than thirty days or an indefinite term with a minimum period	24
of more than thirty days, of any motor vehicles designed by the	25
manufacturer to carry a load of not more than one ton, watercraft,	26
outboard motor, or aircraft, or of any tangible personal property,	27
other than motor vehicles designed by the manufacturer to carry a	28
load of more than one ton, to be used by the lessee or renter	29
primarily for business purposes, the tax shall be collected by the	30
vendor at the time the lease or rental is consummated and shall be	31
calculated by the vendor on the basis of the total amount to be	32
paid by the lessee or renter under the lease agreement. If the	33
total amount of the consideration for the lease or rental includes	34
amounts that are not calculated at the time the lease or rental is	35
executed, the tax shall be calculated and collected by the vendor	36
at the time such amounts are billed to the lessee or renter. In	37
the case of an open-end lease or rental, the tax shall be	38
calculated by the vendor on the basis of the total amount to be	39
paid during the initial fixed term of the lease or rental, and for	40
each subsequent renewal period as it comes due. As used in this	41
division, "motor vehicle" has the same meaning as in section	42
4501.01 of the Revised Code, and "watercraft" includes an outdrive	43
unit attached to the watercraft.	44

A lease with a renewal clause and a termination penalty or	45
similar provision that applies if the renewal clause is not	46
exercised is presumed to be a sham transaction. In such a case,	47
the tax shall be calculated and paid on the basis of the entire	48
length of the lease period, including any renewal periods, until	49
the termination penalty or similar provision no longer applies.	50
The taxpayer shall bear the burden, by a preponderance of the	51
evidence, that the transaction or series of transactions is not a	52
sham transaction.	53

(3) Except as provided in division (A)(2) of this section, in	54
the case of a sale, the price of which consists in whole or in	55
part of the lease or rental of tangible personal property, the tax	56
shall be measured by the installments of that lease or rental.	57

(4) In the case of a sale of a physical fitness facility	58
service or recreation and sports club service, the price of which	59
consists in whole or in part of a membership for the receipt of	60
the benefit of the service, the tax applicable to the sale shall	61
be measured by the installments thereof.	62

(B) The tax does not apply to the following:

63

(1) Sales to the state or any of its political subdivisions,	64
or to any other state or its political subdivisions if the laws of	65
that state exempt from taxation sales made to this state and its	66
political subdivisions;	67

(2) Sales of food for human consumption off the premises	68
where sold;	69

(3) Sales of food sold to students only in a cafeteria,	70
dormitory, fraternity, or sorority maintained in a private,	71
public, or parochial school, college, or university;	72

(4) Sales of newspapers and of magazine subscriptions and	73
sales or transfers of magazines distributed as controlled	74
circulation publications;	75

(5) The furnishing, preparing, or serving of meals without	76
charge by an employer to an employee provided the employer records	77
the meals as part compensation for services performed or work	78
done;	79

(6) Sales of motor fuel upon receipt, use, distribution, or	80
sale of which in this state a tax is imposed by the law of this	81
state, but this exemption shall not apply to the sale of motor	82
fuel on which a refund of the tax is allowable under division (A)	83
of section 5735.14 of the Revised Code; and the tax commissioner	84
may deduct the amount of tax levied by this section applicable to	85
the price of motor fuel when granting a refund of motor fuel tax	86
pursuant to division (A) of section 5735.14 of the Revised Code	87
and shall cause the amount deducted to be paid into the general	88
revenue fund of this state;	89

(7) Sales of natural gas by a natural gas company, of water	90
by a water-works company, or of steam by a heating company, if in	91
each case the thing sold is delivered to consumers through pipes	92
or conduits, and all sales of communications services by a	93
telegraph company, all terms as defined in section 5727.01 of the	94
Revised Code, and sales of electricity delivered through wires;	95

(8) Casual sales by a person, or auctioneer employed directly	96
by the person to conduct such sales, except as to such sales of	97
motor vehicles, watercraft or outboard motors required to be	98
titled under section 1548.06 of the Revised Code, watercraft	99
documented with the United States coast guard, snowmobiles, and	100
all-purpose vehicles as defined in section 4519.01 of the Revised	101
Code;	102

(9)(a) Sales of services or tangible personal property, other	103
than motor vehicles, mobile homes, and manufactured homes, by	104
churches, organizations exempt from taxation under section	105
501(c)(3) of the Internal Revenue Code of 1986, or nonprofit	106
organizations operated exclusively for charitable purposes as	107
defined in division (B)(12) of this section, provided that the	108
number of days on which such tangible personal property or	109
services, other than items never subject to the tax, are sold does	110
not exceed six in any calendar year, except as otherwise provided	111
in division (B)(9)(b) of this section. If the number of days on	112
which such sales are made exceeds six in any calendar year, the	113
church or organization shall be considered to be engaged in	114
business and all subsequent sales by it shall be subject to the	115
tax. In counting the number of days, all sales by groups within a	116
church or within an organization shall be considered to be sales	117
of that church or organization.	118

(b) The limitation on the number of days on which tax-exempt	119
sales may be made by a church or organization under division	120
(B)(9)(a) of this section does not apply to sales made by student	121
clubs and other groups of students of a primary or secondary	122
school, or a parent-teacher association, booster group, or similar	123
organization that raises money to support or fund curricular or	124
extracurricular activities of a primary or secondary school.	125

(c) Divisions (B)(9)(a) and (b) of this section do not apply	126
to sales by a noncommercial educational radio or television	127
broadcasting station.	128

(10) Sales not within the taxing power of this state under	129
the Constitution of the United States;	130

(11) Except for transactions that are sales under division	131
(B)(3)(r) of section 5739.01 of the Revised Code, the	132
transportation of persons or property, unless the transportation	133
is by a private investigation and security service;	134

(12) Sales of tangible personal property or services to	135
churches, to organizations exempt from taxation under section	136
501(c)(3) of the Internal Revenue Code of 1986, and to any other	137
nonprofit organizations operated exclusively for charitable	138
purposes in this state, no part of the net income of which inures	139
to the benefit of any private shareholder or individual, and no	140
substantial part of the activities of which consists of carrying	141
on propaganda or otherwise attempting to influence legislation;	142
sales to offices administering one or more homes for the aged or	143
one or more hospital facilities exempt under section 140.08 of the	144
Revised Code; and sales to organizations described in division (D)	145
of section 5709.12 of the Revised Code.	146

"Charitable purposes" means the relief of poverty; the	147
improvement of health through the alleviation of illness, disease,	148
or injury; the operation of an organization exclusively for the	149
provision of professional, laundry, printing, and purchasing	150
services to hospitals or charitable institutions; the operation of	151
a home for the aged, as defined in section 5701.13 of the Revised	152
Code; the operation of a radio or television broadcasting station	153
that is licensed by the federal communications commission as a	154
noncommercial educational radio or television station; the	155
operation of a nonprofit animal adoption service or a county	156
humane society; the promotion of education by an institution of	157
learning that maintains a faculty of qualified instructors,	158
teaches regular continuous courses of study, and confers a	159
recognized diploma upon completion of a specific curriculum; the	160
operation of a parent-teacher association, booster group, or	161
similar organization primarily engaged in the promotion and	162
support of the curricular or extracurricular activities of a	163
primary or secondary school; the operation of a community or area	164
center in which presentations in music, dramatics, the arts, and	165
related fields are made in order to foster public interest and	166
education therein; the production of performances in music,	167
dramatics, and the arts; or the promotion of education by an	168
organization engaged in carrying on research in, or the	169
dissemination of, scientific and technological knowledge and	170
information primarily for the public.	171

Nothing in this division shall be deemed to exempt sales to	172
any organization for use in the operation or carrying on of a	173
trade or business, or sales to a home for the aged for use in the	174
operation of independent living facilities as defined in division	175
(A) of section 5709.12 of the Revised Code.	176

(13) Building and construction materials and services sold to	177
construction contractors for incorporation into a structure or	178
improvement to real property under a construction contract with	179
this state or a political subdivision of this state, or with the	180
United States government or any of its agencies; building and	181
construction materials and services sold to construction	182
contractors for incorporation into a structure or improvement to	183
real property that are accepted for ownership by this state or any	184
of its political subdivisions, or by the United States government	185
or any of its agencies at the time of completion of the structures	186
or improvements; building and construction materials sold to	187
construction contractors for incorporation into a horticulture	188
structure or livestock structure for a person engaged in the	189
business of horticulture or producing livestock; building	190
materials and services sold to a construction contractor for	191
incorporation into a house of public worship or religious	192
education, or a building used exclusively for charitable purposes	193
under a construction contract with an organization whose purpose	194
is as described in division (B)(12) of this section; building	195
materials and services sold to a construction contractor for	196
incorporation into a building under a construction contract with	197
an organization exempt from taxation under section 501(c)(3) of	198
the Internal Revenue Code of 1986 when the building is to be used	199
exclusively for the organization's exempt purposes; building and	200
construction materials sold for incorporation into the original	201
construction of a sports facility under section 307.696 of the	202
Revised Code; building and construction materials and services	203
sold to a construction contractor for incorporation into real	204
property outside this state if such materials and services, when	205
sold to a construction contractor in the state in which the real	206
property is located for incorporation into real property in that	207
state, would be exempt from a tax on sales levied by that state;	208
and, until one calendar year after the construction of a	209
convention center that qualifies for property tax exemption under	210
section 5709.084 of the Revised Code is completed, building and	211
construction materials and services sold to a construction	212
contractor for incorporation into the real property comprising	213
that convention center;	214

(14) Sales of ships or vessels or rail rolling stock used or	215
to be used principally in interstate or foreign commerce, and	216
repairs, alterations, fuel, and lubricants for such ships or	217
vessels or rail rolling stock;	218

(15) Sales to persons primarily engaged in any of the	219
activities mentioned in division (B)(42)(a), (g), or (h) of this	220
section, to persons engaged in making retail sales, or to persons	221
who purchase for sale from a manufacturer tangible personal	222
property that was produced by the manufacturer in accordance with	223
specific designs provided by the purchaser, of packages, including	224
material, labels, and parts for packages, and of machinery,	225
equipment, and material for use primarily in packaging tangible	226
personal property produced for sale, including any machinery,	227
equipment, and supplies used to make labels or packages, to	228
prepare packages or products for labeling, or to label packages or	229
products, by or on the order of the person doing the packaging, or	230
sold at retail. "Packages" includes bags, baskets, cartons,	231
crates, boxes, cans, bottles, bindings, wrappings, and other	232
similar devices and containers, but does not include motor	233
vehicles or bulk tanks, trailers, or similar devices attached to	234
motor vehicles. "Packaging" means placing in a package. Division	235
(B)(15) of this section does not apply to persons engaged in	236
highway transportation for hire.	237

(16) Sales of food to persons using supplemental nutrition	238
assistance program benefits to purchase the food. As used in this	239
division, "food" has the same meaning as in 7 U.S.C. 2012 and	240
federal regulations adopted pursuant to the Food and Nutrition Act	241
of 2008.	242

(17) Sales to persons engaged in farming, agriculture,	243
horticulture, or floriculture, of tangible personal property for	244
use or consumption primarily in the production by farming,	245
agriculture, horticulture, or floriculture of other tangible	246
personal property for use or consumption primarily in the	247
production of tangible personal property for sale by farming,	248
agriculture, horticulture, or floriculture; or material and parts	249
for incorporation into any such tangible personal property for use	250
or consumption in production; and of tangible personal property	251
for such use or consumption in the conditioning or holding of	252
products produced by and for such use, consumption, or sale by	253
persons engaged in farming, agriculture, horticulture, or	254
floriculture, except where such property is incorporated into real	255
property;	256

(18) Sales of drugs for a human being that may be dispensed	257
only pursuant to a prescription; insulin as recognized in the	258
official United States pharmacopoeia; urine and blood testing	259
materials when used by diabetics or persons with hypoglycemia to	260
test for glucose or acetone; hypodermic syringes and needles when	261
used by diabetics for insulin injections; epoetin alfa when	262
purchased for use in the treatment of persons with medical	263
disease; hospital beds when purchased by hospitals, nursing homes,	264
or other medical facilities; and medical oxygen and medical	265
oxygen-dispensing equipment when purchased by hospitals, nursing	266
homes, or other medical facilities;	267

(19) Sales of prosthetic devices, durable medical equipment	268
for home use, or mobility enhancing equipment, when made pursuant	269
to a prescription and when such devices or equipment are for use	270
by a human being.	271

(20) Sales of emergency and fire protection vehicles and	272
equipment to nonprofit organizations for use solely in providing	273
fire protection and emergency services, including trauma care and	274
emergency medical services, for political subdivisions of the	275
state;	276

(21) Sales of tangible personal property manufactured in this	277
state, if sold by the manufacturer in this state to a retailer for	278
use in the retail business of the retailer outside of this state	279
and if possession is taken from the manufacturer by the purchaser	280
within this state for the sole purpose of immediately removing the	281
same from this state in a vehicle owned by the purchaser;	282

(22) Sales of services provided by the state or any of its	283
political subdivisions, agencies, instrumentalities, institutions,	284
or authorities, or by governmental entities of the state or any of	285
its political subdivisions, agencies, instrumentalities,	286
institutions, or authorities;	287

(23) Sales of motor vehicles to nonresidents of this state	288
under the circumstances described in division (B) of section	289
5739.029 of the Revised Code;	290

(24) Sales to persons engaged in the preparation of eggs for	291
sale of tangible personal property used or consumed directly in	292
such preparation, including such tangible personal property used	293
for cleaning, sanitizing, preserving, grading, sorting, and	294
classifying by size; packages, including material and parts for	295
packages, and machinery, equipment, and material for use in	296
packaging eggs for sale; and handling and transportation equipment	297
and parts therefor, except motor vehicles licensed to operate on	298
public highways, used in intraplant or interplant transfers or	299
shipment of eggs in the process of preparation for sale, when the	300
plant or plants within or between which such transfers or	301
shipments occur are operated by the same person. "Packages"	302
includes containers, cases, baskets, flats, fillers, filler flats,	303
cartons, closure materials, labels, and labeling materials, and	304
"packaging" means placing therein.	305

(25)(a) Sales of water to a consumer for residential use;

306

(b) Sales of water by a nonprofit corporation engaged	307
exclusively in the treatment, distribution, and sale of water to	308
consumers, if such water is delivered to consumers through pipes	309
or tubing.	310

(26) Fees charged for inspection or reinspection of motor	311
vehicles under section 3704.14 of the Revised Code;	312

(27) Sales to persons licensed to conduct a food service	313
operation pursuant to section 3717.43 of the Revised Code, of	314
tangible personal property primarily used directly for the	315
following:	316

(a) To prepare food for human consumption for sale;

317

(b) To preserve food that has been or will be prepared for	318
human consumption for sale by the food service operator, not	319
including tangible personal property used to display food for	320
selection by the consumer;	321

(c) To clean tangible personal property used to prepare or	322
serve food for human consumption for sale.	323

(28) Sales of animals by nonprofit animal adoption services	324
or county humane societies;	325

(29) Sales of services to a corporation described in division	326
(A) of section 5709.72 of the Revised Code, and sales of tangible	327
personal property that qualifies for exemption from taxation under	328
section 5709.72 of the Revised Code;	329

(30) Sales and installation of agricultural land tile, as	330
defined in division (B)(5)(a) of section 5739.01 of the Revised	331
Code;	332

(31) Sales and erection or installation of portable grain	333
bins, as defined in division (B)(5)(b) of section 5739.01 of the	334
Revised Code;	335

(32) The sale, lease, repair, and maintenance of, parts for,	336
or items attached to or incorporated in, motor vehicles that are	337
primarily used for transporting tangible personal property	338
belonging to others by a person engaged in highway transportation	339
for hire, except for packages and packaging used for the	340
transportation of tangible personal property;	341

(33) Sales to the state headquarters of any veterans'	342
organization in this state that is either incorporated and issued	343
a charter by the congress of the United States or is recognized by	344
the United States veterans administration, for use by the	345
headquarters;	346

(34) Sales to a telecommunications service vendor, mobile	347
telecommunications service vendor, or satellite broadcasting	348
service vendor of tangible personal property and services used	349
directly and primarily in transmitting, receiving, switching, or	350
recording any interactive, one- or two-way electromagnetic	351
communications, including voice, image, data, and information,	352
through the use of any medium, including, but not limited to,	353
poles, wires, cables, switching equipment, computers, and record	354
storage devices and media, and component parts for the tangible	355
personal property. The exemption provided in this division shall	356
be in lieu of all other exemptions under division (B)(42)(a) or	357
(n) of this section to which the vendor may otherwise be entitled,	358
based upon the use of the thing purchased in providing the	359
telecommunications, mobile telecommunications, or satellite	360
broadcasting service.	361

(35)(a) Sales where the purpose of the consumer is to use or	362
consume the things transferred in making retail sales and	363
consisting of newspaper inserts, catalogues, coupons, flyers, gift	364
certificates, or other advertising material that prices and	365
describes tangible personal property offered for retail sale.	366

(b) Sales to direct marketing vendors of preliminary	367
materials such as photographs, artwork, and typesetting that will	368
be used in printing advertising material; and of printed matter	369
that offers free merchandise or chances to win sweepstake prizes	370
and that is mailed to potential customers with advertising	371
material described in division (B)(35)(a) of this section;	372

(c) Sales of equipment such as telephones, computers,	373
facsimile machines, and similar tangible personal property	374
primarily used to accept orders for direct marketing retail sales.	375

(d) Sales of automatic food vending machines that preserve	376
food with a shelf life of forty-five days or less by refrigeration	377
and dispense it to the consumer.	378

For purposes of division (B)(35) of this section, "direct	379
marketing" means the method of selling where consumers order	380
tangible personal property by United States mail, delivery	381
service, or telecommunication and the vendor delivers or ships the	382
tangible personal property sold to the consumer from a warehouse,	383
catalogue distribution center, or similar fulfillment facility by	384
means of the United States mail, delivery service, or common	385
carrier.	386

(36) Sales to a person engaged in the business of	387
horticulture or producing livestock of materials to be	388
incorporated into a horticulture structure or livestock structure;	389

(37) Sales of personal computers, computer monitors, computer	390
keyboards, modems, and other peripheral computer equipment to an	391
individual who is licensed or certified to teach in an elementary	392
or a secondary school in this state for use by that individual in	393
preparation for teaching elementary or secondary school students;	394

(38) Sales to a professional racing team of any of the	395
following:	396

(a) Motor racing vehicles;

397

(b) Repair services for motor racing vehicles;

398

(c) Items of property that are attached to or incorporated in	399
motor racing vehicles, including engines, chassis, and all other	400
components of the vehicles, and all spare, replacement, and	401
rebuilt parts or components of the vehicles; except not including	402
tires, consumable fluids, paint, and accessories consisting of	403
instrumentation sensors and related items added to the vehicle to	404
collect and transmit data by means of telemetry and other forms of	405
communication.	406

(39) Sales of used manufactured homes and used mobile homes,	407
as defined in section 5739.0210 of the Revised Code, made on or	408
after January 1, 2000;	409

(40) Sales of tangible personal property and services to a	410
provider of electricity used or consumed directly and primarily in	411
generating, transmitting, or distributing electricity for use by	412
others, including property that is or is to be incorporated into	413
and will become a part of the consumer's production, transmission,	414
or distribution system and that retains its classification as	415
tangible personal property after incorporation; fuel or power used	416
in the production, transmission, or distribution of electricity;	417
energy conversion equipment as defined in section 5727.01 of the	418
Revised Code; and tangible personal property and services used in	419
the repair and maintenance of the production, transmission, or	420
distribution system, including only those motor vehicles as are	421
specially designed and equipped for such use. The exemption	422
provided in this division shall be in lieu of all other exemptions	423
in division (B)(42)(a) or (n) of this section to which a provider	424
of electricity may otherwise be entitled based on the use of the	425
tangible personal property or service purchased in generating,	426
transmitting, or distributing electricity.	427

(41) Sales to a person providing services under division	428
(B)(3)(r) of section 5739.01 of the Revised Code of tangible	429
personal property and services used directly and primarily in	430
providing taxable services under that section.	431

(42) Sales where the purpose of the purchaser is to do any of	432
the following:	433

(a) To incorporate the thing transferred as a material or a	434
part into tangible personal property to be produced for sale by	435
manufacturing, assembling, processing, or refining; or to use or	436
consume the thing transferred directly in producing tangible	437
personal property for sale by mining, including, without	438
limitation, the extraction from the earth of all substances that	439
are classed geologically as minerals, production of crude oil and	440
natural gas, or directly in the rendition of a public utility	441
service, except that the sales tax levied by this section shall be	442
collected upon all meals, drinks, and food for human consumption	443
sold when transporting persons. Persons engaged in rendering	444
services in the exploration for, and production of, crude oil and	445
natural gas for others are deemed engaged directly in the	446
exploration for, and production of, crude oil and natural gas.	447
This paragraph does not exempt from "retail sale" or "sales at	448
retail" the sale of tangible personal property that is to be	449
incorporated into a structure or improvement to real property.	450

(b) To hold the thing transferred as security for the	451
performance of an obligation of the vendor;	452

(c) To resell, hold, use, or consume the thing transferred as	453
evidence of a contract of insurance;	454

(d) To use or consume the thing directly in commercial	455
fishing;	456

(e) To incorporate the thing transferred as a material or a	457
part into, or to use or consume the thing transferred directly in	458
the production of, magazines distributed as controlled circulation	459
publications;	460

(f) To use or consume the thing transferred in the production	461
and preparation in suitable condition for market and sale of	462
printed, imprinted, overprinted, lithographic, multilithic,	463
blueprinted, photostatic, or other productions or reproductions of	464
written or graphic matter;	465

(g) To use the thing transferred, as described in section	466
5739.011 of the Revised Code, primarily in a manufacturing	467
operation to produce tangible personal property for sale;	468

(h) To use the benefit of a warranty, maintenance or service	469
contract, or similar agreement, as described in division (B)(7) of	470
section 5739.01 of the Revised Code, to repair or maintain	471
tangible personal property, if all of the property that is the	472
subject of the warranty, contract, or agreement would not be	473
subject to the tax imposed by this section;	474

(i) To use the thing transferred as qualified research and	475
development equipment;	476

(j) To use or consume the thing transferred primarily in	477
storing, transporting, mailing, or otherwise handling purchased	478
sales inventory in a warehouse, distribution center, or similar	479
facility when the inventory is primarily distributed outside this	480
state to retail stores of the person who owns or controls the	481
warehouse, distribution center, or similar facility, to retail	482
stores of an affiliated group of which that person is a member, or	483
by means of direct marketing. This division does not apply to	484
motor vehicles registered for operation on the public highways. As	485
used in this division, "affiliated group" has the same meaning as	486
in division (B)(3)(e) of section 5739.01 of the Revised Code and	487
"direct marketing" has the same meaning as in division (B)(35) of	488
this section.	489

(k) To use or consume the thing transferred to fulfill a	490
contractual obligation incurred by a warrantor pursuant to a	491
warranty provided as a part of the price of the tangible personal	492
property sold or by a vendor of a warranty, maintenance or service	493
contract, or similar agreement the provision of which is defined	494
as a sale under division (B)(7) of section 5739.01 of the Revised	495
Code;	496

(l) To use or consume the thing transferred in the production	497
of a newspaper for distribution to the public;	498

(m) To use tangible personal property to perform a service	499
listed in division (B)(3) of section 5739.01 of the Revised Code,	500
if the property is or is to be permanently transferred to the	501
consumer of the service as an integral part of the performance of	502
the service;	503

(n) To use or consume the thing transferred primarily in	504
producing tangible personal property for sale by farming,	505
agriculture, horticulture, or floriculture. Persons engaged in	506
rendering farming, agriculture, horticulture, or floriculture	507
services for others are deemed engaged primarily in farming,	508
agriculture, horticulture, or floriculture. This paragraph does	509
not exempt from "retail sale" or "sales at retail" the sale of	510
tangible personal property that is to be incorporated into a	511
structure or improvement to real property.	512

(o) To use or consume the thing transferred in acquiring,	513
formatting, editing, storing, and disseminating data or	514
information by electronic publishing.	515

As used in division (B)(42) of this section, "thing" includes	516
all transactions included in divisions (B)(3)(a), (b), and (e) of	517
section 5739.01 of the Revised Code.	518

(43) Sales conducted through a coin operated device that	519
activates vacuum equipment or equipment that dispenses water,	520
whether or not in combination with soap or other cleaning agents	521
or wax, to the consumer for the consumer's use on the premises in	522
washing, cleaning, or waxing a motor vehicle, provided no other	523
personal property or personal service is provided as part of the	524
transaction.	525

(44) Sales of replacement and modification parts for engines,	526
airframes, instruments, and interiors in, and paint for, aircraft	527
used primarily in a fractional aircraft ownership program, and	528
sales of services for the repair, modification, and maintenance of	529
such aircraft, and machinery, equipment, and supplies primarily	530
used to provide those services.	531

(45) Sales of telecommunications service that is used	532
directly and primarily to perform the functions of a call center.	533
As used in this division, "call center" means any physical	534
location where telephone calls are placed or received in high	535
volume for the purpose of making sales, marketing, customer	536
service, technical support, or other specialized business	537
activity, and that employs at least fifty individuals that engage	538
in call center activities on a full-time basis, or sufficient	539
individuals to fill fifty full-time equivalent positions.	540

(46) Sales by a telecommunications service vendor of 900	541
service to a subscriber. This division does not apply to	542
information services, as defined in division (FF) of section	543
5739.01 of the Revised Code.	544

(47) Sales of value-added non-voice data service. This	545
division does not apply to any similar service that is not	546
otherwise a telecommunications service.	547

(48)(a) Sales of machinery, equipment, and software to a	548
qualified direct selling entity for use in a warehouse or	549
distribution center primarily for storing, transporting, or	550
otherwise handling inventory that is held for sale to independent	551
salespersons who operate as direct sellers and that is held	552
primarily for distribution outside this state;	553

(b) As used in division (B)(48)(a) of this section:

554

(i) "Direct seller" means a person selling consumer products	555
to individuals for personal or household use and not from a fixed	556
retail location, including selling such product at in-home product	557
demonstrations, parties, and other one-on-one selling.	558

(ii) "Qualified direct selling entity" means an entity	559
selling to direct sellers at the time the entity enters into a tax	560
credit agreement with the tax credit authority pursuant to section	561
122.17 of the Revised Code, provided that the agreement was	562
entered into on or after January 1, 2007. Neither contingencies	563
relevant to the granting of, nor later developments with respect	564
to, the tax credit shall impair the status of the qualified direct	565
selling entity under division (B)(48) of this section after	566
execution of the tax credit agreement by the tax credit authority.	567

(c) Division (B)(48) of this section is limited to machinery,	568
equipment, and software first stored, used, or consumed in this	569
state within the period commencing June 24, 2008, and ending on	570
the date that is five years after that date.	571

(49) Sales of materials, parts, equipment, or engines used in	572
the repair or maintenance of aircraft or avionics systems of such	573
aircraft, and sales of repair, remodeling, replacement, or	574
maintenance services in this state performed on aircraft or on an	575
aircraft's avionics, engine, or component materials or parts. As	576
used in division (B)(49) of this section, "aircraft" means	577
aircraft of more than six thousand pounds maximum certified	578
takeoff weight or used exclusively in general aviation.	579

(50) Sales of full flight simulators that are used for pilot	580
or flight-crew training, sales of repair or replacement parts or	581
components, and sales of repair or maintenance services for such	582
full flight simulators. "Full flight simulator" means a replica of	583
a specific type, or make, model, and series of aircraft cockpit.	584
It includes the assemblage of equipment and computer programs	585
necessary to represent aircraft operations in ground and flight	586
conditions, a visual system providing an out-of-the-cockpit view,	587
and a system that provides cues at least equivalent to those of a	588
three-degree-of-freedom motion system, and has the full range of	589
capabilities of the systems installed in the device as described	590
in appendices A and B of part 60 of chapter 1 of title 14 of the	591
Code of Federal Regulations.	592

(51) Any transfer or lease of tangible personal property	593
between the state and a successful proposer in accordance with	594
sections 126.60 to 126.605 of the Revised Code, provided the	595
property is part of a project as defined in section 126.60 of the	596
Revised Code and the state retains ownership of the project or	597
part thereof that is being transferred or leased, between the	598
state and JobsOhio in accordance with section 4313.02 of the	599
Revised Code.	600

(52)(a) Sales of the following occurring on the second	601
Saturday of August and the following Sunday of each year:	602

(i) An item of clothing, the price of which is less than one	603
hundred dollars;	604

(ii) An item of school supplies, the price of which is less	605
than one hundred dollars;	606

(iii) A computer, the price of which, less any manufacturer's	607
rebate, is less than seven hundred fifty dollars; and	608

(iv) A computer accessory, the price of which, less any	609
manufacturer's rebate, is less than one hundred dollars.	610

(b) For purposes of division (B)(52) of this section:

611

(i) "Clothing" does not include clothing or footwear that is	612
designed primarily for athletic activity or protective use and	613
that is not normally worn except when used for the athletic	614
activity or protective use for which it is designed; accessories,	615
including jewelry, handbags, luggage, umbrellas, wallets, watches,	616
and similar items carried on or about the human body, without	617
regard to whether the item is worn on the body in a manner	618
characteristic of clothing; or clothing that is rented, or that is	619
for use in a trade or business.	620

(ii) "School supplies" means pens, pencils, binders,	621
notebooks, reference books, book bags, lunch boxes, calculators,	622
and similar items. "School supplies" does not include furniture,	623
items that are rented, or tangible personal property for use in a	624
trade or business.	625

(C) For the purpose of the proper administration of this	626
chapter, and to prevent the evasion of the tax, it is presumed	627
that all sales made in this state are subject to the tax until the	628
contrary is established.	629

(D) The levy of this tax on retail sales of recreation and	630
sports club service shall not prevent a municipal corporation from	631
levying any tax on recreation and sports club dues or on any	632
income generated by recreation and sports club dues.	633

(E) The tax collected by the vendor from the consumer under	634
this chapter is not part of the price, but is a tax collection for	635
the benefit of the state, and of counties levying an additional	636
sales tax pursuant to section 5739.021 or 5739.026 of the Revised	637
Code and of transit authorities levying an additional sales tax	638
pursuant to section 5739.023 of the Revised Code. Except for the	639
discount authorized under section 5739.12 of the Revised Code and	640
the effects of any rounding pursuant to section 5703.055 of the	641
Revised Code, no person other than the state or such a county or	642
transit authority shall derive any benefit from the collection or	643
payment of the tax levied by this section or section 5739.021,	644
5739.023, or 5739.026 of the Revised Code.	645

Sec. 5739.05.  (A)(1) The tax commissioner shall enforce and	646
administer sections 5739.01 to 5739.31 of the Revised Code, which	647
are hereby declared to be sections which the commissioner is	648
required to administer within the meaning of sections 5703.17 to	649
5703.37, 5703.39, 5703.41, and 5703.45 of the Revised Code. The	650
commissioner may adopt and promulgate, in accordance with sections	651
119.01 to 119.13 of the Revised Code, such rules as the	652
commissioner deems necessary to administer sections 5739.01 to	653
5739.31 of the Revised Code.	654

(2) In accordance with section 5703.14 of the Revised Code,	655
the tax commissioner shall adopt rules that are necessary to	656
implement the tax exemption provided by division (B)(52) of	657
section 5739.02 of the Revised Code. Before each exemption period	658
required under that division, the commissioner shall make	659
available to vendors information bulletins explaining the	660
exemption.	661

(B) Upon application, the commissioner may authorize a vendor	662
to pay on a predetermined basis the tax levied by or pursuant to	663
section 5739.02, 5739.021, 5739.023, or 5739.026 of the Revised	664
Code upon sales of things produced or distributed or services	665
provided by such vendor, and the commissioner may waive the	666
collection of the tax from the consumer. The commissioner shall	667
not grant such authority unless the commissioner finds that the	668
granting of the authority would improve compliance and increase	669
the efficiency of the administration of the tax. The person to	670
whom such authority is granted shall post a notice, if required by	671
the commissioner, at the location where the product is offered for	672
sale that the tax is included in the selling price. The	673
comissionercommissioner may adopt rules to administer this	674
division.	675

(C) The commissioner may authorize a vendor to pay, on the	676
basis of a prearranged agreement under this division, the tax	677
levied by section 5739.02 or pursuant to section 5739.021,	678
5739.023, or 5739.026 of the Revised Code, and waive the	679
requirement that the vendor maintain the complete and accurate	680
record of individual taxable sales and tax collected thereon	681
required by section 5739.11 of the Revised Code, upon application	682
of the vendor, if the commissioner finds that the conditions of	683
the vendor-applicant's business are such that the maintenance of	684
such records of individual taxable sales and tax collected thereon	685
would impose an unreasonable burden upon the vendor. If the	686
commissioner determines that such unreasonable burden has been	687
imposed, the vendor and the commissioner shall agree to the terms	688
and conditions of a test check to be conducted. If the parties are	689
unable to agree to the terms and conditions of the test check, the	690
application shall be denied. The test check conducted shall	691
determine the proportion that taxable retail sales bear to all of	692
the vendor's retail sales and the ratio which the tax required to	693
be collected under sections 5739.02, 5739.021, and 5739.023 of the	694
Revised Code bears to the receipts from the vendor's taxable	695
retail sales.	696

The vendor shall collect the tax on the vendor's taxable	697
sales and the vendor's liability for collecting or remitting shall	698
be based upon the proportions and ratios established by the test	699
check, and not upon any other basis of determination, until such	700
time as a subsequent test check is made at the request of either	701
the vendor or the commissioner where either party believes that	702
the nature of the vendor's business has so changed as to make the	703
prior or existing test check no longer representative. The	704
commissioner may give notice to the vendor at any time that the	705
authorization is revoked or the vendor may notify the commissioner	706
that the vendor no longer elects to report under the	707
authorization. Such notice shall be delivered to the other party	708
personally or by registered mail. The revocation or cancellation	709
is not effective prior to the date of receipt of such notice.	710

Section 2. That existing sections 5739.02 and 5739.05 of the	711
Revised Code are hereby repealed.	712

Section 3.  Section 5739.02 of the Revised Code is presented	713
in this act as a composite of the section as amended by both Am.	714
Sub. H.B. 487 and Am. Sub. H.B. 508 of the 129th General Assembly.	715
The General Assembly, applying the principle stated in division	716
(B) of section 1.52 of the Revised Code that amendments are to be	717
harmonized if reasonably capable of simultaneous operation, finds	718
that the composite is the resulting version of the section in	719
effect prior to the effective date of the section as presented in	720
this act.	721