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Am. Sub. H. B. No. 429 As Passed by the SenateAs Passed by the Senate
127th General Assembly | Regular Session | 2007-2008 |
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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
Senators Schuler, Amstutz, Spada, Kearney, Buehrer, Coughlin, Harris, Miller, D., Mumper, Niehaus, Seitz, Wilson, Mason, Sawyer, Padgett, Wagoner, Cafaro
A BILL
To amend sections 5703.70, 5739.03, 5739.033,
5739.034,
5739.24, 5741.03, and 5741.05 and to
enact section 5739.061 of
the
Revised
Code and
later to repeal sections
5739.035,
5739.123,
5739.24, and 5740.10 of the
Revised
Code to
require vendors to utilize
origin-based
sourcing
for intrastate sales
beginning January
1, 2010,
to discontinue
compensation of impacted
counties for sales tax
losses incurred under
destination-based sourcing, to
compensate vendors
required
to convert from
destination-based
sourcing to
origin-based
sourcing, to permit a
vendor, when making a refund, to retain the amount
of the delivery charge and sales taxes
attributable to the charge, and to declare an
emergency.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 5703.70, 5739.03, 5739.033,
5739.034,
5739.24, 5741.03, and 5741.05 be amended and section
5739.061 of
the Revised
Code be
enacted to
read as follows:
Sec. 5703.70. (A) On the filing of an application for refund
under section 3734.905, 4307.05, 4307.07, 5727.28, 5727.91,
5728.061, 5733.12, 5735.122, 5735.13, 5735.14, 5735.141, 5735.142,
5735.18, 5739.07, 5739.071, 5739.104, 5741.10, 5743.05, 5743.53,
5749.08, or 5751.08 of the
Revised Code, or an application for
compensation under section 5739.123 5739.061 of the Revised Code,
if the
tax commissioner determines
that the amount
of the refund
or
compensation to which the applicant is entitled
is less than
the
amount claimed in the application, the
commissioner shall give
the
applicant written notice by ordinary
mail of the amount. The
notice shall be sent to the address shown
on the application
unless the applicant notifies the
commissioner of a
different
address. The applicant shall have
sixty days
from the
date the
commissioner mails the notice to
provide
additional
information to
the commissioner or request a
hearing,
or both.
(B) If the applicant neither requests a hearing nor provides
additional information to the tax commissioner within the time
prescribed by division (A) of this section, the commissioner shall
take no further action, and the refund or compensation amount or
compensation
amount denied becomes
final.
(C)(1) If the applicant requests a hearing within the time
prescribed by division (A) of this section, the tax commissioner
shall assign a time and place for the hearing and notify the
applicant of such time and place, but the commissioner may
continue the hearing from
time to time as necessary. After the
hearing, the commissioner
may make such adjustments to the refund
or compensation
as the commissioner finds
proper, and shall issue
a final
determination thereon.
(2) If the applicant does not request a hearing, but
provides
additional information, within the time prescribed by
division (A)
of this section, the commissioner shall review the
information,
make such adjustments to the refund or compensation as the
commissioner finds proper, and issue a final determination
thereon.
(3) The commissioner shall serve a copy of the final
determination made under division (C)(1) or (2) of this section on
the applicant in the manner provided in section 5703.37 of the
Revised Code,
and the decision is final, subject to appeal under
section 5717.02
of the Revised Code.
(D) The tax commissioner shall certify to the director of
budget and management and treasurer of state for payment from the
tax refund fund created by section 5703.052 of the Revised Code,
the amount of the refund to be refunded under division (B) or (C)
of this
section. The commissioner also shall certify to the
director and treasurer of state for payment from the general
revenue fund the amount of compensation to be paid under division
(B) or (C) of this section.
Sec. 5739.03.
(A) Except as provided in section 5739.05 of
the
Revised Code, the tax imposed by or pursuant to section
5739.02,
5739.021, 5739.023, or 5739.026 of the Revised Code shall
be paid
by the consumer to the vendor, and each vendor shall
collect from
the consumer, as a trustee for the state of Ohio, the
full and
exact amount of the tax payable on each taxable sale, in
the
manner and at the times provided as follows:
(1) If the price is, at or prior to the provision of the
service or the delivery of possession of the thing sold to the
consumer, paid in currency passed from hand to hand by the
consumer or the consumer's agent to the vendor or
the vendor's
agent, the vendor or
the vendor's agent shall collect the tax with
and at the
same time as the
price;
(2) If the price is otherwise paid or to be paid, the
vendor
or the vendor's agent shall, at or prior to the
provision
of the
service or the delivery of possession of the thing sold to
the
consumer, charge the tax imposed by or pursuant to section
5739.02, 5739.021, 5739.023, or 5739.026 of the Revised Code to
the account of the consumer, which amount shall be collected by
the vendor from the consumer in addition to the price. Such sale
shall be reported on and the amount of the tax applicable thereto
shall be remitted with the return for the period in which the
sale
is made, and the amount of the tax shall become a legal
charge in
favor of the vendor and against the consumer.
(B)(1)(a) If any sale is claimed to be exempt under division
(E) of
section 5739.01 of the Revised Code or under section
5739.02 of
the Revised Code, with the exception of divisions
(B)(1) to (11)
or (28) of section 5739.02 of the Revised Code, the
consumer must
provide to the vendor, and the vendor must
obtain
from the
consumer, a certificate specifying the reason that
the
sale is
not legally subject to the tax.
The certificate shall
be
in such form, and shall be provided either in a hard copy form or
electronic form, as
the tax commissioner prescribes.
(b) A vendor that obtains a fully completed exemption
certificate from a consumer is relieved of liability for
collecting and remitting tax on any sale covered by that
certificate. If it is determined the exemption was improperly
claimed, the consumer shall be liable for any tax due on that sale
under section 5739.02, 5739.021, 5739.023, or 5739.026 or Chapter
5741. of the Revised Code. Relief under this division from
liability does not apply to any of the following:
(i) A vendor that fraudulently fails to collect tax;
(ii) A vendor that solicits consumers to participate in the
unlawful claim of an exemption;
(iii) A vendor that accepts an exemption certificate from a
consumer that claims an exemption based on who purchases or who
sells property or a service, when the subject of the transaction
sought to be covered by the exemption certificate is actually
received by the consumer at a location operated by the vendor in
this state, and this state has posted to its web site an exemption
certificate form that clearly and affirmatively indicates that the
claimed exemption is not available in this state;
(iv) A vendor that accepts an exemption certificate from a
consumer who claims a multiple points of use exemption under
division (D) of section 5739.033 of the Revised Code, if the item
purchased is tangible personal property, other than prewritten
computer software.
(2) The
vendor shall maintain records, including exemption
certificates, of all sales on which a consumer has claimed an
exemption, and provide them to the tax commissioner
on request.
(3) The tax commissioner may establish an identification
system whereby the commissioner issues an identification number to
a consumer that is exempt from payment of the tax. The consumer
must present the number to the vendor, if any sale is claimed to
be
exempt as provided in this section.
(4) If
no certificate is
provided or obtained
within ninety
days after the date on which
such sale is
consummated, it shall be
presumed
that the tax
applies.
Failure
to have so
provided or
obtained a
certificate shall
not
preclude a vendor, within one
hundred twenty days after the tax commissioner gives written
notice of intent to levy an assessment,
from
either establishing
that the sale
is
not
subject to the tax, or obtaining, in good
faith, a fully completed exemption certificate.
(5) Certificates need not be obtained nor
provided
where
the
identity of the consumer is such that the transaction is
never
subject to the tax imposed or where the item of tangible
personal
property sold or the service provided is never subject to
the tax
imposed, regardless of use, or when the sale is in
interstate
commerce.
(6) If a transaction is claimed to be exempt under division
(B)(13) of section 5739.02 of the Revised Code, the contractor
shall obtain certification of the claimed exemption from the
contractee. This certification shall be in addition to an
exemption certificate provided by the contractor to the vendor. A
contractee that provides a certification under this division shall
be deemed to be the consumer of all items purchased by the
contractor under the claim of exemption, if it is subsequently
determined that the exemption is not properly claimed. The
certification shall be in such form as the tax commissioner
prescribes.
(C) As used in this division, "contractee" means a person
who
seeks to enter or enters into a contract or agreement with a
contractor or vendor for the construction of real property or for
the sale and installation onto real property of tangible personal
property.
Any contractor or vendor may request from any contractee a
certification of what portion of the property to be transferred
under such contract or agreement is to be incorporated into the
realty and what portion will retain its status as tangible
personal property after installation is completed. The
contractor
or vendor shall request the certification by certified
mail
delivered to the contractee, return receipt requested. Upon
receipt of such request and prior to entering into the contract
or
agreement, the contractee shall
provide to the contractor
or
vendor a certification sufficiently detailed to enable the
contractor or vendor to ascertain the resulting classification of
all materials purchased or fabricated by the contractor or vendor
and transferred to the contractee. This requirement applies to a
contractee regardless of whether the contractee holds a direct
payment permit under section 5739.031 of the Revised Code or
provides to the contractor or vendor an exemption
certificate as
provided under this section.
For the purposes of the taxes levied by this chapter and
Chapter 5741. of the Revised Code, the contractor or vendor may
in
good faith rely on the contractee's certification.
Notwithstanding
division (B) of section 5739.01 of the Revised
Code, if the tax
commissioner determines that certain property
certified by the
contractee as tangible personal property
pursuant to this division
is, in fact, real property, the
contractee shall be considered to
be the consumer of all
materials so incorporated into that real
property and shall be
liable for the applicable tax, and the
contractor or vendor shall
be excused from any liability on those
materials.
If a contractee fails to provide such certification upon
the
request of the contractor or vendor, the contractor or vendor
shall comply with the provisions of this chapter and Chapter
5741.
of the Revised Code without the certification. If the tax
commissioner determines that such compliance has been performed
in
good faith and that certain property treated as tangible
personal
property by the contractor or vendor is, in fact, real
property,
the contractee shall be considered to be the consumer
of all
materials so incorporated into that real property and
shall be
liable for the applicable tax, and the construction
contractor or
vendor shall be excused from any liability on those
materials.
This division does not apply to any contract or agreement
where the tax commissioner determines as a fact that a
certification under this division was made solely on the decision
or advice of the contractor or vendor.
(D) Notwithstanding division (B) of section 5739.01 of the
Revised Code, whenever the total rate of tax imposed under this
chapter is increased after the date after a construction contract
is entered into, the contractee shall reimburse the construction
contractor for any additional tax paid on tangible property
consumed or services received pursuant to the contract.
(E) A vendor who files a petition for reassessment
contesting
the assessment of tax on sales for which the
vendor
obtained no
valid exemption certificates and for which the
vendor
failed to
establish that the sales
were properly not
subject to
the tax
during the
one-hundred-twenty-day
period allowed under
division
(B) of this
section, may present to the tax commissioner
additional evidence
to prove that the sales were properly subject
to a claim of
exception or exemption. The vendor shall file such
evidence
within ninety days of the receipt by the vendor of the
notice of
assessment, except that, upon application and for
reasonable
cause, the period for submitting such evidence shall
be
extended
thirty days.
The commissioner shall consider such additional evidence in
reaching the final determination on the assessment and petition
for reassessment.
(F) Whenever a vendor refunds to the consumer the full
price,
minus any separately stated delivery charge,
of an item of
tangible personal property on which the tax
imposed
under this
chapter has been paid, the vendor shall
also refund
the
full
amount of the tax paid, minus the amount of tax attributable to
the delivery charge.
Sec. 5739.033. (A) Except as provided in division (B) of
this section, divisions (C) to (I) of this section apply to sales
made on and after January 1, 2008. Any vendor previously
required
to comply with divisions (C) to (I) of this section and
any
vendor that irrevocably
elects to comply with divisions
(C) to
(I) of this section for all
of the vendor's sales and
places of
business in this state shall continue to source its
sales under
those divisions.
The amount of tax due pursuant to sections
5739.02, 5739.021,
5739.023, and 5739.026 of the Revised Code is
the sum of the taxes
imposed pursuant to those sections at the
sourcing location of the
sale as determined under this
section or, if
applicable, under
division (C) of section 5739.031 or section 5739.034 of the
Revised Code, or at the situs of the sale as determined under
section 5739.035 of the Revised
Code. This section applies only to
a vendor's or seller's obligation to collect and remit sales taxes
under section 5739.02, 5739.021, 5739.023, or 5739.026 of the
Revised Code or use taxes under section 5741.02, 5741.021,
5741.022, or 5741.023 of the Revised Code. Division (A) of this
section does not apply in determining the jurisdiction for which
sellers are required to collect the use tax under section 5741.05
of the Revised Code. This section does not affect the obligation
of a consumer to remit use taxes on the storage, use, or other
consumption of tangible personal property or on the benefit
realized of any service provided, to the jurisdiction of that
storage, use, or consumption, or benefit realized.
(B)(1) As used in this division:
(a) "Delivery sale" means the taxable sale of tangible
personal property or a service that is received by a consumer, or
a donee designated by the consumer, in a taxing jurisdiction that
is not the taxing jurisdiction in which the vendor has a fixed
place of business.
(b) "Agreement" has the same meaning as in section 5740.01 of
the Revised Code.
(c) "Governing board" has the same meaning as in section
5740.02 of the Revised Code.
(2) If the tax commissioner does not make the
certification
under section 5740.10 of the Revised Code, a vendor
that is not
required by division (A) of this section to situs
sales
under
divisions (C) to (I) of this section on the date of
the
commissioner's certification may continue after that date to
situs
its sales under section 5739.035 of the Revised Code unless
it is
required, under division (B)(5) of this section, to situs
its
sales under divisions (C) to (I) of this section.
(3) Except as otherwise provided in divisions (B)(4) and (5)
of this section, a vendor with total delivery sales within this
state in prior calendar
years, beginning with
calendar year 2007,
of less
than five hundred
thousand dollars may
situs its sales
under section
5739.035 of the Revised Code.
(4) Once a vendor has total delivery sales in this
state of
five hundred thousand dollars or more for a prior
calendar
year,
the vendor shall source its sales under divisions
(C) to (I)
of
this section and shall continue to source its sales
under those
divisions regardless of the amount of the vendor's
total delivery
sales in future years.
(5) A vendor permitted under division (B)(3) of this section
to situs its sales under section 5739.035 of the Revised Code that
fails to provide, absent a clerical error, the notices required
under division (I)(1) of
section 5739.035 of the Revised Code
shall situs all subsequent
sales as required under divisions (C)
to (I) of this section Beginning January 1, 2010,
retail sales,
excluding the lease or rental, of tangible personal
property or
digital goods shall be sourced to the location where
the vendor
receives an order for the sale of such property or goods if:
(a) The vendor receives the order in this state and
the
consumer receives the property or goods in this state;
(b) The location where the consumer receives the property or
goods is determined under division (C)(2), (3), or (4) of this
section; and
(c) The record-keeping system used by the vendor to calculate
the tax imposed captures the location where the order is received
at the time the order is received.
(2) A consumer has no additional liability to this state
under this chapter or Chapter 5741. of the Revised Code for
tax,
penalty, or interest on a sale for which the consumer remits
tax
to the vendor in the amount invoiced by the vendor if the
invoice
amount is calculated at either the rate applicable to the
location where the consumer receives the property or digital good
or at the rate applicable to the location where the order is
received by the vendor. A consumer may rely on a written
representation by the vendor as to the location where the order
for the sale was received by the vendor. If the consumer does not
have a written representation by the vendor as to the location
where the order was received by the vendor, the consumer may use a
location indicated by a business address for the vendor that is
available from records that are maintained in the ordinary course
of the consumer's business to determine the rate applicable to the
location where the order was received.
(3) For the purposes of division (B) of this section, the
location where an order is received by or on behalf of a vendor
means the physical location of the vendor or a third party such as
an established outlet, office location, or automated order receipt
system operated by or on behalf of the vendor, where an order is
initially received by or on behalf of the vendor, and not where
the order may be subsequently accepted, completed, or fulfilled.
An order is received when all necessary information to determine
whether the order can be accepted has been received by or on
behalf of the vendor. The location from which the property or
digital good is shipped
shall not be used to determine the
location where the order is
received by the vendor.
(4) For the purposes of division (B) of this section, if
services subject to taxation under this chapter or Chapter 5741.
of the Revised Code are sold with tangible personal property or
digital goods pursuant to a single contract or in the same
transaction, the services are billed on the same billing statement
or invoice, and, because of the application of division (B) of
this section, the
transaction would be sourced to more than one
jurisdiction, the
situs of the transaction shall be the location
where the order is
received by or on behalf of the vendor.
(C) Except
for sales, other than leases, of titled motor
vehicles, titled
watercraft, or titled outboard motors as provided
in section
5741.05 of the Revised Code, or as otherwise provided
in
this
section
and section
5739.034 of the
Revised Code,
all
sales
shall be sourced as follows:
(1) If the consumer or a
donee designated by the consumer
receives
tangible personal property
or a service at a vendor's
place of business, the sale
shall be sourced to that place of
business.
(2)
When the tangible personal property or
service is not
received at a vendor's place of business, the sale
shall be
sourced to
the location known to the vendor where
the consumer or
the donee designated by the consumer receives the
tangible
personal
property or service, including the location
indicated by
instructions for delivery to the consumer or the
consumer's donee.
(3) If divisions (C)(1) and (2) of this section do not
apply,
the sale shall be sourced to
the location indicated by an address
for the
consumer that is
available from the vendor's business
records
that are
maintained in the ordinary course of the
vendor's
business, when
use of that address does not constitute
bad faith.
(4) If divisions (C)(1), (2), and (3) of this section do
not
apply, the sale shall be sourced to
the location indicated by an
address for the
consumer obtained
during the consummation of the
sale, including
the address
associated with the consumer's payment
instrument, if
no other
address is available, when use of that
address does not
constitute
bad faith.
(5) If divisions (C)(1), (2), (3), and (4) of this section
do
not apply, including in the circumstance where the vendor is
without sufficient information to apply any of those divisions,
the sale shall be sourced to
the
address from which tangible
personal property was shipped,
or from
which the service was
provided, disregarding any
location
that
merely provided the
electronic transfer of the
property sold
or
service provided.
(6) As used in division (C) of this section, "receive"
means
taking possession of tangible personal property or making
first
use of a service. "Receive" does not include possession by
a
shipping company on behalf of a consumer.
(D)(1)(a) Notwithstanding divisions (C)(1) to (5) of this
section, a business consumer that is not a holder of
a direct
payment permit granted under section 5739.031 of the
Revised Code,
that purchases a digital good, computer software, except computer
software received in person by a business consumer at a vendor's
place of business, or a
service, and that knows at the time of
purchase that such digital good, software, or service will be
concurrently
available for use in more than one taxing
jurisdiction shall
deliver to the vendor in conjunction with its
purchase an exemption certificate claiming multiple
points of use,
or shall meet the requirements of division (D)(2) of this section.
On receipt of the exemption certificate claiming multiple points
of use, the vendor is relieved of its obligation to
collect, pay,
or remit the tax due, and the business consumer must
pay the tax
directly to the state.
(b) A business consumer that delivers the exemption
certificate claiming multiple points of use to a vendor may use
any reasonable, consistent, and uniform method of apportioning the
tax due on the digital good, computer software, or service that is
supported by the consumer's business records as they existed at
the
time of the sale. The business consumer shall report and pay
the appropriate tax to each jurisdiction where concurrent use
occurs. The tax due shall be calculated as if the apportioned
amount of the digital good, computer software, or service had been
delivered to each jurisdiction to which the sale is apportioned
under this division.
(c) The exemption certificate claiming multiple points of use
shall remain
in effect for all future sales by the vendor to the
business consumer until
it is revoked in writing by the business
consumer, except as to the business
consumer's specific
apportionment of a subsequent sale under
division (D)(1)(b) of
this section and the facts existing at the time of
the sale.
(2) When the vendor knows that a digital good, computer
software, or service sold will be concurrently available for use
by the business consumer in more than one jurisdiction, but the
business consumer does not provide an exemption certificate
claiming multiple points of use as required by division (D)(1) of
this section, the vendor may work with the business consumer to
produce the correct apportionment. Governed by the principles of
division (D)(1)(b) of this section, the vendor and business
consumer may use any reasonable, but consistent and uniform,
method of apportionment that is supported by the vendor's and
business consumer's books and records as they exist at the time
the sale is reported for purposes of the taxes levied under this
chapter. If the business consumer certifies to the accuracy of the
apportionment and the vendor accepts the certification, the vendor
shall collect and remit the tax accordingly. In the absence of bad
faith, the vendor is relieved of any further obligation to collect
tax on any transaction where the vendor has collected tax pursuant
to the information certified by the business consumer.
(3) When the vendor knows that the digital good, computer
software, or service will be concurrently available for use in
more than one jurisdiction, and the business consumer does not
have a direct pay permit and does not provide to the vendor an
exemption certificate claiming multiple points of use as required
in division (D)(1) of this section, or certification pursuant to
division (D)(2) of this section, the vendor shall collect and
remit the tax based on division (C) of this section.
(4) Nothing in this section shall limit a person's obligation
for sales or use tax to any state in which a digital good,
computer software, or service is concurrently available for use,
nor limit a person's ability under local, state, or federal law,
to claim a credit for sales or use taxes legally due and paid to
other jurisdictions.
(E) A person who holds a direct payment permit issued under
section 5739.031 of the Revised Code is not required to deliver an
exemption certificate claiming
multiple points of use to a vendor.
But such
permit holder shall comply with division (D)(2) of this
section in
apportioning the tax due on a digital good, computer
software, or a
service for use in business that will be
concurrently available for use in more than
one taxing
jurisdiction.
(F)(1) Notwithstanding divisions (C)(1) to (5) of this
section, the consumer of direct mail that is not a holder of a
direct payment permit shall provide to the vendor in conjunction
with the sale either an exemption certificate claiming direct mail
prescribed by the tax commissioner, or information to show the
jurisdictions to which the direct mail is delivered to recipients.
(2) Upon receipt of such exemption certificate, the vendor is
relieved of all obligations to collect, pay, or remit the
applicable tax and the consumer is obligated to pay that tax on a
direct pay basis. An exemption certificate claiming direct mail
shall remain in effect for all future sales of direct mail by the
vendor to the consumer until it is revoked in writing.
(3) Upon receipt of information from the consumer showing the
jurisdictions to which the direct mail is delivered to recipients,
the vendor shall collect the tax according to the delivery
information provided by the consumer. In the absence of bad faith,
the vendor is relieved of any further obligation to collect tax on
any transaction where the vendor has collected tax pursuant to the
delivery information provided by the consumer.
(4) If the consumer of direct mail does not have a direct
payment permit and does not provide the vendor with either an
exemption certificate claiming direct mail or delivery information
as required by division (F)(1) of this section, the vendor shall
collect the tax according to division (C)(5) of this section.
Nothing in division (F)(4) of this section shall limit a
consumer's obligation to pay sales or use tax to any state to
which the direct mail is delivered.
(5) If a consumer of direct mail provides the vendor with
documentation of direct payment authority, the consumer shall not
be required to provide an exemption certificate claiming direct
mail or delivery information to the vendor.
(G) If the vendor provides lodging to transient guests as
specified in division (B)(2) of section 5739.01 of the Revised
Code, the sale shall be sourced to
the
location where the lodging
is
located.
(H)(1) As used in this division and division (I) of this
section, "transportation equipment" means any of the following:
(a) Locomotives and railcars that are utilized for the
carriage of persons or property in interstate commerce.
(b) Trucks and truck-tractors with a gross vehicle weight
rating of greater than ten thousand pounds, trailers,
semi-trailers, or passenger buses that are registered through the
international registration plan and are operated under authority
of a carrier authorized and certificated by the United States
department of transportation or another federal authority to
engage in the carriage of persons or property in interstate
commerce.
(c) Aircraft that are operated by air carriers authorized and
certificated by the United States department of transportation or
another federal authority to engage in the carriage of persons or
property in interstate or foreign commerce.
(d) Containers designed for use on and component parts
attached to or secured on the items set forth in division
(H)(1)(a), (b), or (c) of this section.
(2) A sale, lease, or rental of transportation equipment
shall be sourced pursuant to division (C) of this section.
(I)(1) A lease or rental of tangible personal property that
does not require recurring periodic payments shall be sourced
pursuant to division (C) of this section.
(2) A lease or rental of tangible personal property that
requires recurring periodic payments shall be sourced as follows:
(a) In the case of a motor vehicle, other than a motor
vehicle that is transportation equipment, or an aircraft, other
than an aircraft that is transportation equipment, such lease or
rental shall be sourced as follows:
(i) An accelerated tax payment on a lease or rental taxed
pursuant to division (A)(2) of section 5739.02 of the Revised Code
shall be sourced to the primary property location at the time the
lease or rental is consummated. Any subsequent taxable charges on
the lease or rental shall be sourced to the primary property
location for the period in which the charges are incurred.
(ii) For a lease or rental taxed pursuant to division (A)(3)
of section 5739.02 of the Revised Code, each lease or rental
installment shall be sourced to the primary property location for
the period covered by the installment.
(b) In the case of a lease or rental of all other tangible
personal property, other than transportation equipment, such lease
or rental shall be sourced as follows:
(i) An accelerated tax payment on a lease or rental that is
taxed pursuant to division (A)(2) of section 5739.02 of the
Revised Code shall be sourced pursuant to division (C) of this
section at the time the lease or rental is consummated. Any
subsequent taxable charges on the lease or rental shall be sourced
to the primary property location for the period in which the
charges are incurred.
(ii) For a lease or rental that is taxed pursuant to division
(A)(3) of section 5739.02 of the Revised Code, the initial lease
or rental installment shall be sourced pursuant to division (C) of
this section. Each subsequent installment shall be sourced to the
primary property location for the period covered by the
installment.
(3) As used in division (I) of this section, "primary
property location" means an address for tangible personal property
provided by the lessee or renter that is available to the lessor
or owner from its records maintained in the ordinary course of
business, when use of that address does not constitute bad faith.
Sec. 5739.034. (A) As used in this section:
(1) "Air-to-ground radiotelephone service" means a radio
service, as defined in 47 C.F.R. 22.99, in which common carriers
are authorized to offer and provide radio telecommunications
service for hire to subscribers in aircraft.
(2) "Call-by-call basis" means any method of charging for
telecommunications services where the price is measured by
individual calls.
(3) "Customer" means the person or entity that contracts with
a seller of telecommunications service. If the end user of
telecommunications service is not the contracting party, the end
user of the telecommunications service is the customer of the
telecommunications service. "Customer" does not include a reseller
of telecommunications service or of mobile telecommunications
service of a serving carrier under an agreement to serve the
customer outside the home service provider's licensed service
area.
(4) "End user" means the person who utilizes the
telecommunications service. In the case of a person other than an
individual, "end user" means the individual who utilizes the
service on behalf of the person.
(5) "Home service provider" has the same meaning as in the
"Mobile Telecommunications Sourcing Act," Pub. L. No. 106-252, 114
Stat. 631 (2000), 4 U.S.C. 124(5), as amended.
(6) "Place of primary use" means the street address
representative of where the customer's use of the
telecommunications service primarily occurs, which must be the
residential street address or the primary business street address
of the customer. In the case of mobile telecommunications
services, "place of primary use" must be within the licensed
service area of the home service provider.
(7) "Post-paid calling service" means the telecommunications
service obtained by making a payment on a call-by-call basis
either through the use of a credit card or payment mechanism such
as a bank card, travel card, credit card, or debit card, or by
charge made to a telephone number that is not associated with the
origination or termination of the telecommunications service.
"Post-paid calling service" includes a telecommunications service,
except a prepaid wireless calling service, that would be a prepaid
calling service, but for the fact that it is not exclusively a
telecommunications service.
(8) "Prepaid calling service" and "prepaid wireless calling
service" have the same meanings as in section 5739.01 of the
Revised Code.
(9) "Service address" means:
(a) The location of the telecommunications equipment to which
a customer's call is charged and from which the call originates or
terminates, regardless of where the call is billed or paid.
(b) If the location in division (A)(9)(a) of this section is
not known, "service address" means the origination point of the
signal of the telecommunications service first identified by
either the seller's telecommunications system or in information
received by the seller from its service provider, where the system
used to transport such signals is not that of the seller.
(c) If the locations in divisions (A)(9)(a) and (b) of this
section are not known, "service address" means the location of the
customer's place of primary use.
(10) "Private communication service" means a
telecommunications service that entitles a customer to exclusive
or priority use of a communications channel or group of channels
between or among termination points, regardless of the manner in
which the channel or channels are connected, and includes
switching capacity, extension lines, stations, and any other
associated services that are provided in connection with the use
of such channel or channels.
(B) The amount of tax due pursuant to sections 5739.02,
5739.021, 5739.023, and 5739.026 of the Revised Code on sales of
telecommunications service, information service, or mobile
telecommunications service, is the sum of the taxes imposed
pursuant to those sections at the sourcing location of the sale as
determined under this section.
(C) Except for the telecommunications services described in
division (E) of this section, the sale of telecommunications
service sold on a call-by-call basis shall be sourced to each
level of taxing jurisdiction where the call originates and
terminates in that jurisdiction, or each level of taxing
jurisdiction where the call either originates or terminates and in
which the service address also is located.
(D) Except for the telecommunications services described in
division (E) of this section, a sale of telecommunications
services sold on a basis other than a call-by-call basis shall be
sourced to the customer's place of primary use.
(E) The sale of the following telecommunications services
shall be sourced to each level of taxing jurisdiction, as follows:
(1) A sale of mobile telecommunications service, other than
air-to-ground radiotelephone service and prepaid calling service,
shall be sourced to the customer's place of primary use as
required by the Mobile Telecommunications Sourcing Act.
(2) A sale of post-paid calling service shall be sourced to
the origination point of the telecommunications signal as first
identified by the service provider's telecommunications system, or
information received by the seller from its service provider,
where the system used to transport such signals is not that of the
seller.
(3) A sale of prepaid calling service or prepaid wireless
calling service shall be sourced under division (C) of section
5739.033 of the Revised Code or, if permitted by division (B) of
that section, shall be sitused under section 5739.035 of the
Revised Code. But in the case of prepaid wireless calling service,
in lieu of sourcing the sale of the service under division (C)(5)
of section 5739.033 of the Revised Code, the service provider may
elect to source the sale to the location associated with the
mobile telephone number.
(4) A sale of a private communication service shall be
sourced as follows:
(a) Service for a separate charge related to a customer
channel termination point shall be sourced to each level of
jurisdiction in which the customer channel termination point is
located;
(b) Service where all customer channel termination points are
located entirely within one jurisdiction or level of jurisdiction
shall be sourced in the jurisdiction in which the customer channel
termination points are located;
(c) Service for segments of a channel between two customer
channel termination points located in different jurisdictions and
which segments of a channel are separately charged shall be
sourced fifty per cent in each level of jurisdiction in which the
customer channel termination points are located;
(d) Service for segments of a channel located in more than
one jurisdiction or level of jurisdiction and which segments are
not separately billed shall be sourced in each jurisdiction based
on the percentage determined by dividing the number of customer
channel termination points in the jurisdiction by the total number
of customer channel termination points.
Sec. 5739.061. (A) As used in this section, "origin-based
sourcing requirements" means the manner in which intrastate sales
are to be sourced under division (B)(1) of section 5739.033 of the
Revised Code.
(B) On and after July 1, 2009, a vendor that received
temporary compensation under section 5739.123 of the Revised Code
as that section existed before its repeal by H.B. 429 of the 127th
general assembly may apply for compensation to assist the vendor
in complying with the origin-based sourcing requirements. The
vendor shall file an application in accordance with division (C)
of this section. The compensation shall be a one-time payment
equal to the actual total costs the vendor incurred in complying
with the origin-based sourcing requirements, not to exceed one
thousand dollars for vendors that were required to comply with
divisions (C) to (I) of section 5739.033 of the Revised Code
before the effective date of this section, and six hundred dollars
for vendors that irrevocably elected to comply with divisions (C)
to (I) of that section before the effective date of this section.
In no event shall a vendor receive compensation that exceeds its
total cost of complying with the origin-based sourcing
requirements.
(C) To be considered for compensation under this section, a
vendor shall file an application with the tax commissioner on a
form prescribed by the commissioner. The commissioner shall
determine the amount of compensation to which the vendor is
entitled, and if that amount is equal to or greater than the
amount claimed on the application, the commissioner shall certify
that amount to the director of budget and management and the
treasurer of state for payment from the general revenue fund. If
the commissioner determines that the amount of compensation to
which the vendor is entitled is less than the amount claimed on
the vendor's application, the commissioner shall proceed in
accordance with section 5703.70 of the Revised Code.
(D) The compensation provided under this section shall not
reduce the amount required to be returned to counties and transit
authorities under section 5739.21 of the Revised Code.
Sec. 5739.24. (A) As used in this section:
(1) "Destination-based sourcing requirements" has the same
meaning as in section 5739.123 of the Revised Code.
(2) "Impacted county" means a county having a population of
less than seventy-five thousand as of the decennial census of 2000
taken by the United States census bureau.
(3) "Master account holder" means a person that holds more
than one vendor's license under division (A) of section 5739.17 of
the Revised Code, operates in multiple tax jurisdictions under the
same ownership, and files or is required to file a consolidated
return under section 5739.12 of the Revised Code.
(4) "Tax jurisdiction" means a county or, if applicable, the
portion of a county in which a transit authority has territory.
(B)(1) Beginning in 2006 and ending January 31, 2009, within
thirty days after the thirtieth day of June and the thirty-first
day of December of each year, a master account holder that makes a
sale that is subject to the destination-based sourcing
requirements shall file with the tax commissioner a report that
details the total taxable sales it made for the prior six-month
period in each tax jurisdiction and at each fixed place of
business for which the master account holder holds or should hold
a license, irrespective of where those sales were sourced under
those requirements. The commissioner may extend the time for
filing the report under this section.
(2) If the report required by division (B)(1) of this section
is not timely filed by a master account holder, the tax
commissioner shall mail notice of a delinquent report to the
holder. In addition to any other penalties or additional charges
imposed under this chapter, the commissioner may impose a penalty
of up to fifty dollars for each fixed place of business of the
master account holder. If the report is filed within fifteen days
after the commissioner mails the delinquency notice, the penalty
may be remitted in full or in part by the commissioner. But if the
master account holder fails to file the report within fifteen days
after the commissioner mails the notice, the commissioner shall
impose a penalty of up to one hundred dollars for each fixed place
of business of the master account holder. This penalty may not be
remitted in full by the commissioner. A penalty imposed under this
division is subject to collection and assessment in the same
manner as any tax levied under this chapter.
(C)(1) Beginning in 2006 and ending April 17, 2009, within
seventy-five days after the thirty-first day of July each year and
the thirty-first day of January of the following year, the tax
commissioner shall determine for each county both of the
following:
(a) The amount of taxes reported on returns filed by all
vendors licensed under division (A) of section 5739.17 of the
Revised Code that were levied by sections 5739.021 and 5739.026 of
the Revised Code and were reported as due in accordance with the
destination-based sourcing requirements;
(b) The amount of taxes levied by those sections that would
have been paid to the county by vendors licensed under division
(A) of section 5739.17 of the Revised Code if the taxes had been
collected in accordance with section 5739.035 of the Revised Code,
as that section exists when the determination is made.
The commissioner may make any adjustments that are necessary
to account for delinquent tax returns or reports.
(2) In making the determination required by division (C)(1)
of this section, the commissioner shall use the lesser of the
county's tax rate in effect as of January 1, 2006, or the actual
tax rate in effect for the six-month period for which the
compensation was calculated.
(3) The commissioner also shall calculate the percentage
difference between the amounts determined under divisions
(C)(1)(a) and (b) of this section by using a fraction, with the
amount determined under division (C)(1)(a) of this section in the
numerator, and the amount determined under division (C)(1)(b) of
this section in the denominator.
(D)(1) If the percentage difference calculated under division
(C)(3) of this section for a county is ninety-six per cent or
less, and the county is an impacted county under this section, the
county shall receive compensation. Beginning in 2006 and ending
May 1, 2009, within ninety days after the thirty-first day of July
each year and the thirty-first day of January of the following
year, the tax commissioner, in the next ensuing payment to be made
under division (B)(1) of section 5739.21 of the Revised Code,
shall in addition provide from the general revenue fund to such
county compensation in the amount of ninety-eight per cent of the
denominator calculated under division (C)(3) of this section,
minus the numerator calculated under division (C)(3) of this
section.
(2) A county that is entitled to compensation under division
(D)(1) of this section may request an advance payment of that
compensation. The commissioner shall adopt rules that establish
the manner by which such county may make the request and the
method the commissioner will use to determine the amount of the
advance payment to be made to the county. Compensation provided
under division (D)(1) of this section shall be adjusted
accordingly to account for advance payments made under division
(D)(2) of this section.
(E) If, under division (C)(1) of this section, the tax
commissioner determines that a county received more taxes under
the destination-based sourcing requirements than it would have
received if taxes had been paid in accordance with section
5739.035 of the Revised Code, as that section existed when the
determination was made, the county is a windfall county
under
this division. Beginning in 2006, within ninety days after
the
thirty-first day of July each year and the thirty-first day of
January of the following year, the commissioner, in the next
ensuing payment to be made under division (B)(1) of section
5739.21 of the Revised Code, shall reduce the amount to be
returned to each windfall county by the total amount of excess
taxes that would have been received by all windfall counties in
proportion to the total amount needed to compensate counties under
division (D) of this section.
(F) The commissioner shall make available to the public the
determinations made under division (C) of this section, but any
data obtained from taxpayers under this section or that would
identify those taxpayers shall remain confidential.
(G) There is hereby created the county compensation tax study
committee. The committee shall consist of the following seven
members: the tax commissioner, three members of the senate
appointed by the president of the senate, and three members of the
house of representatives appointed by the speaker of the house of
representatives. The appointments shall be made not later than
January 31, 2007. The tax commissioner shall be the chairperson of
the committee and the department of taxation shall provide any
information and assistance that is required by the committee to
carry out its duties. The committee shall study the extent to
which each county has been impacted by the destination-based
sourcing requirements. Not later than June 30, 2007, the committee
shall issue a report of its findings and shall make
recommendations to the president of the senate and the speaker of
the house of representatives, at which time the committee shall
cease to exist.
Sec. 5741.03. (A) One hundred per cent
of all
money
deposited into the state treasury under sections
5741.01 to
5741.22 of the Revised Code that is not required to be
distributed
as provided in division (B) or (C) of this section
shall be
credited to the general revenue fund.
(B) In any case where any county or transit authority has
levied a tax or taxes pursuant to section 5741.021, 5741.022, or
5741.023 of the Revised Code, the tax commissioner shall, within
forty-five days after the end of each month, determine and certify
to the director of budget and management the amount of the
proceeds of such tax or taxes
from billings and assessments
received during that month, or shown on tax returns or reports
filed during that month, to be returned to the county or transit
authority levying the tax or taxes, which amounts shall be
determined in the manner provided in section 5739.21 of the
Revised Code. The director of budget and management shall
transfer, from the general revenue fund, to
the permissive tax
distribution fund created by division (B)(1) of
section 4301.423
of the Revised Code and to the local sales tax
administrative
fund created by division (C) of section 5739.21
of the Revised
Code, the amounts certified by the tax
commissioner. The tax
commissioner shall then, on or before the
twentieth day of the
month in which such certification is made,
provide for payment of
such respective amounts to the county
treasurer or to the fiscal
officer of the transit authority
levying the tax or taxes. The
amount transferred to the local
sales tax administrative fund is
for use by the tax commissioner
in defraying costs the
commissioner incurs in administering such
taxes levied by a
county or
transit authority.
(C) Of the revenue deposited into the state treasury from
taxes paid under division (B) of section 5741.05 of the Revised
Code, a percentage shall be distributed each fiscal year to all
counties and transit authorities that levy a tax under section
5739.021, 5739.023, or 5739.026 of the Revised Code. The
percentage to be distributed each fiscal year shall be computed by
dividing the amount described in division (C)(1) by the amount
described in division (C)(2) of this section:
(1) The total sales and use tax revenue distributed to
counties and transit authorities in the calendar year that ended
in the preceding fiscal year;
(2) The sum of the total sales and use tax revenue
distributed to such counties and transit authorities in that
calendar year plus the total revenue collected in that calendar
year from the taxes levied under sections 5739.02 and 5741.02 of
the Revised Code.
(D) Each county and transit authority shall receive a
quarterly
distribution each fiscal year from the revenue to be
distributed
as provided in division (C) of this section. The
amount of the
distribution for each such county and transit
authority shall
equal one-fourth of a percentage of the revenue
to be distributed in the fiscal
year under that division. The
percentage shall be computed by
dividing the amount described in
division (D)(1) by the amount
described in division (D)(2) of
this section:
(1) The total sales and use tax revenue distributed to the
county or transit authority under division (B) of section 5739.21
of the Revised Code in the calendar year that ended in the
preceding fiscal year;
(2) The total sales and use tax revenue distributed to all
counties and transit authorities under division (B) of section
5739.21 of the Revised Code in that calendar year.
Sec. 5741.05. (A) Except as
provided in division (B) of this
section, a A seller that collects
the tax levied by
sections
5741.02, 5741.021, 5741.022, or
5741.023 of the Revised
Code on
transactions, other than sales of
titled motor vehicles,
titled
watercraft, or titled outboard
motors, shall determine
under
section 5739.033 or 5739.034 of the
Revised Code
the
jurisdiction
for which to
collect the tax. A
vendor or seller of
motor
vehicles, watercraft, or
outboard motors
required to be
titled in
this state shall collect the tax levied
by section
5739.02 or
5741.02 of the Revised Code and the
additional taxes
levied by
division (A)(1) of section 5741.021,
division (A)(1) of
section
5741.022, and division (A)(1) of
section 5741.023 of the
Revised
Code for the consumer's county of
residence as provided in
section 1548.06 and division (B) of
section 4505.06 of the
Revised
Code.
(B)(1) Divisions (B) and (C) of this section apply only if
the tax commissioner makes the certification under section 5740.10
of the Revised Code.
(2) For the purposes of this division and division (C) of
this section, "delivery sale" has the same meaning as in section
5739.033 of the Revised Code, and "tax jurisdiction" has the same
meaning as in section 5739.24 of the Revised Code.
(3) Except as otherwise provided in division (B)(4) of this
section, and notwithstanding sections 5741.02, 5741.021, 5741.022,
and 5741.023 of the Revised Code, beginning January 1, 2008, a
seller with total delivery
sales in this state in calendar year
2007 and each calendar year
thereafter of less than five hundred
thousand dollars may elect to
collect the tax due under this
chapter at a rate equal to the sum
of the tax levied under
section 5741.02 of the Revised Code and
the lowest combined rate
of tax levied in any tax jurisdiction in
this state under
sections 5741.021, 5741.022, and 5741.023 of the
Revised Code.
(4) Once a seller has total delivery sales in this state of
five hundred thousand dollars or more for a prior calendar year,
the
seller shall source its sales pursuant to division (A) of
this
section regardless of the amount of the seller's total
delivery
sales in future years.
(C)(1) In each sale by a seller permitted to collect use tax
under division (B) of this section, the seller shall clearly
indicate on each invoice or other similar document provided to the
purchaser at the time of the sale that the seller is authorized to
collect use tax at the rate prescribed in division (B)(3) of this
section.
(2) If a purchaser purchases tangible personal property from
a seller permitted to collect use tax pursuant to division (B) of
this section and pays the tax due under that division to the
seller, no assessment may be made against the purchaser for
additional tax due under section 5741.021, 5741.022, or 5741.023
of the Revised Code unless the purchaser subsequently removes the
property from the tax jurisdiction in which the resident received
the property to another tax jurisdiction with a higher tax rate.
(3) Nothing in this section relieves a person that claims to
be authorized to collect the tax as provided in division (B) of
this section, but that is not so authorized, from liability for
tax, penalties, interest, or additional charges imposed under this
chapter for failure to collect the amount of tax lawfully due
applying the situsing provisions of division (A) of this section.
(D) A vendor or seller
is not responsible for collecting or
remitting additional tax if a
consumer subsequently stores, uses,
or consumes the tangible
personal property or service in another
jurisdiction with a rate
of tax imposed by sections 5741.02,
5741.021, 5741.022, or
5741.023 of the Revised Code that is higher
than the amount
collected by the vendor or seller pursuant to
Chapter 5739. or
5741. of the Revised Code.
Section 2. That existing sections 5703.70, 5739.03, 5739.033,
5739.034, 5739.24, 5741.03, and 5741.05 of the
Revised
Code are
hereby repealed.
Section 3. That section 5739.24 of the Revised Code is hereby
repealed effective May 1, 2009. No payments or reductions in
payments required by division (D) of section 5739.24 of the
Revised Code shall be effected after May 1, 2009. No request for
an advance of the payment that, but for this act, would have been
made after May 1, 2009, shall be honored.
Section 4. That the amendment by this act of sections
5703.70,
5739.033, 5739.034, 5741.03, and 5741.05 of the
Revised
Code shall take effect
January 1, 2010.
Section 5. That a vendor may source sales in the
manner
prescribed by division (B)(1) of section 5739.033 of the
Revised
Code, as amended by this act, before the effective date
specified
in Section 4 of this act. A vendor that elects under this section
to source sales in that manner before the effective date specified
in Section 4 of this act shall begin sourcing sales in that manner
on the first day of a month. Once a vendor sources sales in the
manner so prescribed the vendor shall continue to source all sales
described in that division as
so prescribed.
Section 6. That sections 5739.035, 5739.123, and 5740.10 of
the Revised Code are hereby repealed effective January 1, 2010.
Section 7. That the amendment by this
act of section 5739.03
of the Revised Code shall take effect July 1, 2008.
Section 8. Section 5739.034 of the Revised Code is
presented in
this act as a composite of the section as amended by
both Am. Sub. H.B. 66 and Am. Sub. S.B. 26 of
the 126th General
Assembly. The General Assembly, applying the
principle stated in
division (B) of section 1.52 of the Revised
Code that amendments
are to be harmonized if reasonably capable of
simultaneous
operation, finds that the composite is the resulting
version of
the section in effect prior to the effective date of
the section
as presented in this act.
Section 9. This act is hereby declared to be an emergency
measure necessary for the immediate preservation of the public
peace, health, and safety. The reason for such necessity is that
destination-based sourcing is causing counties to lose sales tax
revenues on sale orders made by residents of other counties, and
an immediate conversion back to origin-based sourcing for
intrastate sales is needed to prevent that loss. Therefore, this
act shall go into immediate effect.
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