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A taxpayer’s purchase of items including a burglar/fire alarm, outdoor illuminated sign, electrical wiring and switches, security/surveillance system, store remodeling, and air compressor were subject to Ohio use tax since the items were considered to be business fixtures. The taxpayer argued that the items were tax exempt since they were incorporated into real property. According to the “business fixture” statute, signs and equipment that are permanently attached to the land and that benefit the specific business conducted thereon are taxableas personal property not real property. The taxpayer did not provide any documentation or supporting testimony to substantiate that the items were not business fixtures. The commissioner acknowledged that some of the items assessed as “store remodeling” could potentially be categorized as realty. However, the taxpayer did not provide sufficient detail to allow the commissioner to separate the taxable from the non-taxable items. Since the taxpayer failed to meet its burden of demonstrating the error in the tax assessment on the items purchased, they were considered to be taxable business fixtures. (Pep Boys - Manny, Moe & Jack of Delaware, Inc. v. Testa, Ohio Board of Tax Appeals, No. 2015-706, April 4, 2016)

(05/10/2016)

The Ohio Department of Taxation has updated guidance on the state’s application of sales and use tax to Internet access and online services. Included in Ohio’s definition of sale and selling is automatic data processing, computer services, or electronic information services that are or are to be provided for use in business when the true object of the transaction is the receipt by the consumer of automatic data processing, computer services, or electronic information services rather than the receipt of personal or professional services to which automatic data processing, computer services, or electronic information services are incidental or supplemental. The updated release provides examples of electronic information services that are subject to Ohio sales and use tax for business use: subscription services, inventory advertising, on-line chat features, mass e-mails, and credit reports (not provided by a consumer credit reporting agency for purposes of the Fair Credit Reporting Act). Electronic information services do not include personal or professional services. If a transaction includes electronic information services and personal or professional services, the department will evaluate if the electronic services render a significant benefit or are incidental to the provision of the personal or professional services. If a provider of online services combines taxable and nontaxable services for a single fee and does not provide a specific description on its invoices, the department may see it as a bundled transaction, in which case the entire amount would be subject to tax. (ST Information Release 1999-04, Ohio Department of Taxation, December 22, 2015)

(03/24/2016)

On February 11, 2016, the U.S. Senate approved a permanent extension of the Internet Tax Freedom Act (ITFA) that is included in H.R. 644, the Trade Facilitation and Trade Enforcement Act of 2015. The bill also establishes an end date of June 30, 2020 for the seven states that currently impose a tax on internet access: Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas, and Wisconsin. President Obama is expected to sign the permanent extension of the ITFA into law. The House of Representatives had previously passed H.R. 235, the Permanent Internet Tax Freedom Act, on December 15, 2015.  For our previous news item on this topic, visit Internet Tax Freedom Act Extended Through October 1, 2016.

 

UPDATE: On February 24, 2016, President Barack Obama signed into law the permanent extension of the Internet Tax Freedom Act.

 

(Trade Facilitation and Trade Enforcement Act of 2015)

(02/23/2016)

On December 18, 2015, President Barack Obama signed H.R. 2029 – Consolidated Appropriations Act, 2016. The Act extends the Internet Tax Freedom Act (ITFA) through October 1, 2016. Prior provisions that grandfather taxes that existed prior to October 1, 1998 are also extended through October 1, 2016. For our previous news item on this topic, see Internet Tax Freedom Act Extended Until December 11, 2015. (H.R. 2029 – Consolidated Appropriations Act, 2016)

(01/18/2016)

On September 30, 2015 the U.S. House of Representative passed H.R. 719, which includes a provision that would extend the Internet Tax Freedom Act (ITFA) through December 11, 2015. The ITFA was scheduled to expire on October 1, 2015. The bill will now go to President Obama for signature.

 

To see our previous news item on the ITFA, visit Internet Tax Freedom Act Extended Until October 1, 2015, Permanent Extension Introduced.

 

To see an update on this news item, visit Internet Tax Freedom Act Extended Through October 1, 2016,

 

(H.R. 719)

(10/26/2015)

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