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Ohio Governor John R. Kasich has signed legislation that enacts click-through and affiliate nexus provisions. Effective July 1, 2015, a seller is presumed to have substantial nexus in Ohio if the seller enters into an agreement with a resident under which the resident, for a commission or other consideration, directly or indirectly, refers potential customers, by a website link, in-person oral presentation, or otherwise, to the seller. In order for the presumption to apply, cumulative gross receipts from sales by the seller to customers in Ohio who are referred to the seller must exceed $10,000 during the immediately preceding 12 months. The presumption can be rebutted by demonstrating that the persons with whom the seller had agreements did not engage in activities that were significantly associated with the seller’s ability to establish or maintain a market in Ohio. The presumption of substantial nexus for other specified activities performed by the seller or an affiliated person can also be rebutted if it can be shown that those activities did nothing to establish or maintain a market for the seller in Ohio. The legislation also expands the criteria for substantial nexus to include: use of employees, agents or others to sell a similar line of products or use similar trade names or trademarks as the seller; use of any person, except for a common carrier, to promote, advertise, facilitate customer sales, perform maintenance, delivery, and installation services for the seller’s Ohio customers, or facilitate delivery by allowing customers to pick up property sold by the seller. The following no longer form the basis for a presumption of substantial nexus in Ohio: a seller’s registration to do business in Ohio and any other contact with Ohio that forms the basis of substantial nexus as permitted under the U.S. Constitution’s Commerce Clause. (H.B. 64, Laws 2015)

(07/16/2015)

On March 10, 2015, a bipartisan group of senators introduced the Marketplace Fairness Act of 2015. Similar legislation – the Marketplace Fairness Act of 2013 – was previously introduced in February 2013 and passed by the Senate on May 6, 2013. That legislation failed to be enacted. If passed, the Marketplace Fairness Act of 2015 would authorize states meeting certain requirements to require remote sellers that do not meet a "small seller exception" to collect their state and local sales and use taxes. For more information on the previous legislation, visit Federal Government Introduces New Remote Seller Bill. (Marketplace Fairness Act of 2015, March 10, 2015)

 

UPDATE: This bill failed to pass during the 114th Congressional Session running from January 3, 2015 to January 3, 2017.  Therefore, this bill has died and would need to be reintroduced to be considered and voted on.

(03/16/2015)

On December 16, 2014, President Barack Obama signed the Consolidated and Further Continuing Appropriations Act, 2015, for sales and use tax purposes. The Act includes a provision that extends the Internet Tax Freedom Act (ITFA) until October 1, 2015 with all provisions unchanged.

 

On January 9, 2015, the House of Representative introduced a bill (un-numbered) that would permanently extend the ITFA, banning states and local jurisdictions from imposing any new tax on internet access. The proposed bill removes the current effective dates of November 1, 2003 through October 1, 2015 and changes the effective date to be effective for new taxes imposed after the date of the enactment.  It is not clear if states that have been grandfathered under the existing provision could retain their current tax on internet access but it appears that may be the case.  No formal legislation has been introduced that would incorporate the Marketplace Fairness Act into this bill. The bill is sponsored by House Judiciary Committee Chairman Bob Goodlatte, among others.

 

For our previous news item on this topic, see Internet Tax Freedom Act is Extended Through December 11, 2014.

 

For an update on this news item, see Internet Tax Freedom Act Extended Until December 11, 2015.

 

(Consolidated and Further Continuing Appropriations Act, 2015; H.R. 235)

(02/12/2015)

President Barack Obama has signed federal legislation extending the Internet Tax Freedom Act (ITFA) through December 11, 2014 as part of the joint resolution which made continuing appropriations for fiscal year 2015. The ITFA was previously set to expire on November 1, 2014. The ITFA bars state and local governments from imposing multiple or discriminatory taxes on electronic commerce and taxes on Internet access.

 

For an update to this news item, see Internet Tax Freedom Act Extended Until October 1, 2015, Permanent Extension Introduced.

 

(P.L. 113-164 (H.J. Res. 124), 113th Congress, 2nd Session, Laws 2014)

(09/26/2014)

Ohio Governor John R. Kasich has signed the fiscal year 2014-2015 state budget, which contains various tax changes. The legislation amends the requirements for Ohio’s computer data center exemption.  The state provides a partial or complete sales and use tax exemption for purchases of computer data center equipment and on the installation, delivery, and repair of such equipment for qualified businesses. "Computer data center equipment" means tangible personal property used or to be used for any of the following: (a) To conduct a computer data center business, including equipment cooling systems to manage the performance of computer data center equipment; (b) To generate, transform, transmit, distribute, or manage electricity necessary to operate the tangible personal property used or to be used in conducting a computer data center business; (c) As building and construction materials sold to construction contractors for incorporation into a computer data center. 

 

Per the legislation, an "eligible computer data center" must meet the following requirements: one or more taxpayers operating a computer data center business at the project site will, in the aggregate, make payments for a capital investment project of at least $100 million at the project site during a period of three consecutive calendar years; and one or more taxpayers operating a computer data center business at the project site will, in the aggregate, pay annual compensation of at least $1,500,000 to employees at the project site for each year of the agreement beginning on or after the first day of the 25th month after the agreement was entered into. The legislation expands the definition of a "computer data center business" to include a business that leases a facility to one or more businesses that provides electronic information services. If an applicant ceases operations during the term of the agreement but resumes operations within 18 months, it will not have violated the requirement to maintain the facility as an eligible computer data center. In this case, the data center exemption cannot be claimed during the time operations were not maintained. When an agreement involves multiple taxpayers, each taxpayer will be entitled to a direct payment permit. The legislation also adopts definitions relating to digital products in order to conform to the Streamlined Sales and Use Tax (SST) Agreement. "Specified digital product" means an electronically transferred digital audiovisual work, digital audio work, or digital book. "Digital audiovisual work" means a series of related images that, when shown in succession, impart an impression of motion, together with accompanying sounds, if any. "Digital audio work" means a work that results from the fixation of a series of musical, spoken, or other sounds, including digitized sound files that are downloaded onto a device and that may be used to alert the customer with respect to a communication. "Digital book" means a work that is generally recognized in the ordinary and usual sense as a book. The definitions apply to transactions on or after January 1, 2014 when specified digital products provided for permanent or less than permanent use are taxable regardless of whether continued payment is required. (H.B. 59, Laws 2013, effective September 29, 2013; Bill Analysis, Ohio Legislative Service Commission)

(06/24/2014)

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