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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)

The Streamlined Sales and Use Tax (SST) Governing Board has  issued a best practices matrix which provides answers to whether the state follows the best practices set forth in the SST Agreement regarding deal-of-the-day vouchers. All SST Member states are to complete and publish their position on the best practices.  The matrix outlines if the “best practiceas approved by the Streamlined Sales Tax Governing Board (SSTGB) for each of the products, procedures, services, or transactions identified in the chartis followed by the specific state. The following best practice descriptions are listed in the matrix along with whether the state follows the best practice:

 

1.       The member state administers the difference between the value of a voucher allowed by the seller and the amount the purchaser paid for the voucher as a discount that is not included in the sales price (i.e., same treatment as a seller’s in-store coupon), provided the seller is not reimbursed by a third party, in money or otherwise, for some or all of that difference.

2.       The member state provides that when the discount on a voucher will be fully reimbursed by a third party the seller is to use the face value of the voucher (i.e., same as the treatment of a manufacturer's coupon) and not the price paid by the purchaser as the measure (sales price) that is subject to tax.

3.       The member state provides that costs and expenses of the seller are not deductible from the sales price and are included in the measure (sales price) that is subject to tax. Further, reductions in the amount of consideration received by the seller from the third party that issued, marketed, or distributed the vouchers, such as advertising or marketing expenses, are costs or expenses of the seller.

 

Unless otherwise listed below, the SST member states have published the Best Practices Matrix and follow the three best practices listed above.

 

The following SST member states have issued the matrix but don’t follow some or all of the best practices listed above as of April 2014: Georgia, Kansas, Nebraska, New Jersey, and Ohio.

 

The following SST member states have not yet issued the matrix as of April 2014: Tennessee, Utah, Vermont, and Wyoming.  Copies of the matrix can be found on each specific state information page on the SST Web page at http://www.streamlinedsalestax.org/index.php?page=state-info.

(05/06/2014)

Representative Lamar Smith (Republican, Texas) has introduced a bill to bar multiple taxes on digital goods and services.  Smith had proposed an earlier bill which failed to pass.  This bill is a revised version of the earlier bill. The proposed bill – called the Digital Goods and Services Tax Fairness Act of 2013 – would only allow a state to tax sales of digital goods and services to customers with a tax address within that state. Additionally, states would be barred from imposing multiple taxes on digital goods. The bill defines digital goods as sounds, images, data and facts maintained in digital form. Internet access service is not included as a digital good in the bill. (H.R. 3724)

(01/28/2014)

The Streamlined Sales Tax (SST) Governing Board has approved Ohio as a full member state. Ohio will become a full member, effective January 1, 2014. Taxpayers registered through the SST Central Registration System will be automatically registered in Ohio on January 1, 2014 and must begin collecting Ohio sales and use taxes unless already registered to do so. A taxpayer that does not expect to make sales in Ohio and is not a Model 1 Seller (a seller who uses a certified service provider) will have from January 1, 2014 to January 31, 2014 to access their account and indicate the anticipated absence of sales in Ohio. If this indicator is not changed to reflect the lack of sales, Ohio will expect to receive a return for each reporting period. Amnesty offered under Streamlined Sales Tax will close for Ohio on December 31, 2014. (Press Release, Streamlined Sales Tax Governing Board, November 5, 2013)

(11/26/2013)

Ohio Governor John R. Kasich has signed the fiscal year 2014-2015 state budget, which contains various tax changes. Effective September 1, 2013, Ohio’s state sales tax rate increases from 5.5% to 5.75%. (H.B. 59, Laws 2013, generally effective 91 days after filing with the Secretary of State, applicable as noted; Bill Analysis, Ohio Legislative Service Commission)

(07/22/2013)

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