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The Tax Commissioner of Ohio has issued an opinion stating that billing and collection services performed by local exchange carriers and invoiced to a telecommunication provider are nontaxable personal services, and therefore not subject to sales tax. (Opinion of the Tax Commissioner, No. 06-0013, Ohio Department of Taxation, August 17, 2007, released November 29, 2007)


An Ohio Information Release clarifies the treatment of delivery charges that became part of a sales price effective August 1, 2003. For sales and use tax purposes, these “delivery charges” are specifically included as part of the “price” of a sale and are not a separately enumerated taxable service. Vendors and sellers are required to charge tax on both the amount associated with the property sold and the “delivery charges” as defined in R.C. 5739.01(H)(1)(a)(iv). It is not relevant whether the charge for the property sold is separately-stated on the invoice from the delivery charge or whether the delivery charge is included in the line item price on the invoice for the property. (Sales and Use Tax Information Release ST 2007-02, Ohio Department of Taxation)


In Ohio, sales of certain dairy equipment and supplies, including cleaning equipment, are now exempt from sales and use taxes provided it is used as part of a continuous manufacturing operation to produce milk, ice cream, cheese, yogurt, or similar dairy products for human consumption. (H.B. 149, Laws 2006, January 2, 2007)


Ohio notified vendors that the Tax Commissioner has decided that he will not issue a journal entry confirming that there are certified service provider (CSP) services provided by the Streamlined Sales Tax Governing Board for all delivery sales made by Ohio vendors. Therefore, Ohio vendors whose delivery sales amounted to less than $30 million dollars in 2005 are not obligated to switch to destination sourcing on May 1, 2007. Instead, they may continue to source their sales by using origin-based sourcing through 2007. However, by January 1, 2008 all vendors must switch to the destination-based sourcing rules. Additionally, if vendors wish to accept the destination-based sourcing rules prior to January 1, 2008, they may do so at any time. Formal notice is not needed and any changes made must be done at the beginning of the reporting period. Nonetheless, vendors with sales over $30 million during the year of 2005 are required to use the destination based sourcing requirements. (Sales and Use Tax Information Release ST 2007-01, Ohio Department of Taxation, February 2, 2007)


The State of Ohio has adopted language amending the definition of “employment service” in the state tax statutes. The amended definition now includes personnel who receive their compensation from a third party who supplies the workers to second party who supplies the workers to the end user. The amended definition now excludes transactions where personnel are provided to a purchaser who intends on supplying the personnel to another party. The transaction between the second party and the end user of the personnel still qualifies as an employment service. (H.B. 293, Laws 2006, Effective January 1, 2007)



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