Effective Date: January 1, 2018 – enforced while litigation is pending
Threshold: $500,000 or provides or enters into an agreement with another person to provide a content distribution network in Ohio to accelerate or enhance the delivery of the seller’s web site to consumers, provided the seller has gross receipts in excess of $500,000
Measurement Date: Current or preceding calendar year
Includable Transactions: Gross sales
When You Need to Register Once You Exceed the Threshold: Next transaction (state doesn’t specify)
Effective January 1, 2018, a seller is deemed to have substantial nexus in Ohio if the seller:
“In-state software” means computer software, as defined in section 5739.01, that is stored on property in Ohio or is distributed within Ohio for the purpose of facilitating a seller’s sales. Computer software means a set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task. This could include internet cookies.
“Content delivery network” means a system of distributed servers that deliver web sites and other web content to a user based on the geographic location of the user, the origin of the web site or web content, and a content delivery server. Ohio previously enacted Click Through and Affiliate nexus in 2015. It will be interesting to see if a challenge is upheld as the Ohio Commercial Activity Tax (CAT) has an $500,000 economic nexus threshold which has been upheld as an adequate quantitative standard that ensures that taxpayer’s nexus with Ohio is substantial. (H.B. 49, Laws 2017)
UPDATE: Ohio’s economic nexus legislation has been challenged. NEW: The legislation did not include a stay of enforcement and therefore, this provision can still be enforced by Ohio while the litigation is pending. There is a chance that if the state is successful, the law could be enforced effective January 1, 2018. An evaluation of the risk of non collection should be evaluated on a case by case basis.For details, click here.