Ohio Enacts SST Origin Sourcing Provisions

Legislation intended to standardize Ohio sales and use tax law to the Streamlined Sales and Use Tax (SST) Agreement origin sourcing provisions has been signed by Governor Ted Strickland. The SST Governing Board adopted the origin sourcing legislation at its December 2007 meeting; thereby, making all vendors use origin sourcing for all intrastate sales beginning January 1, 2010.
The sourcing amendments included in Ohio legislation, H.B. 429, Laws 2008, adopt destination-based sourcing for interstate sales and, effective January 1, 2010, adopt uniform origin sourcing for intrastate sales. Vendors using origin sourcing must formulate a record-keeping method that records the location where the order is received for calculating sales tax. Furthermore, an order is received at the location where a vendor initially receives all information necessary to determine whether the order can be accepted, and not where the order may be subsequently accepted and/or completed, effective January 1, 2010. On or after July 1, 2009, vendors who are required to convert from destination sourcing to origin sourcing for intrastate sales are allowed a one-time payment to assist in complying with the origin sourcing requirements. The bill applies additional sourcing amendments, such as eliminating, effective January 1, 2010, provisions allowing sellers with less than $500,000 of delivery sales within Ohio to collect the use tax at a rate equal to the sum of the state sales tax and lowest piggyback” tax. In addition, the bill amends tax liabilities for both delivery charges and consumer protection. Ohio will continue to be an associate member of the SST Agreement until July 1, 2009. In order to maintain its membership, Ohio must reapply for membership in the Agreement under the new Agreement criteria. If Ohio is approved, it would be an associate member until full membership is triggered – once five state meet the requirements for sourcing sales on an origin basis under the new amendments, but no sooner than January 1, 2010. (H.B. 429, Laws 2008)

Posted on May 31, 2009