Ohio Explains Sourcing Changes

The Ohio Department of Taxation explains the changes made to the way sales of tangible personal property and taxable services are sourced in an information release. Beginning January 1, 2010, vendors that previously switched to destination sourcing for delivery sales will now be required to source their sales to the location where the order is received rather than the delivery location. Remote sales, including mail order, telephone or online sales, by Ohio vendors to Ohio customers will also be sourced to the location where the order is received. Out-of-state vendors making sales to Ohio customers should source their sales to the location where the consumer receives the tangible personal property that was sold. The sale of taxable services should be sourced to the location where the consumer receives the service regardless if the service provider is located in or outside Ohio. No changes were made to the sourcing of lease transactions or direct pay permit holders.

Vendors that previously converted to destination sourcing and received compensation for making the change may be eligible for compensation for converting back to origin sourcing. Although the effective date for these changes is January 1, 2010, the Department of Taxation will not impose penalties on vendors that are required to change their method of sourcing, as long as these changes are made by April 1, 2010. Also, effective January 1, 2010, consumers that purchase tangible personal property and remit Ohio sales tax to the seller at either the rate applicable where the order was received or where the consumer received the tangible personal property, will not be liable for any additional Ohio sales or use tax on that transaction. (Sales and Use Tax: Information Release ST 2009-03, Ohio Department of Taxation, December 2009)

Posted on January 28, 2010