Effective July 1, 2020, charges for internet access are no longer subject to Ohio sales and use tax. This change correlates with legislation enacted in 2016 that permanently extended the Internet Tax Freedom Act. The legislation established an end date of June 30, 2020 for seven states that imposed a tax on internet access at the time.
Accordingly, Ohio has issued guidance regarding the taxability of automatic data processing and electronic information services. Effective July 1, 2020, to the extent that an Internet Access Provider (IAP) is providing its service to a consumer for use in business, the IAP is providing an electronic information service that is exempt from Ohio sales and use tax. To the extent that an On-line Service Provider (OSP) provides automatic data processing or electronic information services that accompany but are not a significant part of the OSPs internet access services, the OSP is providing automatic data processing or electronic information services that are no longer subject to Ohio sales and use tax. OSPs that provide certain proprietary services over the internet, but not internet access, will be evaluated by determining whether the activity is a multiple or discriminatory tax on e-commerce. Automatic data processing or electronic information services would no longer be subject to Ohio sales and use tax if the service had an end result that was not legally collectible on a transaction involving similar property, goods, services, or information accomplished through other means. (Information Release ST 2020-01, Ohio Department of Taxation, June 8, 2020)