Sales and Installation of Computer Cabling Are Exempt in Ohio

Effective October 22, 2019, sales and installation of computer cabling are exempt from Ohio sales and use tax. This change in the taxation of computer cabling is made in response to a recent Ohio Board of Appeals decision that overturned a prior decision by the Board. The Board concluded that computer cabling does not constitute a “business fixture” and is to be treated as real property. Computer cabling for VoIP (Voice over Internet Protocol) and internet communications are now industry standards and incorporated into real property. Individuals who sell and install computer cabling should incur use tax on the cost of the cabling unless the customer wants specialized networks to meet a technical requirement. In the latter case, the computer cabling retains its status as taxable tangible personal property as a business fixture aft it is installed into realty. This change in position effectively shifts the tax obligation from the consumer to the seller/installer in the form of use tax based on the purchase price of the items to be installed.

The new tax treatment of computer cabling will be applied to any past transactions if, at the time of the transaction, the construction contractor neither collected tax as a vendor nor paid tax as a construction contractor. If a construction contractor who acted as a seller and installer of computer cabling or its customer seeks a refund of tax paid on a past transaction, the seller and installer will be expected to accrue use tax as a construction contractor. These provisions do not apply to any conduits and corresponding cabling for public utilities and telecommunications companies that are placed in public rights-of-way or private rights-of-way from the street to a building. (Sales and Use Tax Information Release ST 1999-01, Ohio Department of Taxation, December 19, 2019)

Posted on January 13, 2020