Legislation signed by Governor Ted Strickland in April 2008 will allow businesses engaging in delivery sales within Ohio to return to the state’s traditional way of calculating the sales tax: at the origin of the sale.

This legislation allows Ohio businesses now charging sales tax based on the destination of their Ohio delivery sales to change to the traditional “origin” method  between now and January 1, 2010.  It is our recommendation that the switch occur at the beginning of a month or quarter.

Since 2006, Ohio has gradually moved such merchants to “destination sourcing” of the sales tax, charging sales tax based on the destination of the delivery rather than the location of the store. 

Under the old law, Ohio Information Release 2004-02: If the vendor has taxable delivery sales in excess of $30 million in 2005, the vendor was required to change to destination sourcing on May 1, 2006. If the vendor has taxable delivery sales in excess of $5 million in 2006, the vendor was required to change to destination sourcing on May 1, 2007. Once a vendor changes to charging sales tax on destination sourcing, they may not return to origin based sourcing.  The remaining taxpayers were scheduled to switch to destination sourcing on January 1, 2008. A large ground swell of opposition put the brakes on this in October 2007.  Ohio House Bill 429 was  established to correct the problems.

Merchants who changed to the new destination sourcing system and  will  be changing back per House Bill 429, will be eligible for compensation of up to $1,000 (for mandatory switches to destination sourcing) and $600 (for voluntary switches). The compensation won’t be available until July 1, 2009 at the earliest. 

Click Here to read the full text of the Ohio House Bill 429 news release,  

For more information, contact Theresa Mullen, State and Local Tax Leader, at  330-497.2000.