CPA & Business Advisory Blog

Local Tax Updates

State and Local Tax (SALT) Updates for April 2018

Ohio recently enacted legislation, effective Jan. 1, 2018, that deems a seller has substantial nexus if (1) the seller uses in-state software to sell or lease tangible personal property or services to consumers, or (2) the seller provides or enters into an agreement to provide a content distribution network to accelerate or enhance the delivery of the seller’s website to consumers.

To create the economic nexus, the seller’s gross receipts must exceed $500,000 in the current or preceding calendar year from the sale of such tangible property. This new legislation is enacted in Ohio Revised Code 5741.01(I)(2)(h) and (i).

With this new legislation, Ohio will now require sellers to register and collect sales tax even if they do not have a physical presence in the state. American Catalog Manufacturers Association (ACMA) has filed an action for declaratory judgement challenging the validity of the newly enacted provisions in the Franklin County Court of Common Pleas. ACMA asserts in its complaint that the Statue “provides that “In-state Software Nexus” for an out-of-state retailer arises as a result of HTML and JavaScript coding stored on computers and/or mobile phones of consumers in Ohio and used to display the website of the retailer” should not create nexus.

ACMA alleges that the expanded nexus provision violates the physical presence provision in the U.S. Supreme Court case Quill v. North Dakota. In this case, the court ruled that since Quill did not have a physical presence in the state, nexus did not exist.

ACMA filed this complaint on Dec. 29, 2017 and it has not been decided. The U.S. Supreme Court has agreed to take on a case from South Dakota that could have significant implications for Ohio and other states as it relates to sales tax requirements without any actual physical presence in the state.

Check our blogs page for further developments on this issue.

Ohio Liquor License Renewals

The Ohio General Assembly has expanded the Ohio Department of Taxation’s (ODT) authority regarding liquor license renewals and transfers.

Previously, ODT would verify permit holders’ sales tax and employer withholding tax compliance prior to renewing or transferring a liquor license. ODT will now verify that the taxpayer is in compliance with all Ohio taxes that they are responsible to file.

Taxpayers need to verify that they are in compliance prior to their due date so that there is no delay in renewing or transferring the liquor license.

Trucks Used in Highway Transportation for Hire

Ohio allows an exemption for trucks used in transporting personal property belonging to others for consideration. The person transporting the property must have a certificate issued by Ohio or the U.S. authorizing the holder to engage in this service for consideration. This certificate is generally referred to as a “PUCO” number. The exemption is found in Ohio Revised Code 5739.02(Z) and applies to purchases and repairs of the trucks. The trucks must be transporting property belonging to others for the majority of time or they will not qualify for exemption.

This issue has been addressed in audit situations with the Ohio Department of Taxation and you must have documentation to support the trucks qualify for exemption.

If you have any questions about Ohio economic nexus, liquor license renewals, trucks used in highway transportation for hire, or any other state and local tax issues, please contact Mark Thomas at 330-668-1100 or email Mark.

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