Cash basis bill could change how small businesses pay sales tax

Written on Mar 16, 2018

OSCPA staff report

Rep. Steven Arndt, R-Port Clinton, on Tuesday introduced House Bill 545, which would allow certain small businesses to pay sales tax when they receive money from the sale, not at the time of the sale.

The bill defines a “qualifying small vendor” as one who (a) has gross sales of less than $1 million per year and (b) qualifies as a microbusiness, as defined in Ohio Revised Code section 166.50, for at least seven months of a calendar year.

H.B. 545 is similar to a recommendation from OSCPA’s Tax Reform Task Force report that advised making this change, albeit at a higher dollar threshold, to lessen the burden for small businesses.

From the report: “Accrual accounting for sales tax can require a business to remit sales tax dollars to the State that the business has not collected yet from customers. This requirement can place an undue cash flow burden on a business as it remits money to Ohio but must wait to receive payment from its customer which can be months later.”

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