Bill modifies standard for sales tax on electronic services

Written on Mar 23, 2018

OSCPA staff report

A bill introduced this week would modify the standard for determining when the sales and use tax applies to business-related electronic services that are provided together with other nontaxable services.

House Bill 569 is sponsored by Reps. Scott Lipps, R-Franklin, Rep. William Reineke, R-Tiffin. In announcing the bill, the legislators said it was in response to the Ohio Department of Taxation’s interpretation that the state sales/use tax can be applied to certain electronic information services and automatic data processing.

“The department has identified these services to include subscription services, online chat features, mass emails, credit reports, internet access, service to remotely access your office computer, webinars, email service, payroll processing, and billing services,” the lawmakers wrote. “Recently, the Ohio Board of Tax Appeals has also expanded the tax to medical transcription services and Internet-based food ordering systems.

“We believe that these examples should remain excluded from ODT’s taxing authority when the true object of the transaction is the receipt of personal and professional services.”

They go on to say the bill would help businesses and individual taxpayers, improving the state’s business climate.

OSCPA has previously expressed concerns that such a sales tax expansion would harm Ohio’s service industry. If you have questions, contact OSCPA Tax Policy Director Greg Saul, Esq.

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