09/16/2004 UPDATE: Governor signed Substitute House Bill 204
11/20/03 UPDATE: The Ohio Legislators have passed legislation
( Originally posted 11/10/2003 )
What has your Ohio Legislator been doing ?
Effective July 1, 2003 the Ohio Sales-Tax Rate was increased 20 Percent.
Effective August 1, 2003 all SHIPPING COST to Ohio Consumers
became subject to the Ohio Sales/Use Tax for merchandise.
The following will become effective on January 1, 2004:
( see notes that follow and be sure read the parts in red )
What sales tax rate to charge beginning January 1, 2004: Ohio Revised Code section
A. Sales or leases of titled motor vehicles, titled watercraft or titled outboard motors
1. When the customer receives the merchandise or service at a seller's
2. When merchandise or service is not received at a seller's place of business,
3. If the seller does not know the location at which the customer receives the
4. If 3 above does not apply, charge the sales tax rate for the county by the
5. If 4 above does not apply, charge the sales tax rate for the county by the
The above was caused by the following:
Am. Sub. S.B. 143 (124th General Assembly)
Sens. Blessing, Amstutz, DiDonato, Mead, Spada, Finan, Harris
Reps. Kilbane, Kearns, Metzger, Schuring, Jones
*** Enacts the Simplified Sales and Use Tax Administration Act, a model act
recommended by the National Conference of State Legislatures, for the
development of a voluntary, streamlined system for the collection of
sales and use taxes from remote sellers.
*** Requires that the state participate in multi-state discussions to develop
the system and review and amend the Streamlined Sales and Use-Tax
Administration Agreement recommended by NCSL.
Effective date: March 22, 2002, certain provisions effective June 21, 2002,
August 1, 2002, and July 1, 2003; contains item veto
The January 1, 2004 changes were supposed to go into effect on
July 1, 2003, however, 125 S.B. 47 delayed it 6 months and was
signed into law by Governor Taft on June 12, 2003.
125 H.B. 95 (the Ohio Budget) increased the Sales Tax in Ohio
(the State portion) by twenty percent (from 5 to 6 percent) and
was signed into law by Governor Taft on June 26, 2003 and became
effective on July 1, 2003.
The six month delay in S.B. 47 will now soon expire (on Jan 1, 04))
and the new higher sales tax rate will be required for all taxable sales
(including the shipping cost) from any Ohio Business when shipping
to an Ohio Consumer (customer). This requirement is mandatory,
this coming January 1, 2004, even though the MTC project may take
years to still be approved before any "out-of-state" remote seller
will be required to charge and collect the Ohio Use Tax from the
Ohio Consumer when they order merchandise out of Ohio.
Not only will these actions (taken by the Ohio Legislators) increase
the cost to Ohio Consumers when they select to make purchases
from an Ohio Business, it puts an enormous accounting problem
onto most Ohio Business for tracking the total sales of shipped items
to all 88 counties within Ohio for the required tax obligations.
HOW WILL IT EFFECT THE OHIO CONSUMER ON SHIPPED ITEMS?
Customer in Cuyahoga County orders from a company in Medina County.
$500.00 item with a $10.00 shipping cost.
Prior to JUL 1, 2003: $500.00 x .055 tax ($27.50) + $10.00 S/H = $537.50.
During JUL 2003: $500.00 x .065 tax ($32.50) + $10.00 S/H = $542.50.
After AUG 2003: $500.00 + $10.00 S/H x .065 tax ($33.15) = $543.15.
Starting JAN 2004: $500.00 + $10.00 S/H x .08 tax ($40.80) = $550.80.
NET INCREASE IN SALES TAX TO THE OHIO CONSUMER IN THE
ABOVE EXAMPLE: (Prior JUL 03 vs After JAN 04)
$27.50 INCREASED TO $40.80 ( UP A WHOPPING 48.4 PERCENT ) !
THAT IS ALMOST A FIFTY PERCENT INCREASE IN SALES-TAX...
EVEN IF THE SALES-TAX INCREASE IS REPEALED - -
THE FOLLOWING OCCURS: $500.00 + $10.00 S/H x .07 ($35.70) = $545.70
$27.50 INCREASED TO $35.70 (STILL UP A WHOPPING 36.4 PERCENT ) !
And Ohio Consumers are not just Individuals, but Ohio Businesses
as well. Ohio Businesses who purchase supplies and merchandise
that they "consume" (not for resale) are also subject to paying the Ohio
Sales-Tax. Many of them have also been switching their purchases
to "out-of-state" suppliers to help their own "bottom-line", and this
will cause many more Ohio Businesses to also switch to "out-of-state"
suppliers, especially those located in higher Sales-Tax Counties.
THIS WILL ONLY CAUSE A MAJOR NEGATIVE ECONOMIC ACTIVITY
REACTION WITHIN THE STATE OF OHIO - - BAD DECISION !
Issue 1 talked about creating 30,000 jobs.
If these MTC Sales-Tax changes are allowed to go into effect on
January 1st, it will most likely cause 5,000 Ohio Businesses to CLOSE
LOSING OVER 100,000 JOBS, while making another 25,000 businesses
NON-COMPLIANT WITH THE NEW TAX CODE. As more Ohio Consumers
switch to "out-of-state" vendors, it will become more difficult for a Ohio
business to try and get that business back. These Sales Tax changes
will be destructive to the Ohio economy and absolutely violates every
GUIDING PRINCIPLE for designing a QUALITY TAX SYSTEM. YOU MUST
STOP THIS FROM GOING INTO EFFECT NOW! ARE YOU WILLING TO TAKE
A CHANCE THAT THIS WON'T CAUSE MANY OHIO BUSINESSES TO
COLLAPSE AND BE LEFT WITH LITTLE CHANCE FOR RECOVERY????
This all got started with our Ohio Legislators talking about a "penny"
increase in the Sales-Tax to fund the new State Budget, while they
knew the other MTC requirements were also going to "kick-in" at the
same time. How do they feel the Ohio Businesses will be able to
be competitive against Mail-Order and Internet businesses with the
Ohio consumers located in higher Sales-Tax Counties?
Ohio Consumers will use this (to their advantage) to shift more of
their buying to "out-of-state" firms that are not charging any taxes.
( GeeWiz, that's only human nature )
THE STATE OF OHIO DOESN'T HAVE ANY WAY TO MEASURE THE
AMOUNT OF OHIO TO OHIO BUSINESS THAT HAS BEEN LOST TO
OUT-OF-STATE SELLERS. IF 500 MILLION DOLLARS OF BUSINESS
(FROM THE OHIO CONSUMERS) SUDDENLY WENT TO OUT-OF-STATE
BUSINESSES, OHIO NON-AUTO SALES/USE TAX REVENUES WOULD
DROP BY 30 MILLION DOLLARS. THE STATE OF OHIO OFFICE
OF BUDGET AND MANAGEMENT OCTOBER 10, 2003 MONTHLY
FINANCIAL REPORT SHOWS THAT SEPTEMBER NON-AUTO SALES/USE
TAX COLLECTIONS WERE OFF PROJECTED ESTIMATES BY
7.1 PERCENT, OR OVER 38 MILLION DOLLARS (ONE MONTH), AND
OFF 3.0 PERCENT (OVER 45 MILLION DOLLARS) FOR THE FIRST
QUARTER ( Y.T.D. ). WILL THESE NEGATIVE NUMBERS CONTINUE
TO CLIMB AS MORE OHIO CONSUMERS LEAVE OHIO BUSINESSES?
Here is a direct link to the OBM website to verify the facts: TABLE1
Here is a link if you want to read the entire OBM report: OCTOBER
The majority of Ohio Legislators apparently are wearing
"rose colored glasses" and think that we all live in a "perfect world",
and that the Ohio consumer will honestly voluntarily report and pay their
Ohio Sales/Use-Tax on their Ohio Income-Tax Return (required by Ohio Law)
for their "out-of-state" purchases. - - - DO PIGS FLY?
IF YOU MAKE YOUR PURCHASES DIRECTLY AT OUR STORE,
YOU ONLY PAY THE SALES-TAX FOR MEDINA COUNTY, EVEN
THOUGH YOU LIVE IN CUYAHOGA COUNTY (OR IS THAT NEXT?).
IT IS NOT I WHO MAKES ME UNCOMPETITIVE WITH MAIL-ORDER
AND/OR THE INTERNET, IT IS THE OHIO LEGISLATOR WHO IS
FOOLISHLY TEARING APART OHIO TO OHIO BUSINESS.
If you would like to contact your Ohio Legislator, to thank them for helping
Ohio continue to lose economic activity within Ohio, use the links below:
( be sure to ask them how they voted on 124 SB-143 and 125 HB-95 )
Ohio Senate Website - SENATE
Ohio House of Representatives Website - HOUSE
For more information, you can go to the following:
Ohio Department of Taxation - TAX
Ohio Legislative Service Commission - LSC
Ohio Legislature Live - LIVE
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