The Ohio Department of Taxation issued a release stating that “substantial nexus” exists for Ohio sales and use tax purposes if the seller has gross receipts in access of $500,000 and if the seller uses in-state software to sell tangible personal property or services or enters into an agreement with another person to accelerate or enhance the delivery of the sellers website to others. The release (Sales Tax Information Release ST 2017-02) notes a difference between “in-state software nexus” and “network nexus”. In-state software refers to the use of software to sell or lease taxable tangible personal property or services in Ohio. Network nexus refers to the creation of a network to distribute property whether through taxable sales, storage, use or consuming in Ohio. If the benefit is realized in Ohio, sales tax is owed in Ohio. Anyone making taxable sales in Ohio will need to obtain a seller’s permit, collect tax, file returns and remit tax.
This is the latest update in the Sales Tax Nexus conversation. Ohio’s law appears to be more aggressive than South Dakota and similar to Massachusetts. If you’re doing business across state borders, you may need assistance ensuring compliance. Contact a member of our State and Local Tax Team to learn more.