July 1, 2007
Streamline Sales Tax Project, working to protect Ohio’s businesses
Representative Bob Gibbs was appointed to a national 25 member task force of the SSTP on June 16, 2007 to develop a solution to the most contentious and challenging problem facing the Streamline Sales Tax Project, sourcing.
The task force was created because of Ohio’s insistence to adopting Ohio’s proposal or an acceptable alternative proposal. In Representative Gibbs’ remarks he stated, “Ohio has put forth two amendments today, but because of resistance to both… only the one is being offered that apparently has less opposition. Ironically, this amendment helps Ohio to some extent but the other amendment would help other states become full members of the projects, such as Tennessee, Texas, Utah, Virginia and possibly others and bring the project to fruition.”
Ohio currently being the largest participating state and the success of the project, the Governing Board decided to create the task force to develop a recommendation by the September Governing Board meeting. Ohio has passed legislation (HB 119) that if changes are not made by October 1, 2007, Ohio’s law is repealed that mandates all Ohio’s retailers change to destination sourcing on January 1, 2008.
How did we get to where we are today?
Representative Bob Gibbs and Senator Ron Amstutz sponsored HB 165 and SB 160 respectively, legislation to lowering burdens on Ohio’s businesses who are required to collect Ohio’s sales taxes. This legislation was amended into HB 119 the two year state budget.
Working with Ohio’s tax commissioner Rich Levin, Representative Gibbs and Senator Amstutz offered an amendment in Detroit at the Multi-State Governing Board of SSTP on June 15. The proposal exempts certain size businesses from being required to change from origin base sourcing to destination based sourcing. The sourcing issue has been the number one issue for states to become compliant and ultimately for the success of the project.
Ohio’s exemption became law on July 1, 2007 and if the SSTP does not adopt changes to alleviate additional burdens placed on busineess to comply with destination sourcing by October 1st, Ohio will become an inactive member of the SSTP.
Origin based sourcing the sales taxes is determined at the seller’s location and is allocated to that local jurisdiction. Destination sourcing the tax is determined by where the purchaser takes possession and is remitted to the local jurisdiction of where the buyer took possession. Ohio is an origin based state and this change places additional burdens on sellers and shifts revenue from local taxing jurisdictions.