Tag Archives: Ohio

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Court upholds centralized collection of municipal net profit tax

The municipal net profit tax is a local income tax levied on the net profit of businesses. Historically, each municipal corporation that imposed a tax administered it either directly or through a third party administrator. According to WHIO, this tax produces about $600 million annually in tax revenue.

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2018 update on maximum charges for copies of medical records in Ohio

Ohio law1 establishes the maximum fees a health care provider or medical records company can charge for copies of a patient’s medical record. The law also provides for certain limited situations in which copies of records must be provided without charge – for example, when the records are necessary to support a patient’s claim for Social Security disability benefits. The fee schedule is updated annually.

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Ohio: Lawsuit asserts that in-state software nexus standard is unconstitutional

The Ohio budget legislation, HB 49, that Gov. John Kasich signed into law last July contained an expanded statutory definition of “substantial nexus,” which governs the taxability of sales made by vendors that are located outside of the state. Quoting the legislation at the time, we explained that substantial nexus is presumed to exist when the seller has “gross receipts in excess of $500,000 in the current or preceding calendar year,” and the seller does at least one of the following:

  • Uses in-state software to sell or lease tangible personal property or services to consumers.
  • Provides or enters into an agreement with another to provide a content distribution network in Ohio to facilitate delivery of the retailer’s website to consumers,

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Ohio: Lawmakers pass legislation regulating daily fantasy sports contests

On Dec. 5, 2017, the Ohio House of Representatives approved a measure, House Bill 132, which legalizes daily fantasy sports (DFS), by a vote of 92 to 3. The week prior, on Nov.29, 2017, it passed the Senate, 25 to 4. Cleveland.com reported that the legislation had support within the community, from, among others, the Cleveland Indians, which has marketing partnership with DraftKings, a fantasy sports website.

When we last addressed action on DFS regulation in Ohio , we described Sen. William Coley’s effort, by way of Senate Bill 356, to classify these kinds of games as those of chance. Most states that have legalized DFS have gone out of their way to define them instead as games of skill. Thus, the Legal Sports Report opined that SB 356 would have “shut down pretty much the entire DFS industry as currently situated…”

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Ohio: Department of Taxation updates its nexus standards

In September 2001, the Ohio Department of Taxation issued an information release describing the standards it would apply to determine whether an out-of-state seller is required to collect Ohio’s use tax. The department periodically updates this information, as it did this month to address the changes that were included in the budget bill for fiscal year 2018-19, H49.

The original Information release, ST 2001-01, contains two amendments to the safe harbor exceptions, pursuant to which the department will not require an out-of-state seller to collect and remit Ohio’s use tax from its Ohio customers. There are 16 such exceptions, all addressing the nature of the out-of-state seller’s contacts with the state that will trigger the safe harbor. For example, if the out-of-state seller has an agency relationship with a telemarketer for the purpose of solicitation of customers in other states, then there is no tax collection and remittance obligation. Likewise, when the out-of-state seller merely conducts meetings in this state with suppliers of goods or services, there is no nexus.

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Ohio: Cuyahoga County considers a plastic bag tax

According to Pew Charitable Trusts, Hawaii was the first jurisdiction to address the threat that litter poses to the environment, by way of a ban on the use of plastic bags at retail checkouts. Hawaii’s ban occurred county by county, with Honolulu County being the last of the four to do so, in the spring of 2012, which took effect on July 1, 2015. In 2012, there had not yet been any state-wide measures, but cities and counties were taking action. For instance, in 2007, San Francisco became the first city to regulate the use of bags at checkout when it imposed a $.10 tax on paper bags. And in 2009, Washington DC passed a $.05 cent tax on disposable paper and plastic carryout bags.

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Ohio: House passes measure to exempt optical aids from sales tax, saving consumers $29M

In a late September blog post, the Ohio House Majority Caucus announced that it had passed HB 116, which exempts optical aids from sales and use tax, beginning in July 2019. Optical aids include the following: eyeglasses, contact lenses, and “other instruments or devices that may aid or correct human vision and that have been prescribed by a physician or optometrist licensed by any state, country, or province.” Eyeglass lenses, and “frames into which lenses have been installed, if the lenses have been prescribed by a physician or optometrist licensed by any state, country, or province,” are also within the definition of exempted items.

In order to prevent tax evasion, the law will presume that sales tax applies “until the contrary is established.”

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Ohio: Plan to replace lost revenue chugs along

When Gov. John Kasich signed the budget legislation for the new fiscal year, which began on July 1, 2017, he vetoed a number of provisions, as we explained at the time. One of these was designed to help counties and transit authorities cope with the revenues that they were going to lose from the elimination of the sales tax on Managed Care Organizations (MCO). At issue is more than $600 million.

A fact sheet put out by the state, titled Responsibly Replacing the Medicaid MCO Sales Tax, notes that Ohio’s sales tax on MCOs, which is based on Medicaid payments that the MCOs receive from the state, has been in place since 2009. But in 2014, the federal Centers for Medicare and Medicaid Services (CMS) declared that as of July 2017, Ohio’s Medicaid MCO sales tax would no longer be a permissible taxing method used to draw down Medicaid matching funds from the federal government.

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Ohio: Tax Foundation says tax structure is problematic

Earlier this year, we described a major problem that the Tax Foundation think tank has with the Buckeye State’s tax structure – the overly complex municipal income tax system that the Tax Foundation criticized as a “serious headache” that forces businesses to withhold income taxes from every jurisdiction that any employee works in. In some cases, the compliance burden exceeds the tax obligation.

The Tax Foundation continues to criticize Ohio’s ways. In Ohio Illustrated: A Visual Guide to Taxes and the Economy, the group, which puts Ohio at number 45 on its 2017 State Business Tax Climate Index, asserts that the state has “one of the worst business tax climates in the country.”

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Ohio: Challenge to imposition of the CAT on out-of-state retailers settles

The Buckeye State imposes a commercial activity tax (CAT) for the privilege of doing business in the state, as measured by a company’s gross receipts from Ohio consumers. All businesses with $500,000 or more in annual sales to Ohio consumers are subject to the CAT.

In the case Crutchfield Corp. v. Testa, internet retailers Crutchfield, Newegg, and Mason Companies all challenged the CAT under the dormant Commerce Clause doctrine and Due Process Clause of the U.S. Constitution; at issue was the collective sum of more than $200,000 in taxes, interest and penalties. Their position was that they should not be subject to the CAT because they have no physical presence in Ohio.

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