New Sourcing Rules for Ohio Sales Tax Effective January 1, 2010
As part of Ohio’s participation in the Streamline Sales/Use Tax Project, Ohio was forced to switch to destination based sourcing for sales tax purposes. Now, since the governing rules have been relaxed, Ohio will revert back to origin sourcing for most sales effective January 1, 2010. The most significant change is with respect to delivery sales (i.e., mail order, telephone or online sales) made by an Ohio vendor to an Ohio customer. Such sales, previously sourced to the customer’s location within Ohio, now must be sourced to the vendor’s location where the order is received. Caution — the location where the order is received may not necessarily be where the order is processed or shipped. Additionally, Ohio vendors who were forced to destination based sourcing under previous law are entitled to compensation for part of the actual cost incurred in switching back to origin based sourcing.
Interstate delivery sales, however, will continue to be sourced to the customer’s location where the merchandise is received. Thus, sales by an Ohio vendor delivered to a customer outside the state will not be subject to Ohio sales tax, but rather the sales tax applicable to the customer’s location. Furthermore, sales of tangible personal property received at an Ohio vendor’s fixed location will continue to be sourced to the vendor’s location, while sales of services will continue to be sourced to the location where the service is first received by the customer.