Professional Letter by lonyoo

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									There have been two significant changes to how and the way Ohio sales tax returns will be filed in the
near future. Each of the changes is detailed below. If you have any questions on either of these sales
tax changes, feel free to contact us at (440) 835-3726.



How All Businesses File There Sales Tax Return Is Changing

The way businesses file sales tax returns in Ohio is changing. Starting in 2009, all vendors –
regardless of sales volume – will be required to file electronically rather than on paper.

The first mandatory electronic return is due Feb. 23, 2009 for monthly filers and on July 23, 2009 for
semi-annual filers. But all businesses can get a head start by choosing to file electronically now.

The Ohio Department of Taxation now offers three ways to file a sales tax return electronically. See
below for the option that best suits the needs of your business.

1. Ohio Business Gateway (http://business.ohio.gov/). A website for common state government
   transactions including the filing of sales tax returns. The Business Gateway empowers business
   owners by permitting electronic check and credit card transactions to be post dated until the
   payment is actually due. The website is also adding new file upload and full UST-1 filing
   capabilities that will cut down or eliminate on-line data entry.

2. eForms (http://tax.ohio.gov/online_services/ohio_eforms_business.stm). A website that
   allows businesses to complete Adobe Acrobat versions of Ohio’s sales and use tax forms, much
   as they would on paper. By using eForms, taxpayers have the option of making payment by credit
   card, electronic check, or paper check.

3. TeleFile (1-800-697-0440). A method of electronic filing by touch-tone telephone. For small
   business owners with a single county license. TeleFile users may remit payment by credit card or
   electronic check.

For your convenience, we have attached a detailed, point-by-point comparison of each sales tax filing
method.



Ohio Changes Back to Origin Sourcing for Delivery Sales

The state of Ohio is once again changing how businesses should collect sales tax. A bill signed
recently allows Ohio businesses now charging sales tax based on the destination of their delivery sales
to switch back to the “origin” method as soon as they wish. Businesses who have switched to
destination sourcing of delivery sales have until January 1, 2010 to switch back to the traditional
method.

Starting in 2006, Ohio started gradually moving merchants to destination based sourcing for their sales
tax. The transition was an effort by Ohio to become a member of the Streamlined Sales Tax Project, a
multi-state effort to harmonize sales tax rules across state lines. However, in December, the Governing
Board of the Streamlined Sales Tax Project decided to allow “origin states” to become a member of the
organization starting in 2010 as long as at least four other “origin states” are also ready to become
members. The bill passed by the state of Ohio is a response that allows Ohio businesses to move
back to the “origin” camp while the state can still become a member of the Streamlined Sales Tax
Project.
 Page 2                                                                             February 25, 2010

Those who have switched to the destination sourcing system and will be switching back based on this
bill will eventually be eligible for compensation of up to $1,000 for mandatory switches and $600 for
voluntary switches. The compensation for the switch will not be available until July 1, 2009 at the
earliest. We will forward this information as it becomes available.

For those of you in high tax counties (i.e., Cuyahoga) who have already switched, we recommend not
switch back until required on January 1, 2010. By continuing to use destination sourcing, you are able
to charge your customers a lower tax rate based on where they will take delivery of the goods. This will
enable you to keep the total cost of your products competitive as compared to similar businesses in
lower tax rate counties. Those in lower tax counties would benefit to switch back to origin sourcing to
make them more competitive selling into high tax rate counties. Some of the sales tax rates for our
surrounding counties are listed below;

       Cuyahoga – 7.75%
       Lorain – 6.25%
       Erie – 6.5%
       Huron – 7.0%
       Summit – 6.5%
       Medina – 6.5%
       Geauga – 6.5%
       Lake – 6.25%

								
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