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Ohio Lawmakers Consider Click-Through-Nexus

  • Apr 18, 2013 | Gail Cole

 Ohio lawmakers consider remote sales tax legislation.

nexus, thereby requiring many businesses with no physical presence or employees in the state to collect state and local sales and use tax.

Nexus as defined by HB 59 "means that the seller engages in continuous and widespread solicitation of purchases from residents of this state or otherwise purposefully directs its business activities at residents of this state." Note that this definition does not center on physical presence. Sellers with substantial nexus are required to collect and remit sales and use tax in Ohio.

"'Seller' means the person from whom a purchase is made, and includes every person engaged in this state or elsewhere in the business of selling tangible personal property or providing a service for storage, use, or other consumption or benefit in this state…." (Emphasis mine).

Substantial nexus is "presumed to exist" when the seller:

  • "…Regularly uses persons in this state for the purpose of conducting the business of the seller"
  • "Enters into an agreement with one or more residents of this state under which the resident, for a commission or other consideration, directly or indirectly refers potential customers to the seller, whether by a link on a web site, an in-person oral presentation, telemarketing, or otherwise, provided the cumulative gross receipts from sales to consumers referred to the seller by all such residents exceeded ten thousand dollars during the preceding twelve months." (Emphasis mine).

The Ohio Council of Retail Merchants, a trade association, supports the proposed legislation. "We applaud the hard work of the House Finance & Appropriations Committee to pass legislation that would level the playing field for retailers…."

Yet Roger Geiger, Executive Director of the Ohio chapter of the National Federal of Independent Business, points out that the issue is complicated. "If you're a small business doing intermittent sales and shipping a product into a town, should you have to know all about the thousands and thousands of sales-tax jurisdictions across the country?"

According to a Department of Taxation spokesman, Governor John Kasich's administration is willing to consider expanding the definition of nexus, "but it does have concerns." Rather than redefining nexus at the state level, "the preference is that this nexus issue be resolved… at the federal level."

The full House is expected to vote on HB 59 this week.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.