TO:             GCADA MEMBERS

FROM:       LOUIS A. VITANTONIO, JR.

DATE:        DECEMBER 21, 2004

RE:             SALES TAX COLLECTION CHANGES

A number of dealers have received information regarding a change in the way Ohio sales tax is charged (sourced) on the retail sale and delivery of tangible goods and services.  The state delayed the implementation of the new rule for a year and allows for a voluntarily implementation begining January 1, 2005.  However, this change must be implemented by July 1, 2005.

Regardless, the change will have small effect on how dealers currently collect tax for services provided.  This sales tax change does not effect the current collection of sales tax on the purchase or lease of automobiles.   On the other hand, dealerships that sell and then ship retail goods across county lines in Ohio are required to charge the sales tax rate that exists in the county where the merchandise will be delivered, not the rate where it is sold.

The following Questions and Answers will provide you additional information:

Q.       Does this sales tax change effect how we currently collect sales tax
for the purchase and lease of a motor vehicle?

A.       No, sales tax on the purchase or lease of a motor vehicle is still
collected based on the customer’s county of residence.

Q.       Are wholesale and out-of-state sales effected by the sales tax
change?

A.       No, this does not change the way sales tax is collected, if any, on
the sale of  wholesale or out-of-state dealership goods. As always, your
wholesale customers must still provide you with a exemption certificate, if
they haven’t already done so.

Q.       If a retail customer comes to the dealership and purchases an over
the counter part from the parts department, does the sales tax change effect
this type of sale?

A.       No, the dealership will continue to collect the sales tax based on the dealership location.

Q.       If a retail customer purchases a part from the parts department and
has it shipped to their home, does the sales tax change effect this type of sale?

A.       Yes, the customer will be charged the sales tax based on where the
item is being delivered, as instructed by the consumer.

Q.       If I repair and/or service a vehicle at our dealership location, is there
a change in the way we currently collect tax?

A.       No, you will continue to collect the tax based on where the motor
vehicle is serviced, the dealership location.

Q.       If the dealership conducts and oil change or service at the customer’s
home or business, does the sales tax change effect this type of service?

A.       Yes, the dealership must charge the sales tax where the service is
provided, if it is different county than the dealership’s location.

Q.       How can I determine what sales tax rate to charge a retail customer?

A.       The sales tax rates may be determined by using one of the three following tools: a sales tax chart by county (click here to download), a sales tax chart by zip code (click here to download) or a free web based service provided by the Ohio Department of Taxation (click here).

There is currently a check box on the Universal Sales Tax Return Form (UST-1), which will indicate whether the dealership has chosen to apply the new sales tax change.  Remember, once you elect to collect sales tax under the new rule, you must continue that practice.

If you have any questions please contact Lou Vitantonio at (440) 746-1500 or by email at lvitt@gcada.org.  The memo and its contents should not be construed as legal advice.