Ohio House & Senate approve tax changes; S-Corps and sourcing of sales tax addressed.

PositionOhio

The Ohio General Assembly quickly responded to complaints by Ohio CPAs and businesses by delaying implementation of the sourcing change for sales tax collection to Jan. 1, 2005. In addition to the sales tax collection delay, House Bill 127, sponsored by Rep. Grog Jolivette (R-Hamilton) was expanded in the Senate and approved in the House to include, among others, changes in the taxation of S-Corp. income at the municipal level.

The sales tax sourcing change arose as part of the Streamlined Sales Tax Agreement language adopted previously by Ohio lawmakers. Without the delay, vendors would have been required to collect sales tax at a rate based upon the destination of a delivered good as of Jan. 1, 2004. The yearlong delay will give legislators and stakeholders an opportunity to work out the details of the change.

The taxation of S-Corp. income at the municipal level was also altered in the bill, mandating voter approval for taxation of instate S-Corp. income if a city was imposing that tax as of Dec. 2, 2002. Those cities not imposing a tax as of that date are prohibited to do so.

The taxation of out-of-state S-Corp. income is prohibited except...

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