DALLAS, Sept. 28, 2016 /PRNewswire/ -- The state of
Ohio imposes sales and use tax on
electronic information services (EISs) sold for use in business
when the true object of the transaction is the receipt by the
consumer of electronic information services, rather than the
receipt of personal or professional services to which electronic
information services are incidental or supplemental. EISs do not
include personal and professional services such as accounting,
legal, and training services.
In May, the Ohio Senate passed
HB 466, which adds "digital advertising services" to the list of
services considered personal or professional. As such, digital
advertising services are not considered taxable EISs. Digital
advertising is defined in HB 466 as "providing access, by means of
telecommunications equipment, to computer equipment that is used to
enter, upload, download, review, manipulate, store, add, or delete
data for the purpose of electronically displaying, delivering,
placing, or transferring promotional advertisements to potential
customers about products or services or about industry or business
brands." This provision becomes effective on October 12, 2016.
Internet access providers (IAPs) and online access providers
(OAPs) provide customers with the ability to view or acquire
information from the Internet by means of access to
telecommunications equipment. As such, the state of Ohio views these services as a taxable EIS,
provided they are sold to the customer for business use. However,
IAP and OAP sales of digital advertising would not be subject to
tax. It is important to note, IAPs and OAPs may often find
themselves selling taxable and exempt EISs to their customers. If
they combine invoices into a single fee and use vague descriptions,
the Department may view the invoice as a mixed transaction and
apply tax to the entire charge.
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