Chapter 5740: SIMPLIFIED SALES AND USE TAX ADMINISTRATION ACT

5740.01 Simplified sales and use tax administration act definitions.

As used in this chapter:

(A) "Agreement" means the streamlined sales and use tax agreement as amended and adopted on January 27, 2001, by the national conference of state legislatures' special task force on state and local taxation of telecommunications and electronic commerce, and unanimously adopted by the national conference of state legislatures' executive committee, and as subsequently amended and adopted by the member states.

(B) "Certified automated system" means software certified jointly by the member states to calculate the sales or use tax imposed by each jurisdiction on a transaction, determine the amount of tax to remit to the appropriate state, and maintain a record of the transaction.

(C) "Certified service provider" means an agent certified jointly by the member states to perform all of the seller's sales and use tax functions.

(D) "Member state" means any state that is a signatory to the agreement.

(E) "Person" means an individual, trust, estate, fiduciary, partnership, limited liability company, limited liability partnership, corporation, or any other legal entity.

(F) "Sales tax" means the tax levied by section 5739.02 , 5739.021 , 5739.023 , 5739.026 , or 5739.10 of the Revised Code.

(G) "Seller" means any person making sales, leases, or rentals of personal property or services.

(H) "State" means any state of the United States and the District of Columbia.

(I) "Use tax" means the tax levied by section 5741.02 , 5741.021 , 5741.022 , or 5741.023 of the Revised Code.

Effective Date: 06-21-2002

5740.02 Simplified sales and use tax administration act definitions.

(A)

(1) The state of Ohio shall participate in discussions with other states regarding the development of a streamlined sales and use tax system to reduce the burden and cost for all sellers to collect this state's sales and use taxes.

(2) Subject to division (B) of this section, the state also shall participate in meetings of the implementing states or the governing board of the agreement to review, amend, or administer the terms of the agreement to simplify and modernize sales and use tax administration that embodies the requirements set forth in section 5740.05 of the Revised Code. For purposes of these meetings, the state shall be represented by three delegates. The tax commissioner or the commissioner's designee shall be the chairperson of the delegation. The other delegates shall be one delegate chosen by the speaker of the house of representatives and one delegate chosen by the president of the senate. In all matters where voting by the member states or the governing board is required to amend the agreement, the chairperson, based on the votes of the majority of the delegation, shall cast this state's vote.

(B) The state shall not participate in the meetings of the implementing states or the governing board referred to in division (A)(2) of this section unless the meetings are conducted in accordance with requirements substantially similar to those described in divisions (C) and (F) of section 121.22 of the Revised Code, as if the participants of the meetings were a public body as defined in that section, except such meetings may be closed during any discussion pertaining to proprietary information of a person if the person so requests, personnel matters, competitive bidding, certification of service providers, or matters substantially similar to those described in divisions (G)(2), (3), or (5) of section 121.22 of the Revised Code. The state may participate in teleconferences, special meetings, meetings of working groups, committees, or steering committees if they are conducted in accordance with the public participation rules applicable to such meetings, as established by the implementing states entitled to participate in discussions to finalize the agreement, or the governing board.

(C) As used in this section:

(1) "Meetings of the implementing states" means meetings of the entire body of the states that are entitled to participate in discussions to finalize the agreement because they have enacted legislation based on the uniform sales and use tax administration act, approved January 24, 2001, or the simplified sales and use tax administration act, approved January 27, 2001.

(2) "Governing board" means the board that, under the terms of the agreement, is responsible for the administration and operation of the agreement.

Effective Date: 06-21-2002; 06-02-2005

5740.03 Development of streamlined sales and use tax system.

Subject to section 5740.05 of the Revised Code, the tax commissioner may enter into the agreement with one or more states. In furtherance of the agreement, the commissioner may act jointly with other member states to establish standards for certification of service providers and automated systems, establish performance standards for multi-state sellers, and procure goods and services. The commissioner may take other actions reasonably required to implement this chapter, including adopting rules.

Effective Date: 09-04-2002

5740.04 Interstate agreements.

(A) No provision of the agreement, in whole or in part, invalidates or amends the law of this state. Adoption of the agreement by this state does not amend the law of this state. Implementation in this state of any condition of the agreement, whether adopted before, at, or after membership of this state in the agreement, must be by the action of this state.

(B) The agreement is an accord among individual cooperating sovereigns in furtherance of their governmental functions. The agreement provides a mechanism among the member states to establish and maintain a cooperative, simplified system for the application and administration of sales and use taxes under the duly adopted laws of each member state.

Effective Date: 06-21-2002

5740.05 Effect of interstate agreement on other laws.

The tax commissioner shall not enter into the agreement unless the agreement requires each state to meet the requirements set forth in divisions (A) to (I) of this section. The agreement shall:

(A) Set restrictions to limit over time the number of state sales and use tax rates;

(B) Establish uniform standards for attributing the source of transactions to taxing jurisdictions, the administration of exempt sales, and sales and use tax returns and remittances;

(C) Provide a central, electronic registration system that allows a seller to register to collect sales and use taxes for, and remit them to, all member states;

(D) Provide that registration with the central registration system and the collection of sales and use taxes in the member states will not be used as a factor in determining whether the seller has nexus with a state for any tax;

(E) Provide for reduction of the burdens of complying with local sales and use taxes through the following:

(1) Restricting variances between the state and local tax bases;

(2) Requiring states to administer any sales and use taxes levied by local jurisdictions within the states so that sellers collecting and remitting those taxes will not have to register or file returns with, remit funds to, or be subject to independent audits from, local taxing jurisdictions;

(3) Restricting the frequency of changes in the local sales and use tax rates and setting effective dates for the application of local jurisdictional boundary changes to local sales and use taxes;

(4) Providing notice to sellers and certified service providers of changes in local sales and use tax rates and in the boundaries of local taxing jurisdictions.

(F) Outline any monetary allowances that are to be provided by the member states to sellers or certified service providers. The agreement must allow for a joint public and private sector study of the compliance cost on sellers and certified service providers to collect sales and use taxes for state and local governments under various levels of complexity.

(G) Require each state to certify compliance with the terms of the agreement prior to becoming a member of the agreement, and to maintain compliance, under the laws of the member state, with all provisions of the agreement while a member;

(H) Require each member state to adopt a uniform policy for certified service providers that protects the privacy of consumers and maintains the confidentiality of tax information;

(I) Provide for the appointment of an advisory council of private sector representatives and an advisory council of non-member state representatives to consult with in the administration of the agreement.

Effective Date: 06-21-2002; 04-29-2005

5740.06 Requirements for agreement.

(A) The agreement binds and inures only to the benefit of this state and the other member states. No person, other than a member state, is an intended beneficiary of the agreement. Any benefit to a person other than a state is established by the law of this state and the other member states and not by the terms of the agreement.

(B) Consistent with division (A) of this section, no person shall have any cause of action or defense under the agreement or by virtue of this state's approval of the agreement. No person may challenge, in any action brought under any provision of law, any action or inaction by any department, agency, or other instrumentality of this state, or any political subdivision of this state, on the ground that the action or inaction is inconsistent with the agreement.

(C) No law of this state, or the application thereof, may be declared invalid as to any person or circumstance on the ground that the law or application of it is inconsistent with the agreement.

Effective Date: 06-21-2002

5740.07 Effect of agreement.

(A) A certified service provider is the agent of the seller with whom the certified service provider has contracted for the collection and remittance of sales and use taxes. As the seller's agent, the certified service provider is liable for sales and use taxes due each member state on all sales transactions it processes for the seller, except as provided in this section.

A seller that contracts with a certified service provider is not liable to the state for sales or use taxes due on transactions processed by the certified service provider, unless the seller misrepresented the type of tangible personal property or services it sells, or committed fraud. In the absence of probable cause to believe that the seller made a material misrepresentation or has committed fraud, the seller is not subject to audit of the transactions processed by the certified service provider. A seller is subject to audit for transactions not processed by a certified service provider. The member states acting jointly may perform a system check of the seller and review the seller's procedures to determine if the certified service provider's system is functioning properly and the extent to which the seller's transactions are being processed by the provider.

(B) A person who provides a certified automated system is responsible for the proper functioning of that system and is liable to this state for underpayments of the sales and use tax attributable to errors in the functioning of that system. A seller that uses a certified automated system remains responsible and is liable to this state for reporting and remitting sales and use taxes.

(C) A seller that has a proprietary system for determining the amount of sales or use tax due on transactions and has signed a performance agreement establishing tax performance standards for that system is liable for the failure of the system to meet the performance standards.

Effective Date: 06-21-2002

5740.08 Certified service providers.

(A) As used in this section:

(1) "Confidential taxpayer information" means all information that is protected under Title LVII of the Revised Code or other applicable law.

(2) "Personally identifiable information" means information that identifies a person.

(3) "Anonymous data" means information that does not identify a person.

(B) A certified service provider shall preserve the privacy of consumers who buy, lease, or rent tangible personal property or services from sellers with whom the provider has contracted for the collection and remittance of sales and use taxes to this state. The certified service provider shall protect the personally identifiable information of a consumer in the same manner as required of the department of taxation for taxpayer information. The certified service provider shall use a certified automated system to perform sales and use tax calculations, remittances, and reporting that does not retain the personally identifiable information of consumers, except as follows:

(1) To determine whether a consumer's status or intended use of the goods or services purchased is exempt from the sales or use tax;

(2) To investigate fraud by a consumer or seller;

(3) To the extent necessary to ensure the reliability of the providers' technology and certified automated system in performing all of a seller's sales and use tax functions.

The certified service provider shall provide technical, physical, and administrative safeguards to protect personally identifiable information from unauthorized access and disclosure.

(C) The tax commissioner shall provide to consumers clear and conspicuous notice of the commissioner's information retention and sharing practices, including what personally identifiable information the commissioner collects, how the information collected is used, how long the information is retained, and whether the information may be disclosed to other states. When the commissioner retains a consumer's personally identifiable information that the commissioner received from a certified service provider, the commissioner shall allow the consumer to examine that information and correct any inaccurately recorded information.

(D) If any person, other than a member state or a person otherwise authorized by the laws of this state, seeks to discover a consumer's personally identifiable information, the tax commissioner shall make a reasonable and timely effort to notify the consumer of such request.

(E) Notwithstanding this section, the laws of this state regarding the collection, use, and maintenance of confidential taxpayer information remain applicable and binding. The agreement does not enlarge or limit this state's authority to do any of the following:

(1) Conduct audits or other reviews as provided under the agreement or state law;

(2) Provide records pursuant to section 149.43 of the Revised Code or to governmental agencies under disclosure laws;

(3) Prevent the disclosure of confidential taxpayer information in accordance with Title LVII of the Revised Code;

(4) Prevent, consistent with federal law, the disclosure or misuse of federal return information obtained under a disclosure agreement with the Internal Revenue Service;

(5) Collect, disclose, disseminate, or otherwise use anonymous data for governmental purposes.

(F) This section does not enlarge or limit the privacy policies of any seller that has selected a certified service provider as its agent to perform all of the seller's sales and use tax functions.

(G) A certified service provider that fails to comply with this section is subject to investigation by the tax commissioner or the commissioner's agents and the attorney general, and to prosecution by the attorney general.

Effective Date: 06-21-2002; 04-29-2005

5740.09 Cause of action against seller for overcollection - notice.

(A) No cause of action shall accrue against a seller for over-collection of the taxes levied by section 5739.02 , 5739.021 , 5739.023 , 5739.026 , 5741.02 , 5741.021 , 5741.022 , or 5741.023 of the Revised Code until the purchaser has provided written notice of the over-collection to the seller and the seller has had sixty days after the notice was mailed to respond. The notice must contain the information necessary to determine the validity of the request. In no case shall a cause of action accrue against a seller for the over-collection of such taxes if either the purchaser or the seller has filed a refund claim for the over-collection pursuant to section 5739.07 or 5741.10 of the Revised Code.

(B) In connection with a purchaser's request from a seller of over-collected taxes under division (A) of this section, a seller shall be presumed to have a reasonable business practice if, in the collection of the taxes, the seller does both of the following:

(1) Uses either a certified service provider or a certified automated system, including a proprietary system; and

(2) Has remitted to the state all taxes collected, less any deductions or collection allowances provided by section 5739.12 or 5741.12 of the Revised Code.

Effective Date: 04-29-2005

5740.10 [Repealed].

Effective Date: 2008 HB429 01-01-2010