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No matter if your business is just getting underway or has been operating for some time, remaining informed on Ohio sales tax compliance requirements is key to staying successful. Here are a few useful tips to get you going in Ohio sales tax compliance:

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Work closely with your Marketing department to make sure you use consistent language when describing your services, since what words you choose could make a significant impactful statement about their taxability or nontaxability to states.

Taxation of Consulting Services in Ohio

Harper & Company CPAs Plus' Income tax planning and compliance services harness these advantages for maximum tax savings for clients.

As our economy shifts towards service industries, state revenue agencies have become more interested in taxing these services – leading to sales tax on services becoming a commonplace occurrence across the US.

Electronic information services are one form of taxable services that provide electronic content and data delivery to customers, including creation, maintenance and enhancement of websites and internet-related applications as well as data hosting in remote servers for their benefit.

If a business provides these types of services, they must collect and remit Ohio sales tax as well as any applicable local taxes. In case of audits, businesses can appeal the findings with the Ohio Department of Taxation.

Taxation of Information Technology Services

Ohio requires you to pay sales tax if you offer computer services like software development, programming or engineering that fall under Ohio's definition of computer services as "automatic data processing or electronic information processing services". However, this definition covers many services which would otherwise be exempt.

As an example, states tax charges associated with accessing cloud-based databases or SaaS (Software as a Service) software applications; such taxes apply regardless of whether these apps are used for personal or professional purposes.

Recently, the Supreme Court of Ohio upheld a ruling from the Board of Tax Appeals (BTA) that tax applies to certain automated data processing or electronic information processing services, but reversed their determination that charges for software customization are taxable. This ruling serves to clarify when personal or professional services may be bundled together with automatic data processing or electronic information processing services that would otherwise be subject to tax.

companies operating with nexus in Ohio typically must register, collect and remit Ohio sales tax on all taxable sales made within its borders. Nexus can be established when retailers or marketplace facilitators establish physical presence in Ohio through Fulfillment by Amazon or similar marketplaces or perform more than seven instances of activities that create nexus within one 12-month period.

Taxation of Legal Services

Tax laws can be complex and their consequences serious; consulting with an Ohio tax lawyer could save both individuals and businesses both money and headaches by helping avoid mistakes that cost both parties dearly.

Melissa Skilliter, Director of the Low Income Taxpayer Clinic at SEOLS and an attorney specializing in tax matters with the Internal Revenue Service (IRS), including U.S. Tax Court cases and examinations as well as disputes. Melissa has represented individuals and businesses before state tax agencies such as Ohio Department of Taxation.

Since 2008, she has been a member of the Ohio Bar Association, certified as a specialist in tax law by the Supreme Court Commission on Certification. She has experience representing clients in various tax matters relating to preparation of returns and audit defense by Ohio Department of Taxation audits; as well as representing them before Board of Tax Appeals appeal hearings.

Taxation of Employment Services

Ohio has long imposed taxes on temporary employment services, also known as help supply or employment agency services. This tax is calculated based on the service fee charged to customers by service providers less any employee costs that must be separately reported in order for this fee to be tax-exempt.

From October 1, 2021 onwards, employment services no longer fall within Ohio's tax jurisdiction, per the repeal by Governor Mike DeWine as part of its budget legislation (Amended Substitute House Bill 110).

Purchasers of employment services should review their contracts and pricing to take full advantage of this new tax exemption and stop paying sales taxes that no longer need to be paid. Furthermore, purchasers may negotiate price reductions from providers of employment services to reflect this change, or refund opportunities may exist for services used previously.