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February 18, 2003
TO: Ohio Senate Finance Committee
TO: All Ohio Senators
CC: Ohio Governor Bob Taft
CC: Ohio House of Representatives
With respect to the POTENTIAL NEGATIVE IMPACT IN ECONOMIC ACTIVITY WITHIN
THE STATE OF OHIO that any Ohio Sales-Tax INCREASE would have (temporary and/or
permanent) with Ohio Specialty Retail Stores, many of you have the idea that the Multistate
Tax Commission (MTC) effort will eventually resolve that issue. This is NOT THE CASE.
FROM THE MULTISTATE TAX COMMISSION WEBISTE
Policy Statement 02-01 - Page 4, 1.4
"The Multistate Tax Commission calls on Congress or the U.S. Supreme Court to re-
establish fairness in state sales and use tax systems by requiring remote sellers making
sales above a reasonable threshold level to collect sales and use taxes for any state
that simplifies its tax system in accordance with the foregoing reforms. The threshold level
could be established by either federal legislation or by uniform state legislation approved
by Congress or by the U.S. Supreme Court. If states seek U.S. Supreme Court approval
for an expanded duty to collect for states with a simplified system, the states should
incorporate the threshold level in uniform state legislation implementing a simplified
sales tax system. Such a provision would become effective when a favorable Supreme
Court decision occurs. The COMMISSION SUPPORTS EXEMPTING SMALL REMOTE
SELLERS WHOSE CONTACTS ARE LIMITED TO MAKING SALES BY MAIL ORDER
OR ELECTRONIC MEANS AND WHOSE SALES FALL BELOW THE THRESHOLD
LEVEL FROM AN EXPANDED DUTY TO COLLECT IN THE INTEREST OF RE-
DUCING BURDENS ON THESE SELLERS."
(See the link below to read it directly yourself.) LINK NO LONGER ON THE MTC SITE
http://www.mtc.gov/POLICY/Policy%2002-01__ADOPTED.pdf
Policy Statement 02-02 October 17, 2002 - Page 8, A and B
"A. (1) Individuals who are residents or domiciliaries of this State and business entities
that are organized or commercially domiciled in this State have substantial nexus
with the State.
(2) Nonresident individuals and business entities organized outside the State
that are doing business in this State have substantial nexus and are subject to
[list appropriate business activity taxes for the state, with statutory citations] when
in any tax period the property, payroll or sales of the individual or business
in the State, as they are defined below in Subsection C, exceeds the
thresholds set forth in Subsection B.
B. (1) Substantial nexus is established if any of the following thresholds is exceeded
during the tax period:
(a) a dollar amount of $50,000 of property; or
(b) a dollar amount of $50,000 of payroll; or
(c) a dollar amount of $500,000 of sales; or
(d) twenty-five percent of total property, total payroll or total sales.
(See the link below to read it directly yourself.) NEW WEB ADDRESS FOR THIS LINK
http://www.mtc.gov/POLICY/02-02%20Amended%2010_17_02.pdf OLD
http://www.mtc.gov/UNIFORM/Factor%20Presence.pdf NEW
What these two Policy Statements indicate is that SMALL REMOTE SELLERS
(outside
the State of Ohio) WILL NOT BE REQUIRED TO PARTICIPATE WITH THE MULTI-
STATE TAX COMMISSION / STREAMLINE SALES-TAX PROJECT, EVEN THOUGH
THEY MAY BE AVERAGING A $40,000 per month SALES LEVEL WITH OHIO
CONSUMERS. In fact, a remote seller could be doing a $40,000/Mo. business to 20
States ($9,600,000.00 yearly). You will have to rely on the Ohio Consumer to
voluntarily report and pay their Ohio Use-Tax for their out-of-state purchases on
their Ohio Income-Tax Return (GOOD LUCK). Therefore, with the exception of the very
large out-of-state remote retailers, there will be little change for the overwhelming majority
of out-of-state remote retailers who ARE SHIPPING BILLIONS OF DOLLARS OF
MERCHANDISE TO OHIO CONSUMERS WITH "NO-OHIO-TAX".
OHIO CONSUMERS HAVE SAVED BILLIONS OF DOLLARS OF OHIO SALES-TAX
and you do not have a way to monitor those loses. A sales-tax increase will only
cause more Ohio consumers to shop "out-of-state" with remote retailers who DO
NOT CHARGE THE OHIO SALES / USE-TAXES.
WITH REGARDS TO ADDING SALES-TAX TO ALL "CARRY-OUT/DRIVE-THRU
HOT PREPARED FOODS, these same exact foods are currently taxable if you
"dine-in". If you feel that you cannot extend the sales tax to those because the State of
Ohio does not "tax food", then why are we taxing those same foods when you decide to
dine-in? You have made the decision that these prepared foods are subject to the
sales-tax, at the same time made the decision that they are not subject to the
sales-tax, it only depends if you eat them on or off the premises. Establishing
sales-tax for either will bring you FAR MORE SALES-TAX REVENUES WITHOUT
INCREASING ANY TAX RATE, AND WILL NOT EFFECT THE OHIO BUSINESS AS
TO BEING COMPETITIVE WITH THEIR CUSTOMERS, AND WOULD EFFECT
EVERYONE EQUALLY.
PLEASE DO NOT INCREASE THE OHIO SALES-TAX RATE EVEN FOR A
TEMPORARY PERIOD OF TIME. I HAVE LOST TOO MUCH OF THE OHIO
CONSUMERS BUSINESS ALREADY TO "OUT-OF-STATE" REMOTE RETAILERS
WHO ARE NOT REQUIRED TO CHARGE AND COLLECT THE OHIO USE-TAX.
Good Luck with your goals this week to fix the Ohio Budget.
Regards,
Rick Wells
NOARD
Brunswick, OH 44212
email: k8sci@noard.com
PH: 330 225-7373 |
