Ohio Adm.Code 5703 | Ohio Administrative Code 5703 — Department of Taxation

Chapter 5703-1 General Provisions

Ohio Adm.Code 5703-1-01 Information exchange with other states.

Under authority of section 5703.40 of the Revised Code, it is hereby ordered that all divisions of this department may exchange any or all data or other information which this department may have before it, other than that secured from the federal government or from some other state, with state departments of any other state of the United States which administer the tax laws of such state under the following circumstances and conditions:

A reciprocal agreement with the tax administering authority of each other state will provide for the mutual exchange of information with such other state;

A record of such information so exchanged will be maintained by the division of this department concerned with such exchange, either sending or receiving such information, for a period of four years from the date of exchange;

Such information received from another state is treated as confidential pursuant to the reciprocal agreement that exists between such other state and the state of Ohio.

Last updated August 26, 2026 at 9:02 AM

History

Effective: October 27, 2023
Promulgated Under: Other

Ohio Adm.Code 5703-1-03 Information exchange with federal government.

Pursuant to the provisions of section 5703.40 of the Revised Code, the department of taxation under the jurisdiction of the tax commissioner may exchange, as authorized by law, information with the federal government and its instrumentalities.

Last updated September 9, 2024 at 3:06 PM

History

Effective: May 13, 2018
Promulgated Under: Other

Ohio Adm.Code 5703-1-04 Existing rules and regulations.

All existing rules, regulations, information releases, bulletins, directives and orders of the tax commissioner, with respect to all taxes and assessments administered and supervised by the commissioner, remain in full force and effect until modified, amended or rescinded in accordance with the law.

Last updated September 28, 2026 at 10:53 AM

History

Effective: October 27, 2023
Promulgated Under: Other

Ohio Adm.Code 5703-1-05 Certificate of tax clearance.

(A)

(1) The tax commissioner will prescribe a form that will be used to submit information regarding the Ohio tax circumstances of the corporation under division (I) of section 1701.86 of the Revised Code.

(2) If a taxpayer desires to obtain a certificate of tax clearance, the taxpayer will file the form prescribed by the tax commissioner for that purpose with allowance for at least thirty days for processing.

(B) If a taxpayer requests a certificate of tax clearance, upon determining that all taxes have been paid or adequately guaranteed, the commissioner will issue a certificate of tax clearance to the applicant. Failure to pay or adequately guarantee any of these taxes will prevent issuance of this certificate.

(C) For the purpose of guaranteeing the payment of any taxes which may be due, either a cash bond or surety bond issued by a bonding agency licensed to do business in Ohio may be posted with the commissioner by the applicant. The commissioner will determine the amount. Such bond remains in force until all taxes have been paid, whereupon the commissioner will provide written notice to that effect.

(D) It is the responsibility of the applicant to obtain a personal property tax release certificate from the treasurer of each county in which the applicant had taxable personal property, if necessary. It is the responsibility of the county officials to determine that all personal property taxes have been paid.

(E) Notice provided to the commissioner using any form referenced under this rule does not serve as notice to any other state agency and does not relieve the corporation from any other obligations under the Revised Code. It is the responsibility of the corporation to obtain or file any necessary paperwork under the Revised Code.

Last updated July 14, 2025 at 8:14 AM

History

Effective: July 13, 2025
Promulgated Under: Other

Ohio Adm.Code 5703-1-06 Certification of exempt facilities under sections 5709.20 to 5709.27 of the Revised Code.

Pursuant to division (B) of section 5709.21 of the Revised Code, the tax commissioner hereby prescribes the manner and form of applying for the certification of exempt facilities under sections 5709.20 to 5709.27 of the Revised Code.

(A) Application for certification of an exempt facility as defined in division (E) of section 5709.20 of the Revised Code shall:

(1) Be made by the person owning the facility at the time of application;

(2) Contain plans and specifications of the property, including all materials incorporated or to be incorporated into the property and the associated costs of the materials, and a descriptive list of all equipment acquired or to be acquired by the applicant for the exempt facility and the associated costs of the equipment;

(3) Include details of how the applicant determined the cost of any auxiliary property under section 5709.21 of the Revised Code;

(4) Be accompanied by the nonrefundable fee prescribed by section 5709.212 of the Revised Code. Section 5709.212 of the Revised Code provides that until such fee is paid, the application is not complete, and the applicant is not entitled to any tax exemption under section 5709.25 of the Revised Code.

An exemption will be allowed only for those exempt facility costs covered by the fee paid. If the exempt facility costs exceed those covered by the fee paid, a certificate will not be issued for the excess amount until the additional fee is paid.

An application is filed when a properly completed application is received by the commissioner. An application is not properly completed until all necessary fees, documents, and information are received. The commissioner will provide the applicant at least thirty days after a request is sent to complete the application. Thereafter, the commissioner may deny issuing a certificate because the application is not properly completed. A final determination reflecting such denial may be issued without obtaining the opinion of the director of environmental protection, the director of natural resources, or the director of development. The final determination is subject to appeal under section 5717.02 of the Revised Code. Once the denial becomes final, the applicant may file a new application if the applicant still wants a certificate to be issued.

An applicant generally needs to file a separate application for each location where the owner has facilities for which certification is sought and for every county where a facility is located. However, under authority of division (D) of section 5709.21 of the Revised Code, the commissioner may allow an applicant to file one application that applies to multiple facilities in the same county if the facilities are the same or substantially similar. In addition, a single application, listing each owner and its percentage of ownership, shall be filed for a jointly owned facility; if at any time before or after issuance of an exempt facility certificate the percentages of ownership change, the joint owners will notify the commissioner in writing of the change.

(B) As soon as is practicable after receipt of a properly completed application, the commissioner will provide a copy of the application and any accompanying documentation to the county auditor of the county in which the facility is located.

(C) The commissioner will provide a copy of a properly completed application to either the director of environmental protection, the director of natural resources, or the director of development, as appropriate, to obtain the director's opinion concerning the facility. After obtaining the director's opinion and considering any additional information requested, the commissioner will ascertain if a certificate should be issued in whole, in part, or denied.

The commissioner will give written notice of the proposed finding to the applicant and the appropriate county auditor. If the applicant or the county auditor desires a reconsideration of the proposed finding, either person may file a written request for reconsideration with the commissioner within sixty days after the notice was sent. Either person may include a request that the commissioner conduct a hearing on the application.

If a hearing has been requested, the commissioner will schedule a hearing and give notice thereof to the applicant, the county auditor, and the appropriate director. After the hearing, the commissioner will issue a final determination on the application and serve copies of the final determination on the applicant and the appropriate county auditor. The final determination is subject to appeal under section 5717.02 of the Revised Code.

After conclusion of the above proceedings, including exhaustion of any appeal, the commissioner will issue, if applicable, an exempt facility certificate, which will include an exempt facility certificate number. The number is used on all tax returns, all sales tax exemption certificates, and all other forms and correspondence pertaining to the facility.

(D) For purposes of audit and examination by employees of the tax commissioner, the taxpayer shall identify separately the exempted portion of a facility on the taxpayer's books and records.

(E) Upon the commissioner's own motion or upon receiving a complaint, the commissioner may, at the commissioner's discretion, after giving notice and the opportunity for a hearing to a certificate holder, revoke or modify such certificate in accordance with division (C) of section 5709.22 of the Revised Code.

(F) New application costs for the addition, enlargement, expansion, or replacement of property at a previously certified exempt facility, filed under division (E) of section 5709.25 of the Revised Code, are separately ascertained for each such facility. If the exempt facility is a jointly owned facility, the new application is based on the aggregate costs of all the joint owners of the facility.

The new application shall be accompanied by the nonrefundable fee prescribed for applications filed under division (E) of section 5709.25 of the Revised Code. Section 5709.212 of the Revised Code provides that until the fee is paid, the application is not complete, and the applicant is not entitled to any tax exemption under section 5709.25 of the Revised Code. A certificate will not be issued for the addition, enlargement, expansion, or replacement until the fee is paid.

(G) In the event of the transfer of an exempt facility certificate as provided by section 5709.27 of the Revised Code, the transferee shall promptly provide:

(1) Written notice of the transfer to the commissioner and to the county auditor of the county in which the facility is located, specifying the effective date of the transfer; and

(2) A copy of the instrument of transfer and a copy of the certificate transferred.

(H) As used in section 5709.21 of the Revised Code, "the date of the construction of the facility" means the date on which actual installation or construction of the facility, as set forth by the plans and specifications, is begun, which will result in the completed and operational facility.

Last updated May 1, 2025 at 7:49 AM

History

Effective: May 1, 2025
Promulgated Under: Other

Ohio Adm.Code 5703-1-07 Request to suspend or revoke liquor permit for unpaid excise tax.

(A) As used in this rule:

(1) "Excise tax" means any excise tax, fee, or charge administered by the tax commissioner, including any applicable interest, penalty, or additional charge for failure to timely report or pay such tax, fee, or charge.

(2) "Final tax liability" means the liability for a tax that is no longer on appeal or subject to appeal to the board of tax appeals or a subsequent court.

(B) Pursuant to section 4301.25 of the Revised Code, the tax commissioner may request the liquor control commission to suspend or revoke a permit issued under Chapter 4301. or 4303. of the Revised Code if the holder of the permit has a final tax liability for unpaid excise tax.

(C) This rule is not intended, in any manner, to limit the authority of the tax commissioner in performing the functions conferred upon the commissioner by division (B) of section 4303.26 and division (D) of section 4303.271 of the Revised Code.

Last updated November 15, 2023 at 2:06 PM

History

Effective: February 7, 2017
Promulgated Under: Other

Ohio Adm.Code 5703-1-12 Requests for an opinion of the tax commissioner.

As used in this rule, "opinion" means an opinion of the tax commissioner as provided for in section 5703.53 of the Revised Code.

(A) A taxpayer requesting an opinion must:

(1) Submit the request in writing;

(2) Request an "opinion of the tax commissioner";

(3) State all facts of the activity or transaction for which the opinion is requested;

(4) Identify the parties involved in the activity or transaction about which the opinion is requested;

(5) Set out the specific legal question or questions for which the opinion is requested; and

(6)

(a) Be signed by the taxpayer or, if the taxpayer is a corporation, by an officer or employee of the corporation authorized to act on its behalf; or

(b) Be signed by the taxpayer's tax representative if the taxpayer has filed in writing, signed by the taxpayer or, if the taxpayer is a corporation, by an officer or employee of the corporation authorized to act on its behalf, authorization for the tax representative to request such an opinion on behalf of the taxpayer and to answer questions on behalf of the taxpayer for purposes of the request.

(7) If a request is made for an opinion to be confidential, support any request for the opinion to be confidential with a valid reason therefore (e.g. publication of a redacted opinion would still identify the taxpayer or a trade secret of the taxpayer).

(B) Any correspondence that does not meet all of the criteria in paragraph (A) of this rule is general correspondence. A response to general correspondence is not an opinion.

(C) The commissioner may request additional documentation or memoranda in support of a request for an opinion as she or he deems necessary.

(D) The commissioner has the discretion to decline to issue a requested opinion.

(E) An opinion will bear an opinion number and be headed "Opinion of the Tax Commissioner." Any document that does not bear an opinion number and heading is not an opinion.

(F) Any taxpayer who receives an opinion may rely on that opinion. The commissioner will follow that opinion in determining the tax liability of that taxpayer from the date of the issuance of the opinion until any of the following events occurs:

(1) The opinion is specifically revoked in writing and sent to the taxpayer. The effective date of a revocation will be the date it is received by the taxpayer or one year after the issuance of the opinion, whichever is later;

(2) The effective date of any rule of the commissioner inconsistent with the opinion;

(3) The effective date of any state or federal statutory amendment or federal rule change that renders the opinion inconsistent with the laws of the state of Ohio or the United States;

(4) The date of any decision concerning the laws of the state of Ohio or the United States by a state or federal court or by the Ohio board of tax appeals that renders the opinion inconsistent with the decision;

(5) Any change in the taxpayer's material facts on which the opinion was based; or

(6) The expiration date of the opinion, if specified in the opinion.

(G) An opinion does not bind the commissioner as to the treatment of any transaction or tax liability arising prior to the issuance of the opinion.

(H) An opinion binds the commissioner only with respect to the taxpayer for whom the opinion was issued.

Last updated October 27, 2023 at 8:41 AM

History

Effective: October 27, 2023
Promulgated Under: Other

Ohio Adm.Code 5703-1-13 Authorized delivery services.

(A) Pursuant to section 5703.056 of the Revised Code, a delivery service company can request to have a delivery service authorized for use to deliver tax payments or tax documents to the tax commissioner, treasurer of state, or the board of tax appeals. "Delivery service" means a specific delivery product offered by a delivery service company and does not constitute all of the delivery products offered by that delivery service company. A delivery service must meet all of the following criteria:

(1) The delivery service is available to the general public;

(2) The delivery service is at least as timely and reliable on a regular basis as the United States postal service;

(3) The delivery service company records electronically to a database kept in the regular course of its business, and marks on the cover in which the payment or document is enclosed, the date on which the payment or document was given to the delivery service company for delivery; and

(4) The delivery service company records electronically to a database kept in the regular course of its business the date on which the payment or document was given by the delivery service company to the person who signed the receipt of delivery and the name of the person who signed the receipt.

(B) If the delivery service meets the criteria listed in paragraph (A) of this rule, the delivery service company seeking to have a delivery service approved by the commissioner will fill out an application and return it to the department of taxation. Upon verifying the information on the application, the commissioner will journalize the decision to deny or accept the delivery service. Such journal entry will be kept in the administrative journal entry volume. A copy of the journal entry will be mailed to the delivery service company, the treasurer of state, and the board of tax appeals. The denial of a delivery service is subject to the same procedures as set forth in paragraph (C) of this rule.

(C) If the delivery service no longer meets the above criteria, the delivery service company shall notify the commissioner that the delivery service no longer meets the criteria listed in paragraph (A) of this rule. The commissioner may also revoke the use of the delivery service if the commissioner finds that the delivery service no longer meets the above criteria. The commissioner will send by certified mail a notice to the delivery service company whose delivery service the commissioner intends to revoke. That person will have ten days from the receipt of the commissioner's notice to contest the revocation by requesting a hearing. The hearing will be held within ten days of the commissioner's receipt of the request. The commissioner's determination on the revocation is final and is not subject to further administrative review or appeal. The removal of the product from the list of authorized delivery services will be reflected in a journal entry kept in the administrative journal entry volume. A copy of the journal entry will be mailed to the delivery service company, the treasurer of state, and the board of tax appeals.

(D) If a delivery service is revoked from the list of authorized delivery service products by the commissioner, such person providing the delivery service is not allowed to reapply for authorization of that delivery service for a period of one year.

(E) The effective date of the revocation of a delivery service is sixty days from the date of the journal entry issued pursuant to paragraph (C) of this rule.

(F) The Ohio department of taxation will publish a list of authorized delivery service products and any delivery service products that have been revoked on its web page. Such list will also be available from the Ohio department of taxation's office of chief counsel.

Last updated October 27, 2023 at 8:41 AM

History

Effective: October 27, 2023
Promulgated Under: Other

Ohio Adm.Code 5703-1-14 Succession of the tax commissioner's duties.

(A) As used in this rule and as used in division (I) of section 5703.05 of the Revised Code:

(1) "Absence" means a period of time declared in writing as such by the commissioner during which the commissioner is away from the office of commissioner and the commissioner ascertains the duties and functions of the commissioner cannot be adequately performed by the commissioner. "Absence" does not include a "vacancy in the office of commissioner."

(2) "Disability" means a medically determinable physical or mental impairment which can reasonably be expected to result in death or to be of long-continued and indefinite duration and which has been declared as such by a licensed medical professional.

(3) "Recusal" means the act of disqualifying oneself or withdrawing oneself from performing a duty or function as commissioner.

(4) "Vacancy in the office of commissioner" means that the commissioner has died, has formally resigned, or has been formally terminated from the position of commissioner and that a new commissioner has not been appointed by the governor on either an interim or permanent basis. "Vacancy in the office of commissioner" does not include an "absence."

(5) "Act as commissioner" means performing the powers, duties and functions of the commissioner and exercising the privileges and immunities of the commissioner including, but not limited to, the powers, duties, functions, privileges, and immunities of the commissioner described in Chapter 5703. of the Revised Code.

(6) "Familial relationship" means a relationship in which the commissioner is a spouse, sibling, natural or adoptive parent, or natural or adoptive child of a taxpayer or of a taxpayer's representative.

(7) "Designated deputy" means the deputy commissioner or deputy commissioners designated to act as commissioner by the commissioner pursuant to division (I) of section 5703.05 of the Revised Code and pursuant to paragraph (B) of this rule.

(B) If the commissioner designates not more than two deputy commissioners to act as commissioner pursuant to division (I) of section 5703.05 of the Revised Code, such designation will be accomplished by journal entry. In the event that more than one deputy commissioner is designated, the journal entry will prescribe the order of precedence between the two deputy commissioners. The commissioner may vacate such journal entry at any time. In the event that the commissioner vacates such journal entry, the commissioner may, by journal entry, designate a different deputy commissioner or deputy commissioners to act as commissioner pursuant to division (I) of section 5703.05 of the Revised Code.

(C) In the event of disability of the commissioner or vacancy in the office of commissioner, the designated deputy will act as commissioner and to assume the administration of such office. The designated deputy will act as commissioner only until, in the event of disability, the disability no longer exists, or, in the event of a vacancy in the office of commissioner, a new commissioner is appointed by the governor. Such actions are performed in the name of the designated deputy.

(D) In the event of a recusal of the commissioner, the designated deputy will act as commissioner and to assume the administration of such office only to the extent as is necessary for such designated deputy to resolve any matter over which the commissioner is or was not able to act as commissioner due to the recusal of the commissioner. Such actions are performed in the name of the designated deputy.

(E) In the event of absence of the commissioner, the designated deputy will act as commissioner and to assume the administration of such office only to the extent as is necessary for such designated deputy to resolve any matter over which the commissioner is or was not able to act as commissioner due to the absence of the commissioner. Such actions are made under the name of the tax commissioner and not the designated deputy.

(F) If the commissioner has a familial relationship with a taxpayer or a representative of a taxpayer such that acting as commissioner on a matter involving that taxpayer or representative would create a conflict of interest in violation of section 102.03 the Revised Code, the commissioner will recuse himself or herself from acting as commissioner with respect to that matter.

(G) When there has been a recusal by the tax commissioner on a matter, the actions of an employee with respect to that matter are performed under the authority of the designated deputy. In such cases, where it would normally be necessary for that employee to communicate with the commissioner, the employee will communicate with the designated deputy, and the designated deputy will act as commissioner with respect to that matter.

(H) This rule does not supercede the governor's authority to appoint a commissioner or to remove a commissioner as otherwise provided by law. Any designation made by the commissioner under paragraph (B) of this rule terminates when a new commissioner or a new governor is placed into office.

Last updated October 27, 2023 at 8:41 AM

History

Effective: October 27, 2023
Promulgated Under: Other

Ohio Adm.Code 5703-1-15 Electronic software providers; approval and suspension.

(A) As used in this rule:

(1) "IRS" means the internal revenue service.

(2) "IRS Publication 1345" or "IRS Publication 4163" means the version as of the most recent effective date of section 5701.11 of the Revised Code.

(3) "Authorized IRS e-file provider" has the same meaning as when that term is used in:

(a) IRS publication 1345 for individual tax returns, and

(b) IRS publication 4163 for entity tax returns.

(4) "Ohio electronic filing program" means the Ohio equivalent of the IRS e-file or modernized e-file programs outlined in:

(a) IRS publication 1345 for individual tax returns, and

(b) IRS publication 4163 for entity tax returns.

(5) "Applicant" means any person who is an authorized IRS e-file provider and who files an application with the tax commissioner to become an authorized provider for an Ohio electronic filing program.

(B)

(1) Pursuant to the authority in, and in fulfillment of the duties established under, sections 718.851, 5703.05, 5703.054, 5703.059 and 5747.082 of the Revised Code, the commissioner will annually publish the following for becoming an authorized provider for the Ohio electronic filing programs:

(a) An application;

(b) Approval guidelines, including the items listed in paragraph (C) of this rule;

(d) Submission and approval deadlines for those items listed in paragraph (B)(2) of this rule.

(2) The commissioner may approve any applicant as an authorized provider for the Ohio electronic filing program if the applicant timely and substantially:

(a) Submits the completed application in adherence with the published approval guidelines;

(b) Provides evidence of approval as a registered vendor or accepted participant with the IRS; and

(C) After the commissioner approves an applicant as an authorized provider for the Ohio electronic filing program, the commissioner may rescind or suspend the provider's access to the Ohio electronic filing program for poor business practices, which include, but are not limited to, the following:

(1) The provider made a material misrepresentation during the application process.

(2) The provider fails to maintain compliance with this rule, or the published approval guidelines and software tests.

(3) The provider fails to timely and accurately:

(a) Transmit client and personal returns, or

(b) Pay client or personal tax liabilities.

(4) The provider is suspended or disbarred from practice before the IRS.

(5) The provider violates advertising standards, including those promulgated by the IRS.

(6) The provider violates any provision in Title LVII of the Revised Code relating to tax preparers.

(7) The provider demonstrates unethical practices in return preparation.

(8) The provider is convicted of any criminal offense, under either federal or Ohio law, that either:

(a) Relates to the preparation of taxes, or

(b) Involves an element of dishonesty, fraud, deceit, theft, misrepresentation, or breach of trust.

Last updated October 27, 2023 at 8:41 AM

History

Effective: October 27, 2023
Promulgated Under: Other

Chapter 5703-3 Property Tax

Ohio Adm.Code 5703-3-01 Property excepting oil, gas and water production plants.

(A) For the purpose of classifying property for taxation, items of property devoted primarily to the general use of the land or buildings thereon are to be considered as real property and all other items of property including their foundations and all things accessory thereto which are devoted primarily to the business conducted on the premises are to be considered as personal property.

(B) The following items are hereby classified as real property for the purpose of taxation. This list is not all-inclusive and items similar to those herein classified are to be considered as real property if they meet the test as set forth in the preceding paragraph.

(1) Land and improvements to land, including retaining walls, piling, and mats for the general improvement of the site, private roads, walks, paving, areaways, culverts, bridges, viaducts, subways and tunnels, fencing, artificial lakes, reservoirs, spray ponds, dykes, dams, ditches and canals, drainage, storm and sanitary sewers, water lines for drinking, sanitary and fire protection purposes.

(2) Buildings, structural and other improvements to buildings, including their foundations, floors, partitions, insulation, walls, roof, stairways, loading and unloading platforms and canopies, systems for heating, air-conditioning, ventilating, sanitation, fixed fire protection, lighting, plumbing and drinking water, awnings and shades, building elevators, building escalators and package chutes.

(3) Generating equipment:

(a) Steam generating equipment primarily for furnishing heat to buildings and steam power for generators described in paragraph (B)(3)(b) of this rule, including all equipment and appurtenances and service lines auxiliary thereto.

(b) Electric generating equipment primarily for furnishing lights for buildings and yards, including all equipment and appurtenances auxiliary thereto and including all electric lighting circuits and equipment incidental thereto.

(4) Permanent standard gauge railroad trackage, bridges and trestles.

(5) Permanent crane trackage which is an integral structural part of a building.

(6) Fixed river or lake wharves and docks.

(7) Stationary car dumpers, other than mechanical dumpers, including track hoppers and bins.

(8) Silos used in farming.

(9) Walls forming storage yards.

(10) Mine shafts and entries.

Last updated November 19, 2025 at 11:48 AM

History

Effective: December 19, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-3-02 Oil, gas and water production plants.

Certain tangible property used in the oil, gas and water production industry shall be classified as real property or personal property as follows:

General plant facilities

(Common to general oil, gas and water production plants, separate units)

(A) Real property

(1) Land and improvements to land, including retaining walls, piling, and foundations for the improvement of the site; private roads, walks, paving, areaways, culverts, bridges, viaducts, subways and tunnels; fencing, artificial lakes, reservoirs, spray ponds, dams, ditches, and canals; drainage, storm, plant waste, and sanitary sewers.

(2) Buildings and improvements to buildings, including foundations, floors, frames, permanent partitions, walls, roofs, stairways, loading and unloading platforms, and canopies; built-in system for heating, air-conditioning, ventilating, sanitation, fixed fire protection, lighting, plumbing and drinking water; awnings and shades, built-in inter-communicating system including private telephone, telegraph, and auto-call equipment, building elevators, (freight and passenger) and escalators.

(3) Power plant machinery and equipment:

(a) Steam power generating equipment including boilers, settings, breechings, and stacks; fuel storage tanks and bunkers; fuel preparation and handling equipment; special burners for coal, coke, oil or gas; ash handling equipment; fans, motors, turbines, or engines, pumps, piping, valves, fittings and insulation; condensing equipment, cooling towers, and spray pond equipment, air compressors, receivers, etc., and all auxiliary equipment.

(b) Electric power generating equipment including engines, turbines, generators, motors, exciters, pumps, condensers, coolers, fans, instruments, and all auxiliary equipment; piping, valves, fittings, and insulation; main switchboard complete; transformers, electric power circuits complete with wires, cables, conduits, towers, poles, and incidental equipment on primary side of sub-station switchboard.

(c) Electric power receiving equipment including main switchboard complete, transformers, converters, electric power circuits, complete with wires, cables, conduits, towers, poles, and incidental equipment on primary side of sub-station switchboard.

(4) Main water pumping station equipment, including deep wells, intakes, pumps, piping, valves, fittings, and insulation; storage tanks, fixed fire protection systems, storage and pressure water tanks and pressure pumps, piping, valves, fittings, and insulation; hydrants, and sprinkler systems.

(5) Main service lines for steam, electric power circuits, water or gas.

(6) Permanent trackage, bridges, trestles, and track scales; water and coaling stations.

(7) Permanent trackage, and electric power lines for gantry cranes, ore bridges and similar equipment.

(8) Wagon or truck platform scales.

(9) Fixed river or lake wharves.

(10) Gas holders.

The following items in paragraphs (A)(11) to (A)(22) of this rule when installed and located on the premises or leased premises of the owner and used in the recovery or production of water, will be included in the value of the right to the mineral and are to be assessed as real estate as provided in sections 5713.05 and 5713.06 of the Revised Code. The following items in paragraphs (A)(11) to (A)(22) of this rule when installed and located on the premises or leased premises of the owner and used in the recovery or production of oil or gas, shall not be included in the valuation of the right to the minerals pursuant to sections 5709.112 and 5715.01 of the Revised Code. The values as determined by section 5713.051 of the Revised Code shall be the true value in money of oil reserves and gas reserves constituting real property on the first day of January of each tax year. Items in paragraphs (A)(11) to (A)(22) of this rule are to be classified and assessed as personal property if they are not installed on the leased premises or premises of the owner or if said items are used for the transmission, transportation or distribution of oil, gas or water.

(11) All equipment, supplying power to pumps and pumping jacks, including motors, or engines, gas, gasoline, or diesel; driving pulley for belt to "Bull Wheel"; connector rods and supports.

(12) All casings.

(13) Foot valves and rods for operation of valves.

(14) Sucker rods.

(15) Derricks.

(16) All piping, valves and fittings and supports.

(17) Receiving and storage tanks.

(18) Compressors and engines (gas and air) piping, receivers, etc.

(19) Main distributing switchboard.

(20) Power wiring from switchboard to equipment.

(21) Gas scrubbers.

(22) Cooling water storage tanks.

(B) Personal property

General

(1) Well drilling equipment.

(2) Tool pullers.

(3) All machine shop equipment for repair of equipment and care of tools.

(4) All portable tools, including swabbing and clean out equipment, as well as all hand tools.

(5) Office furniture and fixtures.

(6) Equipment for preparation of sites, road building, grading, etc.

Compressor stations

(Used in transmission, transportation or distribution)

(7) Compressors and engines (gas and air), piping, receivers, etc.

(8) Main distributing switchboard.

(9) Power wiring from switchboard to equipment.

(10) Reforming gas plant.

(11) Gas cooling towers, pumps and piping and supports.

(12) Main steam piping used in production.

(13) Gas scrubbers.

(14) Water pumps and piping and supports from compressors to spray pond.

(15) Spray pond pumps, piping and supports, spray heads.

(16) Machine shop equipment for maintenance and repair.

(17) Absorbers and dehydrators; contractors.

(18) Calorimeters.

(19) Welding shop and equipment.

(20) Yard flood lighting.

(21) Portable fire protection equipment.

(22) Hoists and cranes.

(23) Lubricating oil equipment, including storage tanks, pumps, piping, filters, dewatering equipment, settling tanks, etc.; fuel measuring equipment, meters, pressure regulators, etc.

(24) Lockers.

(25) Control room, meters, gauges and piping.

(26) Portable tools, (welders, air compressors and small tools).

(27) Cooling water storage tanks.

(28) All other engines, machinery, tools and implements of every kind, including foundations, used or designed to be used in processing, or incidental thereto, with their installation costs, including all equipment ancillary or auxiliary to any of the personalty above listed.

Freight, cartage and installation costs, including foundations and incidental materials, labor, etc., incurred in erecting any above equipment are to be included as a part of the cost of this equipment.

Last updated November 19, 2025 at 11:48 AM

History

Effective: December 19, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-3-03 Filing of balance sheets; effect of repeal and reduction of listing percentage.

Taxpayers engaged in any business, profession or occupation conducted for gain, profit or income on their own account, and taxpayers or fiduciaries returning for estates or beneficial owners engaged in any business, profession or occupation conducted for gain, profit or income, who are required to file a personal property tax return shall file a balance sheet at the time of making return on appropriate forms prescribed by the department of taxation.

Last updated December 29, 2025 at 7:50 AM

History

Effective: December 22, 2025
Promulgated Under: Other

Ohio Adm.Code 5703-3-04 Dates for listing taxable personal property.

All taxpayers required by rule 5703-3-03 of the Administrative Code to file a balance sheet and make a return of taxable property used in business shall list such personal property as of the close of business of the last day of December.

Last updated November 19, 2025 at 11:48 AM

History

Effective: December 19, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-3-10 Tangible personal property tax; true value of depreciable assets; application of "true value" or "302" computation.

(A) Tangible personal property used in business in this state must be returned, for purposes of the personal property tax, at its true value in money. The true value of depreciable tangible personal property is its book cost less book depreciation, unless the tax commissioner finds that the depreciated book value is greater or less than the true value of such property.

(B) Application of the composite annual allowance procedure provided for in rule 5703-3-11 of the Administrative Code shall determine the prima facie true value of depreciable tangible personal property used in business. The prima facie valuations can be rebutted by probative evidence of higher or lower valuation.

(1) When an item of tangible personal property is acquired in an arms-length transaction, its true value at the time of purchase is the acquisition cost, including all costs incurred to put the property in place and make it capable of operation, which are normally capitalized in accordance with generally accepted accounting principles.

(2) The true value in money of any tangible personal property may be proved by establishing the amount for which the property would sell in an open market by a willing seller to a willing buyer in an arm's-length transaction. If market value is estimated by an appraisal, the property must be appraised as part of an ongoing business unless the taxpayer can demonstrate that the property is more accurately appraised on the basis of piecemeal liquidation or disposal.

(3) If a taxpayer believes that the composite annual allowance procedure as determined by the commissioner does not accurately reflect the true value in money of the taxpayer's depreciable tangible personal property on hand, the taxpayer may establish more accurate annual allowances by probative evidence.

(a) Such evidence must show that the published composite annual allowance procedures are inappropriate because they cause an unjust or unreasonable result, or must be modified because of special or unusual circumstances.

(b) Such evidence may include, but is not limited to, an aging of disposals study and any other studies, data, or documentation the taxpayer wishes to submit for consideration by the commissioner.

(c) Such evidence must cover a sufficient number of years to demonstrate a pattern in the history of the useful life of the subject property.

Last updated January 17, 2025 at 12:41 AM

History

Effective: January 17, 2025
Promulgated Under: Other

Ohio Adm.Code 5703-3-11 Tangible personal property tax; "true value" or "302" computation.

(A) To assist taxpayers in returning the true value of depreciable tangible personal property used in business in this state, as required by Chapter 5711. of the Revised Code and rule 5703-3-10 of the Administrative Code, and to assist in the efficient administration of the personal property tax, the tax commissioner shall determine a composite annual allowance procedure for use in computing the true value of such property. The application of the composite annual allowance procedure to the original cost of tangible personal property may be referred to as the "true value computation" or the "302 computation."

(B) The valuation determined by the true value computation shall be the prima facie true value in money of taxable tangible personal property.

(C) The composite annual allowance procedure shall take into consideration the type of business conducted, the types and classes of property, the useful life of the property in such classes, physical deterioration, functional and economic obsolescence, repair and maintenance practices, salvage value of property assigned to such classes, and any other factors that the commissioner considers proper in determining the true value of depreciable tangible personal property used in business in this state.

(D) The commissioner shall publish and make available the composite annual allowance procedure, with such instructions and examples as the commissioner deems useful or necessary to assist taxpayers in computing their proper tax liability.

(E) The commissioner shall review and, if necessary, modify the composite annual allowance procedure, from time to time, to assure that such allowance procedure reflects current technology and business experience.

Last updated November 5, 2024 at 9:06 AM

History

Effective: June 22, 2017
Promulgated Under: Other

Ohio Adm.Code 5703-3-12 Tangible personal property tax; true value; exhaustion method; presumed disposals.

(A) As used in this rule, "exhaustion method" means a procedure for valuing tangible personal property of a business in which the cost and accumulated depreciation reserves of furniture, fixtures, and machinery and equipment are shown on the taxpayer's books and records as fully depreciated, and the taxpayer maintains no records of actual disposals of such property.

(B) Retail merchants and other taxpayers who follow the practice of showing fully depreciated assets on the books, whether or not physically disposed of, must value and list these assets for taxation as long as they are held for use in business. If the taxpayer maintains no records of disposals of fully depreciated assets, the exhaustion method may be used to compute the true value of this property for the purposes of the tangible personal property tax.

(C) A taxpayer who meets the requirements of paragraph (B) of this rule shall calculate the true value of furniture, fixtures, and machinery and equipment as follows: The costs of fully depreciated assets acquired during each of the ten years preceding the year for which that class of property reaches its minimum utility value as shown on the composite annual allowance procedure for the current year, as determined pursuant to rule 5703-3-11 of the Administrative Code, shall be included. To reflect estimated disposals, the cost shall be reduced by ten per cent for each year that the year of acquisition precedes the year of minimum utility value for the current tax year. The property is considered to be totally disposed of if acquired more than nine years before the year of minimum utility value for the current tax year. The value of this property is computed using the reduced cost and the minimum utility value percentage for that class of property for the current tax year.

(D) The tax commissioner may publish detailed instructions or examples to assist taxpayers in applying the provisions of this rule.

Last updated October 7, 2024 at 1:28 PM

History

Effective: June 22, 2017
Promulgated Under: Other

Ohio Adm.Code 5703-3-32 Dealer in intangibles tax definition of "primarily".

(A)

(1) Division (B)(1) of section 5725.01 of the Revised Code defines "dealer in intangibles." Paragraphs (B) to (D) of this rule define "primarily" as used in section 5725.01 of the Revised Code. In addition to the primarily requirement defined in this rule, a person needs to meet all other legal requirements in order to meet the definition of "dealer in intangibles."

(2) As used in this rule:

(a) "Affiliated group" means two or more persons related in such a way that one person owns or controls the business operation of another member of the group. In the case of corporations with stock, one corporation owns or controls another if it owns more than fifty per cent of the other corporation's common stock with voting rights.

(b) "Dealer activities" means lending money, or discounting, buying, or selling bills of exchange, drafts, acceptances, notes, mortgages, or other evidences of indebtedness, or buying or selling bonds, stocks, or other investment securities, whether on the person's own account with a view to profit, or as agent or broker for others, with a view to profit or personal earnings. "Dealer activities" includes the servicing of loans originated or purchased by or on behalf of the person or another member of the person's affiliated group.

(c) "Gross income," except as otherwise provided in this rule, has the same meaning as in section 61 of the Internal Revenue Code, as amended. In no event will "gross income" include the recovery of basis from the sale, exchange, or other disposition of an asset.

(d) "Hedging transactions" means transactions engaged in for the purpose of reducing exposure to risk from market fluctuations in price or availability.

(B)

(1) As used in division (B)(1) of section 5725.01 of the Revised Code, and except as otherwise provided in this rule, a person's business consists primarily of dealer activities if either paragraph (B)(1)(a) or (B)(1)(b) of this rule applies:

(a) For a person that had an office or other place of business in Ohio at the end of each of the three preceding calendar years, such person's gross income from one or more dealer activities exceeds fifty per cent of the person's total gross income in at least two of the three preceding calendar years; or

(b) For a person that had an office or other place of business in Ohio at the end of the immediately preceding calendar year but did not have an office or other place of business in Ohio at the end of one or both of the other two of the three preceding calendar years, such person's gross income from one or more dealer activities exceeds fifty per cent of the person's total gross income in the immediately preceding calendar year.

(2) For purposes of paragraph (B)(1) of this rule, the computation of the applicable percentages will not include, in the numerator or the denominator, any gross income from hedging transactions.

(C)

(1) A person whose business does not meet the percentage test in paragraph (B) of this rule may show that such person's business nonetheless consists primarily of dealer activities. Paragraph (C)(1) of this rule applies only if the person files a written notice with the tax commissioner, in person or by certified mail, of the person's intent to apply such paragraph to the tax year no later than the later of the following:

(a) The due date, without extension, for filing the dealer in intangibles tax return for that tax year;

(b) Sixty days from the date the person receives written notice from the tax commissioner that it appears that the person does not meet the percentage test in paragraph (B) of this rule for that tax year.

(2) The tax commissioner may show that a person's business that meets the percentage test in paragraph (B) of this rule nonetheless does not consist primarily of dealer activities. Paragraph (C)(2) of this rule applies only if the tax commissioner sends to the person a written notice, in person or by certified mail, of the tax commissioner's intent to apply such paragraph no later than two years after the date the person files a dealer in intangibles tax return for the tax year to which the commissioner seeks to apply such paragraph.

(3) Whoever seeks to apply paragraph (C) of this rule bears the burden of showing, based on the totality of the circumstances, that the person's business consists primarily of activities other than as shown by the percentage test in paragraph (B) of this rule. Factors to consider in addition to the person's gross income from dealer activities include, but are not limited to, the proportion of the person's assets related to dealer activities, the proportion of time the person or the person's employees spend engaging in dealer activities, the proportion of costs incurred in performing dealer activities, and substantial changes in the character of the person's business.

(D) As used in division (B)(1) of section 5725.01 of the Revised Code, the determination of whether a person winding up a dealer business conducted on the person's own account remains in business primarily for the purpose of realizing upon the assets of the business is based on the totality of the circumstances.

(E) This rule is not intended to address whether a person meeting the definition of "dealer in intangibles" may be a "dual capacity" enterprise in accordance with Gen. American Transp. Corp. v. Limbach (1984), 15 Ohio St.3d 302.

Last updated January 8, 2024 at 8:37 AM

History

Effective: January 7, 2024
Promulgated Under: Other

Chapter 5703-7 Income Tax

Ohio Adm.Code 5703-7-02 Applications for personal income tax refunds.

(A) An application for refund under section 5747.11 of the Revised Code shall include any of the following:

(1) An annual return, or amended annual return, filed pursuant to Chapter 5747. of the Revised Code to the extent that the facts and figures contained on such return result in an overpayment; or

(2) Any other form prescribed by the tax commissioner specifically for the purpose of requesting a refund of a tax imposed by section 5733.41 or Chapter 5747. of the Revised Code.

(B) Nothing in this rule obligates the commissioner to prescribe a form to request a refund under paragraph (A)(2) of this rule.

(1) In prescribing a form under paragraph (A)(2) of this rule, the commissioner may limit the scope of refunds that may be requested on the form or limit the usage of the form to a certain class of taxpayers.

(2) Any person who files a form prescribed in paragraph (A)(2) of this rule without an annual return or amended annual return may be requested to provide such return or any other information the commissioner deems necessary to support the refund claimed.

(C) Nothing contained herein shall prohibit the commissioner from any subsequent action or review authorized by Chapter 5747. of the Revised Code, notwithstanding the initial determination of the amount of tax liability or the subsequent payment of such refund claims.

Last updated January 6, 2025 at 7:52 AM

History

Effective: January 6, 2025
Promulgated Under: Other

Ohio Adm.Code 5703-7-03 Documentation to support a taxpayer's joint filing and residency credits.

(A) Pursuant to division (F) of section 5747.05 of the Revised Code, a taxpayer will provide the following documentation to substantiate the credits allowed under section 5747.05 of Revised Code:

(1) For a nonresident credit claimed pursuant to division (A) of section 5747.05 of the Revised Code:

(a) A completed copy of the Ohio nonresident credit calculation form prescribed by the tax commissioner;

(b) Federal wage and income statements;

(d) The taxpayers' federal return, with accompanying schedules (including schedules C, E, and F), as filed with internal revenue service;

(e) Any other documentation that proves an element of the taxpayer's nonresident credit.

(2) For a resident credit claimed pursuant to division (B) of section 5747.05 of the Revised Code:

(a) A completed copy of the Ohio resident credit calculation form prescribed by the commissioner;

(b) Federal wage and income statements;

(c) Income tax returns, including a tax enacted for purposes of complying with internal revenue service notice 2020-75 or composite income tax returns on which the taxpayer is included, for other states or the District of Columbia:

(d) Copies of refund checks issued by other states or the District of Columbia, if applicable:

(e) Proof of payment of income tax to another state or the District of Columbia, if applicable:

(f) Any other documentation that proves an element of the taxpayer's resident credit.

(3) For the joint filing credit allowed under division (E) of section 5747.05 of the Revised Code:

(a) Federal wage and income statements for both spouses;

(b) The taxpayers' federal return, with accompanying schedules (including schedules C, E, and F), as filed with internal revenue service;

(B) The documentation listed in paragraphs (A)(1) and (A)(2) of this rule should be used by an individual who claims both the resident credit and nonresident credit during one taxable year.

(C) When claiming a credit under section 5747.05 of the Revised Code, the taxpayer will, when feasible, provide documentation relevant to the taxable year at issue when filing the taxpayer's Ohio income tax return. If the documentation is not provided with the return, the taxpayer will provide the information upon request of the commissioner.

Last updated December 29, 2025 at 7:50 AM

History

Effective: December 22, 2025
Promulgated Under: Other

Ohio Adm.Code 5703-7-04 Alternative estimated payment methods for farmers and fishermen.

(A) "Estimated gross income from farming" and "estimated gross income from fishing" have the same meaning as they are used in sections (b)(2) and (3) of 26 CFR 1.6073-1 as of the most recent effective date of section 5701.11 of the Revised Code.

(B) In lieu of the estimated payment schedule under section 5747.09 of the Revised Code, an individual may utilize one of the alternative methods of filing and paying Ohio individual income tax and school district income tax allowed under paragraph (C) of this rule if both of the following are true:

(1) At least two-thirds of the individual's estimated gross income is estimated gross income from farming or estimated gross income from fishing; and

(2) The individual uses the same method for filing and paying Ohio individual income tax and school district income tax, if applicable, as the individual used for filing and paying federal income tax.

(1) Forgoing the payment of estimated taxes as prescribed under section 5747.09 of the Revised Code if the individual, on or before the first day of the third month following the close of the taxpayer's taxable year, both files an annual individual income tax return, and school district income tax return, if applicable, pursuant to section 5747.08 of the Revised Code and makes payment in full of the tax reflected on the return or returns; or

(2)

(a) Making payment in full of the Ohio individual income estimated tax, and school district income estimated tax, if applicable, due for the taxable year, on or before the fifteenth day of the first month following the close of the taxpayer's taxable year; and

(b) Filing a timely annual individual income tax return and school district income tax return, if applicable, pursuant to section 5747.08 of the Revised Code.

Last updated February 10, 2025 at 10:54 AM

History

Effective: November 28, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-7-05 Income tax; extensions; penalties and interest.

(A)

(1) Any term used in this rule has the same definition as in section 5747.01, 5733.40, or 5747.38 of the Revised Code, or if undefined in those sections, when used in a comparable context in Chapter 5747. of the Revised Code.

(2) The term "unextended due date" means the date prescribed for filing an annual return under Chapter 5747. of the Revised Code , without any extension.

(B)

(1)

(a) For any taxable year, a taxpayer that receives an extension for filing the taxpayer's federal income tax return shall automatically receive an extension for filing the taxpayer's corresponding Ohio tax return under this chapter to the same due date, provided that the federal extension due date is beyond the unextended due date for the corresponding Ohio return.

(b) For any taxable year, a qualifying entity that receives an extension for filing the qualifying entity's federal income tax return shall automatically receive an extension for filing the qualifying entity's corresponding Ohio tax return under this chapter to the same due date, provided that the federal extension due date is beyond the unextended due date for the corresponding Ohio return.

(c) For any taxable year, an electing pass-through entity that receives an extension for filing the electing pass-through entity's federal income tax return will automatically receive an extension for filing the electing pass-through entity's corresponding Ohio tax return under this chapter to the same due date, provided that the federal extension due date is beyond the unextended due date for the corresponding Ohio return.

(2) If a taxpayer, qualifying entity, or electing pass-through entity is eligible for the extension under paragraph (B)(1) of this rule, such extension shall apply to any annual return, required to be filed under section 5747.08 or 5747.42 of the Revised Code, due for the taxable year.

(C)

(1) An extension of time to file under paragraph (B)(1) or (B)(2) of this rule does not extend the due date for payment of any tax due or for the purposes of imposing interest on any tax due, unless the tax commissioner expressly extends the due date for payment of tax.

(2) Nothing in this rule shall abate any penalty or interest imposed for failure to pay taxes in a timely manner if, after the filing of the taxpayer's, qualifying entity's, or electing pass-through entity's return, it is determined that the taxpayer, qualifying entity, or electing pass-through entity owes taxes in addition to those shown due on the originally filed return.

(D) Nothing in this rule precludes or modifies the applicability of section 5747.026 of the Revised Code.

Last updated November 28, 2022 at 8:38 AM

History

Effective: November 24, 2022
Promulgated Under: Other

Ohio Adm.Code 5703-7-06 Personal income tax form required for withholding purposes.

Pursuant to the authority granted under division (B) of section 5747.18 of the Revised Code, Ohio employers and employees shall utilize Ohio form IT-4 for the purposes of the withholding required under section 5747.06 of the Revised Code.

(A) The employee must include the name and number of the school district in which the employee resides.

(B) The employee is entitled to the number of withholding exemptions shown on his or her properly completed IT-4. If such form is not properly completed by the employee and timely submitted to the employer, the employer shall withhold under section 5747.06 of the Revised Code on behalf of the employee without exemptions.

Last updated November 19, 2025 at 11:49 AM

History

Effective: September 18, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-7-07 Requirements for requesting inspection of income tax returns.

Any returns required to be filed pursuant to Chapter 5747. of the Revised Code shall not be open to inspection, except upon proper judicial order or upon application by a requesting authority which is lawfully charged with the performance of duties requiring the inspection of tax returns or related information available to the department of taxation. The application shall be made in writing and signed by the head of the authority requesting the information and shall be addressed to the tax commissioner. The application shall contain:

(A) The title of the requesting authority for whom the inspection is to be made;

(B) By specific reference, the law which such requesting authority is charged with administering, the law under which the requesting authority is so charged, and the relationship of said laws to administration of the tax laws of Ohio;

(C) The name or names of the person or persons whose income tax returns are to be inspected, together with sufficient identifying data to distinguish those persons whose returns are requested from other persons with the same or similar names;

(D) The purpose of the proposed inspection, and the procedure by which it will be accomplished;

(E) The name or names of any persons to be permitted to examine the return(s) requested or share information related thereto; and

(F) A statement that the person signing the request is fully aware of the confidentiality requirements of the law and the penalties applicable to a breach thereof, and, by making the request, accepts both officially and personally, full responsibility for any breach of confidentiality of the tax returns of the persons named in response to paragraph (C) of this rule or any information related thereto.

There shall be attached to the request a separate statement signed by each of the persons named in response to paragraph (E) of this rule, certifying that they are familiar with the confidentiality requirements of the law and the penalties applicable to a breach thereof, and that they will maintain that confidentiality.

Within a reasonable time after receipt of the application, the commissioner shall determine whether such request is proper and whether such request can be granted without an unreasonable disruption of the administration of the tax laws and shall thereupon notify said requesting authority of the time and place for such inspection, which inspection shall be conducted under the supervision of the commissioner or the commissioner's designated agent; or notify the requesting authorities of the reason such request is denied.

Nothing provided herein shall restrict the furnishing of information to the internal revenue service, as provided in section 5747.18 of the Revised Code.

Last updated November 19, 2025 at 11:49 AM

History

Effective: September 18, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-7-08 Deduction of disability and survivorship benefits.

(A) In accordance with division (A) of section 5747.01 of the Revised Code, a taxpayer may generally deduct, to the extent included in federal adjusted gross income, the amount of:

(1) Disability benefits received pursuant to a disability plan if the benefit payment is conditioned on the disability of the covered individual; or

(2) Survivor benefits received pursuant to a survivorship plan if the benefit payment is conditioned on the death of the covered individual.

(B) In determining the eligibility of benefits for the deduction under division (A)(4) of section 5747.01 of the Revised Code, the terms of the plan, or the authority creating the plan, under which the benefits at issue are paid shall serve as the primary means of determining their character as disability or survivor benefits.

(C) A taxpayer may not deduct, as disability benefits, any payments received under a plan if the payments are deemed as other than disability benefits, including:

(1) Sick pay or similar temporary wage and salary continuation payments;

(2) Payments that have converted from disability benefits to retirement benefits because the terms of the plan, or the authority creating the plan, reclassified the benefits based on the covered individual's attained age or any other reason; or

(3) Payments authorized to be paid without the disability of the covered individual as a pre-condition.

(D) A taxpayer may not deduct, as survivorship benefits, any payments received under a plan if the payments are deemed as other than survivor benefit payments or are authorized to be paid without the death of the covered individual as a pre-condition.

Last updated November 19, 2025 at 11:49 AM

History

Effective: September 18, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-7-09 Taxpayers reporting of school district of residence.

(A)

(1) Pursuant to section 5747.04 of the Revised Code, individual taxpayers shall indicate the Ohio school districts in which the taxpayers resided during the taxable year when filing their returns pursuant to section 5747.08 of the Revised Code.

(2) Taxpayers shall indicate their Ohio school districts using the four-digit number assigned to the school district by the tax commissioner.

(B) Nonresident taxpayers shall indicate that they did not reside in an Ohio school district at any point during the taxable year by using the four-digit nonresident number designated by the commissioner.

(C) The commissioner shall publish the four-digit school district numbers and nonresident number on the department's website and as part of the annual income tax return instructions.

Last updated May 11, 2026 at 10:22 AM

History

Effective: August 27, 2021
Promulgated Under: Other

Ohio Adm.Code 5703-7-10 Withholding on supplemental compensation for Ohio individual income tax purposes.

(A) As used in this rule:

(1) "Regular compensation" means compensation, such as salaries and wages, that is not "supplemental compensation."

(2) "Supplemental compensation" means bonuses, commissions, and other nonrecurring types of payments or compensation.

(B) Pursuant to division (A) of section 5747.06 of the Revised Code, every employer shall withhold:

(1) From its employees' regular compensation, subject to the tax imposed by Chapter 5747. of the Revised Code, based on both:

(a) The frequency upon which the employee subject to withholding is paid by the employer, and

(b) The withholding rate tables, which the tax commissioner will publish on the department of taxation's website on or before the last day of January for the taxable year or within forty-five days of a change in the tax rates prescribed by section 5747.02 of the Revised Code;

(2) From its employees' supplemental compensation, subject to the tax imposed by Chapter 5747. of the Revised Code, at the highest rate of tax set forth in division (A)(3) of section 5747.02 of the Revised Code for the taxable year;

(3) From its employees' compensation, subject to the tax imposed by Chapter 5748. of the Revised Code, based on the tax rate in effect for employee's school district of residence.

(1) Make any adjustment to the withholding rate tables published under paragraph (B)(1)(b) of this rule; or

(2) Republish the withholding rate tables under paragraph (B)(1)(b) of this rule for a taxable year in which the tables remain unchanged.

Last updated January 5, 2026 at 8:24 AM

History

Effective: January 1, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-7-13 State income tax refund offsets; portion of joint refund not belonging to obligor or recipient.

(A) Refunds of income taxes under Chapter 5747. of the Revised Code are subject to offset under sections 5747.12, 5747.121, 5747.122 and 5747.123 of the Revised Code. The tax commissioner will identify those taxpayers due a refund who are subject to such offset based upon information provided by any state or federal agency.

The commissioner will immediately disburse the refunds of those taxpayers to the appropriate fund or agency, to the extent they do not exceed the outstanding balance to be collected by such offset, and except as provided in paragraph (B) of this rule. Any remaining portion of the tax refunds will be paid to the taxpayer.

(B)

(1) A "liable spouse" is a taxpayer, included on a jointly filed individual income tax return, who is liable for a debt under sections 5747.12, 5747.121, 5747.122 and 5747.123 of the Revised Code. A "non-liable spouse" is a taxpayer, included on a jointly filed individual income tax return, who is not liable for a debt under sections 5747.12, 5747.121, 5747.122, and 5747.123 of the Revised Code.

(2) In the case of taxpayers who file joint returns, where one taxpayer is a liable spouse and one taxpayer is a non-liable spouse, only the portion of the refund belonging to the liable spouse is subject to the offset under paragraph (A) of this rule. The burden is on the taxpayers to prove that a portion of the refund is not subject to offset based on the information shown on the taxpayers' joint income tax return and the attachments thereto.

(3) The commissioner will notify the taxpayers that they have twenty-one days from receipt of the notice to prove the portion of the taxpayers' refund not subject to offset by utilizing the following calculation:

(a) Step 1: The taxpayer shall compute the ratio of the non-liable spouse's portion of the taxpayers' Ohio adjusted gross income to the total Ohio adjusted gross income as reporting for the tax year at issue. In computing this amount, the taxpayer shall utilize only those adjustments contained in division (A) of section 5747.01 of the Revised Code related to the income included in the non-liable spouse's portion of federal adjusted gross income.

(b) Step 2: The taxpayer shall multiply the taxpayers' total tax liability prior to applying any payments or withholding, by the ratio obtained in step 1.

(c) Step 3: The taxpayer shall subtract the product obtained in step 2 from the portion of all payments, including withholdings and estimated payments, belonging to the non-liable spouse.

(4) If the taxpayers have provided a calculation under paragraph (B)(3) of this rule, the commissioner shall review the calculation.

(a) If the commissioner concurs, the offset under paragraph (A) of this rule will not include any amounts due to the non-liable spouse. The commissioner will immediately disburse such portion of the refund belonging to the liable spouse to the appropriate fund or agency.

(b) If the commissioner does not concur, the commissioner will notify the taxpayers and provide a revised calculation. The notice will advise them that they have twenty-one days from receipt of the notice to:

(i) For amounts subject to offset under section 5747.12 of the Revised Code, submit any additional documentation to refute the revised calculation;

(ii) For amounts subject to offset under sections 5747.121, 5747.122, and 5747.123 of the Revised Code, file a complaint with the commissioner concerning the revision, along with an optional request for a hearing.

(5) If the taxpayers submit additional documentation pursuant to paragraph (B)(4)(b)(i) of this rule, the commissioner shall review the documentation and make any necessary adjustments. If the taxpayers file a complaint pursuant to paragraph (B)(4)(b)(ii) of this rule, the commissioner shall proceed according to the relevant statutory provisions. Otherwise, the commissioner's revised calculation will be substituted for that of the taxpayers. The commissioner will then make any disbursements in the same manner as under paragraph (A) of this rule.

(6) Notwithstanding paragraph (B)(3) of this rule, if the taxpayer requests and the commissioner agrees, the commissioner may calculate the portion of the refund subject to offset based on any information in the commissioner's possession.

(7) If no such proof or review request is submitted within the time specified, the full refund will be subject to offset under a paragraph (A) of this rule.

(C) For purposes of this rule, notices sent by the commissioner by ordinary mail are rebuttably presumed to be received by the taxpayers seven days after the mailing thereof.

(D) Nothing in this rule shall be construed to limit any subsequent corrections, assessments, or refunds within the applicable statutes of limitation.

Last updated November 28, 2022 at 8:38 AM

History

Effective: November 24, 2022
Promulgated Under: Other

Ohio Adm.Code 5703-7-15 Income tax; withholding; corporate officer liability.

(A) Pursuant to division (G) of section 5747.07 of the Revised Code, a person is personally liable for an employer's responsibility to file returns and make payments required under section 5747.07 of the Revised Code, if the employer is a corporation, limited liability company, or business trust and either:

(1) The person is an employee with control or supervision over, or charged with the responsibility of, filing the required returns or making the required payments; or

(2) The person is an officer, member, manager, or trustee responsible for the execution of the employer's fiscal responsibilities.

(B)

(1) Pursuant to section 5747.453 of the Revised Code, a person is personally liable for a qualifying entity or electing pass-through entity's responsibility to file returns and make payments required under sections 5747.40 to 5747.453 of the Revised Code, if either:

(a) The person is an employee of, investor in, owner, or beneficiary of the entity with control or supervision over, or charged with the responsibility of, filing the required returns or making the required payments; or

(b) The person is an officer, member, manager, or trustee of the entity responsible for the execution of the entity's fiscal responsibilities.

(2) An owner, investor or beneficiary with an indirect or constructive interest in an entity is personally liable for the responsibilities described in section 5747.453 of the Revised Code if such owner, investor or beneficiary otherwise meets the requirements for personal liability under that section.

(1) The term "person" specifically contemplates non-individuals.

(2) A person has "control or supervision" over filing the required returns and making the required payments if either:

(a) The person directly or indirectly supervises or manages any person described in paragraph (C)(3) of this rule; or

(b) The person has direct or indirect authority over any person described in paragraph (C)(3) of this rule.

(3) A person is "charged with the responsibility" of filing the required returns and making the required payments if any of the following apply:

(a) The person is statutorily or contractually responsible for the preparation and/ or filing of the required returns and/or transmission of the required payments;

(b) The person signs and/or submits any required Ohio tax filing or payment;

(c) The person retains, directs, or consults with any outside persons who are charged with filing and remitting the required Ohio tax returns and payments;

(d) The person performs the duties required under section 5747.06 or 5747.42 of the Revised Code, or performs any other payroll or withholding functions, for the employer or entity;

(e) The person has the direct or delegated authority to sign checks or make payments electronically on behalf of the employer or entity; or

(f) The person's position is one that would ordinarily be responsible for any fiscal duty, including but not limited to those listed in this paragraph, even if the person does not actually participate in or supervise said duty.

(4) A person is "responsible for the execution of the employer or entity's fiscal responsibilities" if any of the following apply:

(a) The person is statutorily or contractually responsible for the financial affairs of the employer or entity;

(b) The person performs any of the duties or functions, or has any of the authority, described in paragraph (C)(2) or (C)(3) of this rule; or

(c) The person delegates, or has the power to delegate, any of the duties or functions described in paragraph (C)(2) or (C)(3) of this rule to any other person.

(5) Performance of any duty by either electronic and non-electronic means, or both, is contemplated.

(D)

(1) Nothing in this rule or Chapter 5747. of the Revised Code shall be construed to limit the number of persons derivatively liable for the taxes described in paragraphs (A) and (B) of this rule.

(2) If more than one person described in paragraph (A) or (B) of this rule is personally liable for any unpaid liability, their liabilities shall be joint and several.

(E) The provisions of this rule are not exclusive or exhaustive. The commissioner may use any relevant evidence to establish the personal liability of any person for an unpaid tax liability under section 5747.07, 5747.38, or 5747.41 of the Revised Code.

Last updated February 10, 2025 at 8:01 AM

History

Effective: February 8, 2025
Promulgated Under: Other

Ohio Adm.Code 5703-7-16 Personal income tax: determination of resident status.

(A) The following factors shall not be considered when determining an individual taxpayer's domicile under division (C) or (D) of section 5747.24 of the Revised Code:

(1) The location of financial institutions in which the taxpayer has any accounts, including, but not limited to, checking, savings, certificates of deposit, or individual retirement accounts.

(2) The location of issuers of credit cards, institutional lenders which have made loans, or any other persons making installment loans to, or guaranteed by, the taxpayer.

(3) The location of a business at which the taxpayer makes purchases of tangible personal property.

(4) The location of investment facilities, brokerage firms, realtors, financial advisors or consultants used by the taxpayer.

(5) The location of either the insurance company that issued or the insurance agent that sold any insurance policy to the taxpayer.

(6) The location of professionals utilized by the taxpayer for legal, tax, accounting, financial, medical, veterinary, or retirement services.

(7) The location or identity of recipients of political contributions made by the taxpayer.

(8) The location of organizations described in section 501(c) of the Internal Revenue Code, except organizations described in paragraphs (2), (7), and (10) of that section, to which the taxpayer makes contributions or other payments, or in which the taxpayer participates as a congregant, member, board member, committee member, adviser, or consultant provided that participation does not exceed attendance at more than twelve meetings or functions of any one such organization during a calendar year.

(9) The location of funeral facilities or the burial plot of the taxpayer.

(10)

(a) The location, place of business, or place of organization or incorporation of business ventures or business entities in which the taxpayer holds an ownership interest or board membership unless the taxpayer exercises significant control over the affairs of the venture or entity.

(b) A taxpayer "exercises significant control over the affairs of the venture or entity" if the taxpayer directly, indirectly, constructively under section 1563(e) of the Internal Revenue Code, or beneficially owns more than five per cent in the capital, profits, or value of the business venture or business entity.

(11) The location where the taxpayer married.

(12) The recitation of residency or domicile in a will, trust, or other estate planning document of the taxpayer.

(13) The location of the taxpayer's friends, dependents as defined in section 152 of the Internal Revenue Code, and family members other than his or her spouse, if not legally separated from his or her spouse under a decree of divorce or separate maintenance as provided in section 7703(a)(2) of the Internal Revenue Code.

(14) The location of educational institutions attended by the taxpayer's dependents as defined in section 152 of the Internal Revenue Code, unless those dependents pay tuition at that educational institution based on the residency of the taxpayer in the state where the educational institution is located.

(15) The location of trustees, executors, guardians, or other fiduciaries named in estate planning documents of the taxpayer.

(B) The following factors may be considered in determining an individual taxpayer's domicile under division (C) or (D) of section 5747.24 of the Revised Code:

(1) The number of contact periods the taxpayer has in this state.

(2) The taxpayer's activities in tax years other than the tax year or years at issue.

(3) The failure of the taxpayer to meet any of the requirements of division (B)(1) of section 5747.24 of the Revised Code.

(4) The jurisdiction in which the taxpayer is registered to vote.

(5) Any other fact the tax commissioner deems relevant, except those set forth in paragraph (A) of this rule.

(C)

(1) An individual taxpayer can support his or her claim of the number of contact periods in this state by oral or written statements or by writings or recordings. The absence of writings or recordings shall not prevent the individual from supporting his or her claims of the number of contact periods and meeting the individual's burden of proof, but such evidence shall be subject to review for veracity and credibility for determining whether the individual has met the burden of proof.

(2) The tax commissioner can request that any statement offered by the individual be made under penalty of perjury, and any such statement which the individual cannot or will not make under penalty of perjury shall be given no weight and shall not be considered by the tax commissioner as evidence which would otherwise allow the individual to meet or help meet the individual's burden of proof.

(3) The types of "writings or recordings" that an individual can submit to prove the number of contact periods in this state include, but are not limited to, the following:

(a) Receipts or financial statements that show the taxpayer's location at a certain time.

(b) Personal diaries, calendars or expense reports for business travel created contemporaneously with the events they show.

(d) Payroll records generated by the taxpayer's employer.

(e) Evidence of in-person use of club facilities or memberships.

(f) Utility bills, statements, and notices related to a specific location.

(g) Photographs and video recordings that show the taxpayer's location at a certain time.

(h) Health care practitioner billing statements for in-person services provided.

(i) School attendance records for in-person classes or instruction.

(j) Minutes of meetings of any organization that show the taxpayer's in-person attendance.

(k) Any public records that show the taxpayer's location at a certain time.

(l) Armed services records, including military orders.

(D) As used in this rule, "Internal Revenue Code" has the same meaning and effective date as described in division (A) of section 5701.11 of the Revised Code.

Last updated June 29, 2026 at 7:28 PM

History

Effective: June 29, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-7-19 All employer withholding and school district employer withholding taxpayers must file and pay electronically.

Pursuant to the authority granted under sections 5703.05 and 5703.059 of the Revised Code:

(A) Except as provided in paragraph (B) of this rule, each person filing income tax withholding or school district income tax withholding returns under sections 5747.06 to 5747.072 of the Revised Code shall:

(1) File all such returns electronically in a manner as prescribed by the tax commissioner;

(2) For individual income tax withholding, make payments electronically in a manner as prescribed by the commissioner;

(3) For school district income tax withholding, make payments electronically in a manner as prescribed by the commissioner.

(B)

(1) Any person may request an exemption from the electronic filing and payment requirements of paragraph (A) of this rule. Such request must be made in writing on the form prescribed by the commissioner. The commissioner shall publish the form on the department of taxation's web site.

(2) Upon review and receipt of a request under paragraph (B)(1) of this rule, the commissioner will notify the person in writing of the decision. If granted, the exemption from the electronic filing and payment requirements of paragraph (A) of this rule shall apply:

(a) Until the date, or for the duration, specified in the notice granting the exemption, or

(b) If no date or duration is specified in the notice, until revoked by the commissioner in writing.

(3) A denial or revocation by the commissioner under paragraph (B)(2) of this rule is not a final determination of the commissioner and is not subject to further appeal.

(C) Nothing in this rule affects any person's obligation to timely file all returns and timely pay all amounts required by Chapter 5747. of the Revised Code.

Last updated December 19, 2024 at 7:59 AM

History

Effective: December 19, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-7-20 Employer withholding bulk filing.

(A) As used in this rule:

(1) "Bulk filer" means a payroll service provider or similar entity that is registered with the tax commissioner to transmit Ohio employer withholding returns via bulk file upload.

(2) "Payroll service provider" means a third party that assists an employer with payroll administration and Ohio employer withholding tax obligations. A payroll service provider can include a professional employer organization or alternate employer organization.

(3) "Bulk file upload" means a process by which a bulk filer submits employer withholding taxes and filings through any electronic method prescribed by the commissioner.

(4) "Client company" means an employer on whose behalf a bulk file upload is submitted to the commissioner by a bulk filer.

(5) Any reference in this rule to employer withholding includes the taxes imposed under Chapters 5747. and 5748. of the Revised Code that an employer is obligated to deduct and withhold from an employee pursuant to section 5747.06 of the Revised Code.

(B)

(1) The commissioner will publish the following for becoming a bulk filer for Ohio employer withholding taxes:

(a) An application;

(b) Approval guidelines and conditions of participation, including the items listed in paragraph (C) of this rule;

(d) Submission and approval deadlines for the items listed in paragraph (B)(2) of this rule.

(2) The commissioner may approve any applicant as an authorized bulk filer if the applicant timely and substantially:

(a) Submits the completed application in adherence with the published approval guidelines;

(b) Registers for a state OHID account or another electronic registration method approved by the commissioner; and

(3) The authorization as a bulk filer is valid until one of the following:

(a) The bulk filer dissolves, merges out of existence, or otherwise ceases business.

(b) The authorization is rescinded or suspended by the commissioner pursuant to paragraph (C) of this rule.

(c) The commissioner updates the approval guidelines or conditions of participation to be a bulk filer, including file and software tests, and the bulk filer no longer complies with the updated approval guidelines or conditions of participation.

(4) Each client company of a bulk filer will also be registered with the commissioner and have an active Ohio employer withholding account.

(C) After the commissioner approves an applicant as a bulk filer, the commissioner may rescind or suspend the bulk filer's access to the bulk file upload program for poor business practices, which include, but are not limited to, the following:

(1) The bulk filer made a material misrepresentation during the application process.

(2) The bulk filer fails to maintain compliance with this rule, or the published approval guidelines, or file and software tests.

(3) The bulk filer fails to timely and accurately:

(a) Transmit client and personal returns, or

(b) Pay client or personal tax liabilities.

(4) The bulk filer is suspended or disbarred from practice before the IRS.

(5) The bulk filer violates any applicable provision in Title LVII of the Revised Code relating to tax return preparers.

(6) The bulk filer demonstrates unethical practices in return preparation.

(7) The bulk filer is convicted of any criminal offense, under either federal or Ohio law, that either:

(a) Relates to the preparation of taxes, or

(b) Involves an element of dishonesty, fraud, deceit, theft, misrepresentation, or breach of trust.

(D) The commissioner may limit the filing and payment methods available to a bulk filer if the bulk filer does not comply with this rule.

(E) Nothing in this rule affects a person's obligation to file and make payments electronically as prescribed by rule 5703-7-19 of the Administrative Code.

Last updated December 19, 2024 at 7:59 AM

History

Effective: December 19, 2024
Promulgated Under: Other

Chapter 5703-9 Sales and Use Tax

Ohio Adm.Code 5703-9-02 Maintenance of records.

(A) Since all sales of tangible personal property in this state are presumed to be subject to sales tax until the contrary is established, the burden of proof rests upon each vendor to show what part, if any, of their gross receipts from sales resulted from nontaxable sales.

Each vendor must maintain complete, accurate and adequate records which include both:

(1) Primary records such as purchase invoices, bills of lading, sales invoices, guest checks, exemption certificates, tax payment receipts, and cash register tapes;

(2) Secondary records such as bank deposit receipts and day books, journals, or any other records in which accumulated data is recorded. Secondary records must be supported by complete primary records.

(B) Records are adequate if the records demonstrate to the tax commissioner that the vendor collected the proper amount of sales tax due on the vendor's taxable sales.

(1) In order to be adequate, primary records such as sales invoices and cash register tapes for taxable sales must distinguish between taxable and nontaxable items. Further, the primary records must separately state the total amount of each transaction and the tax charged on the transaction. These amounts must accumulated and recorded in a secondary record.

(2) Invoices for lodging must also clearly show the length of stay, in terms of consecutive days for each guest.

(C) All records must be preserved for a period of four years unless the commissioner consents, in writing, to their destruction within that period or by order requires that they be kept for a longer period.

(D) If any vendor fails to maintain complete primary sales records which may be utilized in verifying the accuracy of the figures reflected in their secondary records and/or reported on their tax returns, the commissioner may audit and assess as provided in section 5739.13 of the Revised Code.

Last updated September 9, 2025 at 12:38 PM

History

Effective: July 17, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-9-03 Sales and use tax; exemption certificate forms.

(A) As used in this rule, "exception" refers to sales for resale that are excluded from the definition of retail sale by division (E) of section 5739.01 of the Revised Code. "Exemption" refers to retail sales not subject to the tax pursuant to division (B) of section 5739.02 of the Revised Code.

(B)

(1) All sales are presumed to be taxable until the contrary is established. If a purchaser claims that tax does not apply to a transaction, the purchaser must provide a fully completed exemption certificate to the vendor or seller. The exemption certificate may be provided electronically or in hard copy. The vendor must retain the fully completed exemption certificate in its files.

(2) Exemption certificate forms are available on the department's website at tax.ohio.gov. The forms may be reproduced as needed. Substitute exemption certificates may be developed and used as long as they contain the data elements prescribed in paragraph (D) of this rule.

(C)

(1) If a vendor, seller, or consumer is purchasing a motor vehicle, a watercraft that is required to be titled, or an outboard motor that is required to be titled and is claiming exemption from the sales and use tax based on a reason other than resale, the vendor, seller, or consumer must comply with rule 5703-9-10 or 5703-9-25 of the Administrative Code.

(2) If a construction contractor is claiming exemption from sales or use tax on the purchase of materials for incorporation into real property, the construction contractor must comply with rule 5703-9-14 of the Administrative Code.

(D) An exemption certificate is fully completed if it contains the following data elements:

(1) The purchaser's name and business address,

(2) A tax identification (e.g. vendor's license or consumer's use tax account) for the purchaser issued by this state, if any,

(3) The purchaser's type of business or organization,

(4) The reason for the claimed exemption, and

(5) If the certificate is in hard copy, the signature of the purchaser.

If any of these elements are missing the exemption certificate is invalid.

(E) The following form, located on the department's website at http://tax.ohio.gov/Forms, is incorporated in this rule by reference: "Certificate of Exemption - Streamlined Sales and Use Tax Agreement," revised December 2021.

Last updated November 13, 2025 at 7:44 AM

History

Effective: November 13, 2025
Promulgated Under: Other

Ohio Adm.Code 5703-9-04 Use tax; taxable use of tangible personal property manufactured for sale or purchased for resale.

(A) A vendor, wholesaler, lessor, manufacturer, or other person who removes from inventory tangible personal property that was purchased without payment of sales or use tax on the basis that the tangible personal property was intended to be resold pursuant to division (E) of section 5739.01 of the Revised Code, and temporarily or permanently stores, uses, or otherwise consumes such tangible personal property in a taxable manner inconsistent with such claim of exception, shall accrue and pay use tax on the price of the tangible personal property, as defined in division (G) of section 5741.01 of the Revised Code.

(B) A manufacturer who produces tangible personal property which he has manufactured from raw materials or component parts purchased without payment of sales or use tax on the basis that the raw materials or parts were intended to be incorporated into a product for sale pursuant to division (B)(42)(a) of section 5739.02 of the Revised Code, and that temporarily or permanently stores, uses, or otherwise consumes such tangible personal property in a taxable manner inconsistent with such claim of exemption, shall accrue and pay use tax on the price of such tangible personal property, as defined in division (G) of section 5741.01 of the Revised Code and in accordance with paragraph (A) of rule 5703-9-21 of the Administrative Code.

Last updated September 9, 2025 at 12:38 PM

History

Effective: July 17, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-9-05 Transactions where tangible personal property is or is to be stored.

(A) A transaction in which "tangible personal property is or is to be stored" under division (B)(9) of section 5739.01 of the Revised Code means transactions involving any keeping or holding of another's tangible personal property or any provision of space that is used to store another's tangible personal property.

(B) In a transaction in which "tangible personal property is or is to be stored" pursuant to division (B)(9) of section 5739.01 of the Revised Code, it is not relevant whether the storage of the tangible personal property is at a location that constitutes personal property or real property. The tax must be charged on the full fee or charge for the transaction. Accordingly, the tax imposed under that division is not subject to division (A)(2) of section 5739.02 of the Revised Code, or division (A)(2) of section 5741.02 of the Revised Code.

(C) "Tangible personal property is or is to be stored" includes, but is not limited to, the following and other similar transactions:

(1) Except as provided in paragraph (D) of this rule, the holding of tangible personal property for the consumer for which there is a charge;

(2) The short-term or long-term holding of clothing for a consumer in a vault or other facility;

(3) Any other bailment of personal property for which a fee is charged;

(4) The provision of a locker, self-storage unit, building, or other property, both real and personal, for the lessee's or renter's use in storing tangible personal property;

(5) The provision of dry-dockage, drysail docking or of out-of-water storage for watercraft;

(6) The provision of safe deposit boxes;

(7) Except for parking as provided in paragraph (D)(2) of this rule, the holding of, or provision of space to keep a motor vehicle: or

(8) Airplane storage. "Airplane storage" is an aircraft at rest, either in a hangar or by tie-downs, during which the engine of the aircraft is not maintained in an active or operational condition pursuant to the directives found in the "Pilot's Operating Handbook" for the aircraft.

(D) "Tangible personal property is or is to be stored" does not include the following or other similar transactions:

(1) Storage of tangible personal property held by the consumer for sale in the regular course of the consumer's business, including raw materials and work-in-progress;

(2) Parking provided as an adjunct to residential accommodations and parking in a public or private commercial facility or lot, used for the parking of vehicles. Parking of vehicles is to be distinguished from the storage of vehicles. Examples of parking would include parking at an airport and parking in a parking lot where the fee is paid on a monthly basis. An example of storage would include the storing of a collectible automobile that is occasionally removed and returned;

(3) The in-water moorage of watercraft at a dock or pier;

(4) The kenneling or boarding of an animal where the true object of such service involves animal care that includes additional services such as the care and feeding of the animal and the charges for such additional services are not separately stated;

(5) The provision of private mailboxes; or

(6) Bailments where no fee is imposed as a condition of the bailment, even if tipping is permitted.

(E)

(1) Determination of the tax due on currency or coin-operated storage modules, such as coin-operated lockers, shall be made either by using the pre-determined method provided in this paragraph or by a method approved by the tax commissioner under section 5739.05 of the Revised Code. Vendors using the following predetermined method do not need to apply to the tax commissioner for authorization:

(a) The average charge per transaction is broken down into two components, one representing price and the other representing sales tax.

(b) The average charge per transaction for the reporting period shall be determined and divided by the sum of one plus the percentage total rate of tax applicable in the taxing jurisdiction which the storage space is located to arrive at the "price component" of the average charge per transaction. Any fraction of a cent included in such price shall be dropped.

(c) The average charge per transaction minus the "price component" determined under paragraph (E)(1)(b) of this rule yields the "sales tax component."

(d) The total receipts for the reporting period shall be divided by the average charge per transaction to arrive at the number of transactions.

(e) The number of transactions as determined under paragraph (E)(1)(d) of this rule shall be multiplied by the "sales tax component" determined under paragraph (E)(1)(c) of this rule. This result is the amount to report as the tax on such sales for the reporting period. Taxable sales for the reporting period is total receipts less the sales tax.

(2) The following is an example of the procedure to be used pursuant to paragraphs (E)(1)(b) to (E)(1)(e) of this rule:

(a) The average charge per transaction is fifty cents and the rate for the taxing jurisdiction is seven per cent. The resulting calculation under paragraph (E)(1)(b) of this rule is $0.46728972, ($0.50/1.07) The fractions of a cent are dropped, yielding a "price component" of forty-six cents for the average charge per transaction.

(b) The forty-six-cent "price component" of the transaction is subtracted from the fifty-cent average charge per transaction, resulting in the "sales tax component" of four cents included in each fifty-cent charge.

(c) The total receipts of $1,025.25 are divided by the fifty-cent average charge to arrive at 2,050.5, the number of transactions.

(d) The 2,050.5 transactions are multiplied by the "sales tax component" of four cents per transaction, resulting in the amount to report as the tax on such sales of $82.02.

Last updated September 9, 2025 at 12:38 PM

History

Effective: July 17, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-9-06 Imposition of tax on transportation services.

(A) "Transportation service" means the provision of transportation wholly within the state of Ohio by means of a motor vehicle or aircraft with a driver or pilot.

(1) Transportation service includes, but is not limited to, all of the following:

(a) Intrastate transportation by taxicab;

(b) Intrastate transportation by limousine;

(d) Shuttle service;

(2) Transportation service does not include:

(a) Transportation by ambulance. As used in this rule, "ambulance" means any motor vehicle or aircraft specially designed and equipped to provide medical transportation and includes ambulettes that are specially designed and equipped to provide transport to persons that require the use of a wheelchair;

(b) Transportation provided by transit bus as defined by section 5735.01 of the Revised Code;

(c) Transportation provided by a citizen of the United States holding a certificate of public convenience and necessity issued under 49 U.S.C. 41102;

(d) Transportation sold to, or provided by, a political subdivision or agency of the federal or state government, including, but not limited to, a county, municipal corporation, county transit board, regional transit authority, or regional transit commission; and

(e) Tour services, except for the transportation component as provided in paragraph (D) of this rule.

(B) A person providing a transportation service shall charge sales or use tax on the entire price paid by the consumer for the transportation service.

(C) "Tour service" means the provision of travel packages that include transportation services along with one or more of the following: admissions to events/locations; the services of guides; overnight accommodations; and any similar travel package element. A person providing only food and beverages for consumption on the motor vehicle or aircraft, in addition to a transportation service, is not providing a tour service.

(D) The transportation element of tour services is subject to the tax on providing transportation service.

(1) A tour service provider that uses a transportation service purchased from another shall be subject to the sales or use tax on transportation services in the following manner:

(a) If it does not separately state the charge for the transportation service to its customer the tour service provider is the consumer of the transportation service and it is subject to the tax based on the price it pays for the transportation service; or

(b) If it does separately state the charge for the transportation service to its customer the tour service provider is reselling the transportation service to that customer. Subject to paragraph (G) of this rule, the tour service provider shall collect and remit the tax from the customer based on that transportation service charge.

(2) A person providing a tour service using transportation equipment it owns, leases, or otherwise has a license to use shall be subject to the sales or use tax in the following manner:

(a) If it does not separately state the charge for the transportation service to its customer, the tour service provider is subject to the tax based on the costs it incurs for providing the transportation service as set forth in paragraph (E) of this rule; or

(b) If it does separately state the charge for the transportation service to its customer, subject to paragraph (G) of this rule, the tour service provider shall collect the tax from the consumer and remit the tax based on that transportation service charge.

(E) Absent special and unusual circumstances, the price charged or costs incurred by the person for the transportation service shall include, at a minimum, the following costs:

(1) The costs for the use of the vehicle or plane (depreciation) including overhead costs;

(2) The costs for the fuel and maintenance costs of the vehicle or plane;

(3) The costs for the driver(s) or pilot(s) including any costs for such person's(') food and accommodations;

(4) The costs for parking and tolls; and

(5) Any additional costs for providing a transportation service.

(F) Transportation services that do not include the costs in paragraph (E) of this rule shall be considered sham transactions and will be disregarded pursuant to section 5703.56 of the Revised Code.

(G) Nothing in this rule shall prohibit a tour service provider providing transportation under paragraph (D)(1)(b) or paragraph (D)(2)(b) of this rule from allowing the customer to claim an exemption from the tax if the exemption is claimed following the procedures prescribed by section 5739.03 of the Revised Code.

Last updated September 9, 2025 at 12:38 PM

History

Effective: July 17, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-9-07 Application for refund of sales and use taxes.

(A)

(1) An application for refund of sales or use tax illegally or erroneously paid will be made on a form "ST AR Application for Sales/Use Tax Refund" and filed with the department in accordance with instructions thereon. The application may be filed by a vendor, seller, or consumer, or by a tax representative designated on a form prescribed or approved for such purposes, e.g., form "TBOR 1 Declaration of Tax Representative." The application will state the basis for the refund, i.e., why the payment of tax was illegal or erroneous.

(2) The department will deny applications if the first three sections of the form "ST AR" are not fully answered and a complete listing of every invoice included in the refund application is not provided. If the refund application includes twenty-five or more invoices, the listing will be provided in an electronic spreadsheet.

(3) An application filed by a vendor or seller will show that the tax was remitted to the state. The vendor or seller will submit one original fully completed form "ST AR Application for Sales/Use Tax Refund" and one set of the following supporting documentation:

(a) Copies of original invoices or similar documents.

(b) Copies of credit memos, a statement from the customer, signed by the customer with specified amounts, agreeing to await reimbursement of the tax until final determination of the refund claim, or some other proof that the accounts receivable was adjusted for the tax or account activity.

(c) A Microsoft Excel or Microsoft-compatible spreadsheet provided electronically for all claims containing twenty-five or more invoices. The spreadsheet needs to list every invoice separately and the total should equal the amount requested on the refund application.

(d) Copies of fully-completed exemption certificates or letters of usage.

(e) If the claim is due to an amended return, proof need be provided of the original and amended figures for the period(s) claimed on the refund application. The proof may consist of sales journals, cash register receipts, summary reports or any other document used to prepare the tax return.

(f) If the invoices included with the refund request are for capitalized research and development equipment, proof that the equipment purchased is capitalized research and development equipment. Proof may consist of asset ledgers, depreciation schedules, etc.

(g) Copies of accrual sheets for the periods referenced on the refund application, if tax was erroneously accrued on purchases.

(4) An application filed by a consumer will show that the consumer paid the tax to the vendor or seller or directly to the state. The consumer will provide one original fully completed form "ST AR Application for Sales/Use Tax Refund" and one set of the following supporting documentation:

(a) Copies of original invoices or similar documents.

(b) Copies of canceled checks or some other proof that the invoices were paid in full, including the tax.

(d) The reason why the payment of the tax was illegal or erroneous. If the consumer is claiming a use-based exemption, the consumer will supply a detailed description of how the tangible personal property or service was used. References to the Revised Code or legal opinions alone are insufficient to substantiate a refund request.

(5) An application for refund of sales or use tax needs to be filed within the period specified by divisions (D) and (E) of section 5739.07 of the Revised Code. Tax is paid on the date it is remitted to the state and not on the date it is collected by a vendor or seller from a consumer.

(B)

(1) A consumer seeking refund of over-collected sales or use tax need either:

(a) File an application for refund directly with the tax commissioner pursuant to paragraph (A)(4) of this rule; or

(b) Request a refund from the vendor or seller that collected the tax in question. A request for refund from a vendor or a seller is not an application for refund to the commissioner.

(2) If a vendor or seller denies a consumer's refund request, the consumer may file an application for refund with the commissioner pursuant to paragraph (A)(4) of this rule. Requesting a refund directly from the commissioner is the consumer's sole remedy to claim refund of the tax. Any such application needs to be filed with the commissioner within the time prescribed in paragraph (A)(5) of this rule.

(C) Any refund amount that is determined to be due a taxpayer based on an application for refund of sales or use tax will first be applied to any outstanding indebtedness of that taxpayer pursuant to section 5739.072 of the Revised Code. Any amount remaining after the satisfaction of such outstanding indebtedness will be paid to the taxpayer.

(D) The following forms, located on the department's website, are incorporated in this rule by reference:

(1) "ST AR Application for Sales/Use Tax Refund," revised May 2016.

(2) "TBOR 1 Declaration of Tax Representative," revised December 2013.

Last updated April 15, 2024 at 8:30 AM

History

Effective: April 15, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-9-08 Sales and use tax; authority to predetermine (prepay) or prearrange sales tax.

(A) Section 5739.05 of the Revised Code authorizes the tax commissioner to grant a vendor one of the following types of authority.

(1) Predetermined authority may be available to a vendor if such authority will improve compliance and increase efficiency in administering the tax. For example, vending machines cannot differentiate between taxable and nontaxable food sales, produce a record of individual sales, or separately collect tax on taxable sales. Likewise, the requirement to record and tax each individual sale at large spectator events may negatively affect the vendor's efficiency in administering the tax.

(2) Prearranged authority is designed to relieve businesses that generate large daily quantities of primary records from the administrative burden and cost associated with record storage. Only food service operators licensed under section 3717.43 of the Revised Code are eligible for this type of authority.

The tax commissioner issues predetermined and prearranged authorities under the conditions and procedures explained in paragraphs (B) to (F) of this rule.

(B) Predetermined authority

A vendor must apply to the commissioner for predetermined authority. Predetermined authority may be granted if the commissioner determines that such authority will improve compliance and increase administrative efficiency. The proportions and ratios in a predetermined agreement shall be determined by either a test check conducted by the commissioner under terms and conditions agreed to by the commissioner and the vendor or by any other method agreed upon by the vendor and the commissioner.

The commissioner may require the vendor to post a notice that the tax is included in the selling price. If sales are from isolated vending machines, notice must be posted on each vending machine.

A qualifying vendor must apply to the commissioner for prearranged authority. The proportions and ratios in a prearranged agreement shall be determined by either a test check conducted by the commissioner under terms and conditions agreed to by the commissioner and the vendor or by any other method agreed upon by the vendor and the commissioner.

Compliance with the provisions of the prearranged authority requires that the vendor report and remit the tax as computed under the terms of the agreement.

(D) Vendor's liability under predetermined or prearranged authority

A vendor that complies fully with the provisions of the predetermined or prearranged authority is absolved of any additional tax liability based on sales except liability from unreported sales. This relief from liability does not apply if the vendor has failed to notify the commissioner in writing of any change in business activity that would increase the tax liability.

(E) Vendor's duty to notify commissioner of business changes affecting agreement

A vendor must notify the commissioner in writing, either personally or via certified mail, of any changes in the nature of the vendor's business that may affect the validity of the terms of the predetermined or prearranged agreement. At any time, the commissioner may request a review of the percentages specified in the predetermined or prearranged agreement if the commissioner believes the nature of the vendor's business has so changed that it may affect the validity of the terms of the agreement.

A change in the provisions of an authorization based on a review will, upon the written agreement of the parties, become effective at the beginning of the vendor's next reporting period. An adjustment to the percentage of taxable sales because of a change in the combined state and local sales tax rate may be reflected in an amendment to the predetermined or prearranged agreement without performing a new analysis and becomes effective beginning the first day of a change in the combined state and local rate.

(F) Cancellation of predetermined or prearranged authority

A predetermined or prearranged authority may be cancelled by either the vendor or commissioner effective on the last day of the month in which the vendor or the commissioner receives, personally or via certified mail, a written notice thereof with the other party. Failure by the vendor to comply with the provisions of the authority is sufficient reason to cancel the authority and to reinstate the requirement that the vendor comply with all provisions of Chapter 5739. of the Revised Code.

Last updated September 9, 2025 at 12:39 PM

History

Effective: July 17, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-9-10 Motor vehicles, off-highway motorcycles, and all-purpose vehicles; tax payment or exemption claim required for certificate of title.

(A) If any sale of a motor vehicle, off-highway motorcycle, or all-purpose vehicle is claimed to be exempt from the sales or use tax levied by Chapters 5739. and 5741. of the Revised Code, the clerk of courts shall refuse to issue a certificate of title unless the application is accompanied by a certificate of exemption executed by the purchaser that specifies the reason the sale is not legally subject to the tax.

(B) If any sale of a motor vehicle, off-highway motorcycle, or all-purpose vehicle is claimed to be exempt from the sales tax on the basis that the sale is in interstate commerce, the clerk of courts shall refuse to issue a certificate of title unless the application is accompanied by a statement of fact regarding the sale.

(C) If any sale of a motor vehicle, off-highway motorcycle, or all-purpose vehicle is claimed to be exempt from the sales tax on the basis that the sale is to an out-of-state resident for immediate removal of the motor vehicle from Ohio for exclusive use outside this state, the clerk of courts shall refuse to issue a certificate of title unless the application is accompanied by an affidavit signed by the purchaser.

(D) A copy of each of the statements described in this rule and/or certificates is to be retained by the applicant and one copy presented to the clerk of courts, who shall retain the copy in its files.

(E) The following forms, located on the department's website at https://tax.ohio.gov/wps/portal/gov/tax/business/get-a-form/tax-forms, are incorporated in this rule by reference:

(1) "Certificate of Exemption Regarding Sale of a Motor Vehicle, Off-Highway Motorcycle, or All-Purpose Vehicle," revised November 2023, form STEC MV;

(2) "Statement Regarding Sale of a Motor Vehicle, Off-Highway Motorcycle, or All-Purpose Vehicle in Interstate Commerce," revised March 2004 form STEC IC.

(3) "Statement Regarding Sale of a Motor Vehicle, Off-Highway Motorcycle, or All-Purpose Vehicle to an Out-of-State Resident," revised March 2023, form STEC NR.

Last updated November 13, 2025 at 8:35 AM

History

Effective: November 13, 2025
Promulgated Under: Other

Ohio Adm.Code 5703-9-11 Returned merchandise and rejected services.

(A) A vendor or seller may deduct from his gross sales an amount equal to the purchase price of merchandise returned and services rejected by his customers during the reporting period. The vendor or seller must refund to the customer or credit the customer's account with the full purchase price of the tangible personal property returned or the service rejected plus the full amount of sales or use tax applicable thereto.

(B) In no event shall a transaction be treated as a return of merchandise or a rejection of services for purposes of reporting sales or use tax if the vendor or seller deducts from the customer's refund any amount for use, damage, or wear and tear of the merchandise returned, any restocking or handling charge, or otherwise fails to refund to the customer or credit the customer's account with the full purchase price and applicable tax.

(C) This rule does not apply to trade-ins and core charges which constitute part of the purchase price pursuant to sections 5739.01 and 5741.01 of the Revised Code.

(D) Division (F) of section 5739.03 of the Revised Code applies to this rule.

Last updated September 9, 2025 at 12:39 PM

History

Effective: July 17, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-9-12 Exchanged merchandise.

(A)

(1) If taxable merchandise is returned to the vendor in exchange for another item the vendor may, provided the vendor allows the customer the full purchase price of the item returned plus the applicable tax, either by credit or refund, record the net difference between the selling price of the item returned and the item delivered to the customer in the exchange as an addition to or deduction from gross sales, whichever is appropriate.

(2) If the price of the item delivered to the customer in the exchange is greater than the price of the item returned the vendor must report the difference as an addition to gross sales and collect the appropriate amount of sales tax on the additional amount.

(3) If the price of the item delivered to the customer in the exchange is less than the price of the item returned the difference in price may be deducted from gross sales.

(4) If there is an exchange in a different jurisdiction, the return and subsequent purchase needs to account for the change in jurisdiction and rate. The jurisdiction of the original transaction is provided any applicable (legal) credit of the tax and the subsequent purchase representing an exchange is taxed at the applicable rate of the new jurisdiction on the full purchase price.

(B) The provisions of this rule shall not apply to "trade-ins" so as to conflict with the statutory definition of "sale" and "price" as provided in section 5739.01 of the Revised Code.

Last updated September 9, 2025 at 12:39 PM

History

Effective: July 17, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-9-13 Sales and use tax; reporting periods.

(A) Vendor's and seller's tax returns:

(1) Vendors licensed under section 5739.17 of the Revised Code and sellers licensed under section 5741.17 of the Revised Code are required to file returns and remit the tax due each month unless the tax commissioner authorizes filing at less frequent intervals as provided in paragraph (A)(2) of this rule.

(2) Vendors and sellers that do not hold a permit to sell alcoholic beverages may be authorized to file returns and remit tax due on a semiannual basis if their average monthly tax liability collections are less than two hundred dollars.

(3) Notwithstanding paragraph (A)(2) of this rule, the commissioner may require any vendor or seller that fails to timely file returns and remit tax due to file returns and remit tax on a monthly basis.

(B) Direct permit holders:

(1) Holders of direct pay permits issued pursuant to section 5739.031 of the Revised Code are required to file returns and remit tax due each month unless the commissioner authorizes filing at less frequent intervals as provided in paragraph (B)(2) of this rule.

(2) Holders of direct pay permits may be authorized to file returns and remit tax due on a quarterly basis if their average monthly tax liability is less than five thousand dollars.

(1) Business consumers:

(a) Business consumers that file returns pursuant to section 5741.12 of the Revised Code are required to file returns and remit tax due each month unless the commissioner authorizes filing at less frequent intervals as provided in paragraph (C)(1)(b) of this rule.

(b) Business consumers may be authorized to file returns and remit tax due on a quarterly basis if their average monthly tax liability is less than five thousand dollars.

(2) Individual consumers:

(a) Individuals that do not file consumer's use tax returns under paragraph (C)(2)(c) of this rule and whose use tax liability in the current calendar year is anticipated to be not more than one thousand dollars may file and remit the tax due in any year either on their income tax return under Chapter 5747. of the Revised Code for that year by the due date of that return or on the prescribed voluntary payment form for the calendar year. An individual that files an income tax return is subject to the statute of limitations with regards to assessments or refunds found in Chapters 5739. and 5741. of the Revised Code for amounts reported on that return related to use tax liability.

(b) Individuals that report and remit tax under paragraph (C)(2)(a) of this rule that make either an extraordinary individual purchase on which the tax exceeds seven hundred fifty dollars or a purchase of a motor vehicle, titled watercraft or titled outboard motor, on which tax is neither collected by a vendor nor, in the case of a motor vehicle, titled watercraft or titled outboard motor, paid by the consumer to the clerk of courts, must separately report and remit tax on that purchase using the prescribed voluntary payment form for the calendar quarter in which the purchase was made. Any such extraordinary purchase shall not be considered in calculating the tax liability for the current calendar year under paragraph (C)(2)(a) of this rule.

(c) Individuals whose annual tax liability is greater than one thousand dollars or any other individuals that the commissioner requires to obtain a consumer's use tax account shall file returns in the same manner as business consumers under paragraph (C)(1) of this rule.

(D)

(1) As used in this rule, returns filed on a semiannual basis will be for the reporting periods January through June and July through December. Returns filed on a quarterly basis will be for the reporting periods January through March, April through June, July through September and October through December.

(2) Except as otherwise provided in this rule, any sales tax, seller's use tax, or consumer's use tax return must be filed on or before the twenty-third day of the month following the end of the reporting period.

(3) The commissioner shall establish a filing interval for each newly registered vendor, seller, direct pay holder or consumer's use tax account holder within a reasonable amount of time after setting up the account and shall inform the vendor, seller, direct pay holder or consumer of that filing interval. Except as provided in paragraph (B)(2) or (C)(2) of this rule, unless the taxpayer is notified by the commissioner of an alternate filing period the filing period shall be monthly.

(E) Partial returns may be required for any taxpayer reporting on a semiannual or quarterly basis as a result of a tax rate change that becomes effective during a reporting period. The partial returns are necessary to separate the two tax rates in effect during the reporting period.

(F) For purposes of computing any applicable penalty, interest, and additional charges, unreported sales or use tax that was not but should have been reported pursuant to paragraphs (A) to (C) of this rule shall be considered due on the filing date of the tax return for such unreported tax as determined using the filing basis authorized under those paragraphs.

(G) Notwithstanding the provisions of paragraph (A) of this rule, the returns must be filed and tax due remitted on a monthly basis for any vendor or seller that elects to employ a certified service provider, as defined in division (C) of section 5740.01 of the Revised Code, or that uses a certified automated system, as defined in division (B) of section 5740.01 of the Revised Code, or that files a simplified electronic return as defined in the "Streamlined Sales and Use Tax Agreement," as identified in rule 5703-9-54 of the Administrative Code.

(H) Any holder of an active vendor's license, seller's use tax account, direct pay account or consumer's use tax account shall file returns according to the filing schedule established under this rule for every filing period, regardless of whether there is tax liability for that period.

(I) The commissioner shall calculate the "average monthly tax liability," as that term is used in paragraphs (A)(2), (B)(2), and (C)(1) of this rule, using the liability of the vendor, seller, direct pay holder or consumer's use tax account holder for the prior twelve month period.

(J)

(1) The commissioner may require any vendor, seller, direct pay holder or consumer to use a different filing period than required by paragraph (A), (B), or (C) of this rule if the commissioner finds that it would result in improved compliance or increased administrative efficiency.

(2) Any vendor, seller, direct pay holder or consumer may file a request with the commissioner to change their reporting period. The commissioner may agree to the request if the commissioner finds the alternate filing period would improve compliance or increase administrative efficiency.

(3) Whenever the commissioner changes a filing period for a vendor, seller, consumer or direct pay holder, the commissioner shall determine the date on which the change in filing period takes effect.

(K) Except as provided in paragraph (B)(2) of this rule, nothing in this rule shall be construed to have any impact on whether a vendor, seller, direct pay holder or consumer is required to make remittances by electronic funds transfer or to make accelerated payments of tax liability.

Last updated August 4, 2026 at 11:08 AM

History

Effective: May 5, 2022
Promulgated Under: Other

Ohio Adm.Code 5703-9-14 Sales and use tax; construction contracts; exemption certificates.

(A) A "construction contract" is any agreement, written or oral, pursuant to which tangible personal property is or is to be transferred and incorporated into real property, as defined in section 5701.02 of the Revised Code, so as to become a part thereof without regard to whether it is new construction or an addition to or alteration of an existing building or structure. A "construction contractor" is any person who performs such an agreement, whether as prime contractor or subcontractor.

(B) Tangible personal property that is permanently affixed to real property, but that primarily benefits the business conducted on the premises by the occupant, is a "business fixture," as defined in section 5701.03 of the Revised Code, and retains its status as personal property after such affixation is made. An agreement to transfer and install a business fixture is a sale and not a construction contract.

The transfer and affixation of personal property where title to the personal property does not transfer to the owner or lessee of the premises is a sale and not a construction contract. The item affixed remains personal property since the failure to transfer title displays an intention not to make the affixation permanent.

Tangible personal property that is temporarily affixed during construction, such as temporary electricity or water service hook-ups, fencing, construction elevators, shoring lumber, and concrete forms, is not incorporated into real property for sales and use tax purposes. This applies even if these items remain affixed after construction is completed due to inadvertence, convenience, or economic necessity.

(C) The sale and installation of the following items is never a construction contract and such transactions are to be treated as the sale and installation of tangible personal property for sales tax purposes:

(1) Carpeting, including carpet padding, tack strips, adhesive, and similar materials that are integral and necessary components of a carpet installation transaction;

(2) Agricultural land tile as defined in division (B)(5)(a) of section 5739.01 of the Revised Code;

(3) Portable grain bins as defined in division (B)(5)(b) of section 5739.01 of the Revised Code; and

(4) Trees, shrubs, sod, seed, fertilizer, mulch, and other tangible personal property transferred as part of a landscaping and lawn care service as defined in division (DD) of section 5739.01 of the Revised Code.

This provision shall not be construed to alter or affect the classification of such items after installation is completed.

(D)

(1) A construction contractor who purchases materials or taxable services for incorporation into real property is the consumer of those materials or services and shall pay sales or use tax on their purchase price, except as provided by paragraph (F) of this rule. The construction contractor is the consumer, even if a subcontractor provides the actual labor to incorporate those materials into the real property. Nevertheless, a construction contractor may purchase exempt from tax those materials or services that will be incorporated:

(a) Into a building used exclusively for charitable purposes by a nonprofit organization operated exclusively for charitable purposes as defined in division (B)(12) of section 5739.02 of the Revised Code;

(b) Into real property that is owned, or will be accepted for ownership at the time of completion, by the United States government or its agencies, the state of Ohio, or an Ohio political subdivision;

(c) Into real property under a construction contract with the United States government or its agencies, the state of Ohio, or an Ohio political subdivision;

(d) A computer data center entitled to the exemption under section 122.175 of the Revised Code;

(e) Into a horticulture structure or livestock structure as defined in section 5739.01 of the Revised Code for a person engaged in the business of horticulture or producing livestock;

(f) A building under a construction contract with an organizations exempt from taxation under section 501(c)(3) of the Internal Revenue Code of 1989 when the building is to be used exclusively for the organization's exempt purposes;

(g) Into a house of public worship or religious education;

(h) Into the original construction of a sports facility under section 307.696 of the Revised Code;

(i) Into a hospital facility entitled to exemption under section 140.08 of the Revised Code;

(j) Into real property in another state, if the materials or services, when sold to a construction contractor in that state for incorporation into real property in that state, would be exempt from a tax on sales levied in that state;

(k) Building and construction materials and services sold for incorporation into real property comprising a convention center that qualifies for property tax exemptions under section 5709.084 of the Revised Code (until one calendar year after the construction is completed).

(l) Building and construction materials sold for incorporation into a structure or improvement to real property that is used primarily as or in support of a manufacturing or research and development facility that is to be owned by a megaproject operator upon completion as outlined in division (B)(13) of section 5739.02 of the Revised Code.

(2) When claiming exemption under paragraph (D)(1) of this rule, the contractee and contractor must issue exemption certificates in accordance with paragraphs (I) and (J) of this rule. The contractee shall be deemed to be the consumer of all materials and services purchased under the claim of exemption and liable for the tax on the incorporated materials or services in the event the tax commissioner ascertains that the contractee was not entitled to exemption.

(E) A construction contractor who also makes substantial sales of the same types of tangible personal property that the contractor incorporates into real property in performing construction contracts may purchase those types of tangible personal property excepted from sales and use tax on the basis of resale under division (E) of section 5739.01 of the Revised Code. The contractor, unless granted direct payment authority, must have a consumer's use tax account with the department of taxation and accrue and pay use tax on the price of all materials consumed in performing construction contracts, in accordance with rule 5703-9-04 of the Administrative Code.

Similarly, a construction contractor who purchases materials without payment of the tax because the contractee has claimed an exemption under paragraph (D) of this rule must pay use tax on any materials not used on the exempt job and consumed by the contractor in a taxable manner.

(F)

(1) A person who manufactures or fabricates items of tangible personal property, and then sells some of the items and incorporates some into real property, must elect whether to be treated as a manufacturer or as a construction contractor on the purchase of raw materials incorporated into the manufactured items. The manufacturer/construction contractor need not notify the tax commissioner of such election and may elect to treat purchases of raw materials for distinct manufactured items differently. However, complete records must be maintained to show how the person elected to treat each purchase of raw materials.

(a) If the person elects to be treated as a manufacturer, the purchase of all raw materials may be exempted from the tax on the basis that they will be incorporated as a material or part into an item manufactured for sale under division (B)(42)(a) of section 5739.02 of the Revised Code. The manufacturer must accrue and pay use tax on the price of any self-manufactured item subsequently consumed in performing a taxable construction contract, or in any other taxable manner, in accordance with paragraph (A) of rule 5703-9-21 of the Administrative Code.

(b) If the person elects to be treated as a construction contractor, the person must pay sales or use tax on the acquisition cost of all raw materials, unless such materials are ultimately consumed in performing a nontaxable construction contract under paragraph (D) of this rule. The construction contractor must pay sales or use tax on all raw materials, and no refund of such tax will be allowed, even though the raw materials are incorporated into an item manufactured for sale. If such sale is a retail sale, the construction contractor is acting as vendor and must appropriately collect sales tax on such transaction.

(2) The election required by paragraph (F)(1) of this rule applies only to the purchase of raw materials that will become parts or components of manufactured items. Machinery and equipment used by the person in manufacturing shall be taxed based upon its quantified primary use without regard to how the manufacturer/construction contractor elects to treat the raw materials for sales and use tax purposes.

(G) The contractee may, or upon request of the contractor pursuant to the procedure specified in division (C) of section 5739.03 of the Revised Code shall, certify to the contractor what portions of a contract will be, at the completion of the contract, classified as personal property and what portions will be classified as real property. The fact that a certification has been made by the contractee must be noted in every written construction contract, and the contractor, subcontractors, and contractee shall each maintain a copy of the certification with the job documentation. If the tax commissioner subsequently determines that property certified by the contractee as personal property is, in fact, real property, the contractee shall be deemed the consumer of all materials incorporated into such real property and may be assessed sales or use tax thereon along with applicable interest and penalty.

The certification of the contractee has application only to the tangible personal property installed or incorporated pursuant to the contract. Equipment, tools, and supplies used by the contractor in performing the contract shall be taxed based upon their primary use without regard to the contractee's certification.

(H) Machinery, equipment, tools, supplies, and other tangible personal property purchased or leased by a construction contractor and used or consumed in performing a construction contract, including a contract specified in paragraph (D) of this rule, are taxable. The repair or installation of these items also is taxable.

(I)

(1) A contractee claiming an exemption specified in paragraph (D) of this rule must complete and deliver to the contractor a construction contract exemption certificate. If the contractee is a governmental entity, a government official must sign under the "political subdivision" section of the certificate.

As outlined in division (B)(7) of section 5739.03 of the Revised Code, the lessee of a sports facility claiming the exemption specified in paragraph (D)(1)(h) of this rule can provide and sign the exemption certificate on behalf of the county in which the subject sports facility is located. This rule applies when the tangible personal property is sold for the original construction or improvement to a sports facility wholly owned by a county that is intended to house major league professional athletic teams, and includes the stadium itself, together with all parking facilities, walkways, and other auxiliary facilities.

(2) All other contractees claiming exemption must sign under the "owner/contractee" section. If there is one prime contractor on the job, the contractee need only supply one exemption certificate to the prime contractor.

Pursuant to division (B)(7) of section 5739.03 of the Revised Code, in the case of tangible personal property sold for the original construction or improvement to a sports facility wholly owned by a county that is intended to house major league professional athletic teams, including a stadium, together with all parking facilities, walkways, and other auxiliary facilities, the person that leases the facility can provide and sign the exemption certificate on behalf of the county.

The contractor should make copies of the construction contract exemption certificate signed by the contractee and use those copies when making purchases of materials that will be incorporated into real property pursuant to the construction contract. A prime contractor must provide copies to all subcontractors for their use in purchasing materials for the job. The contractor or subcontractor must sign each certificate copy used when purchasing materials.

The original exemption certificate must be retained in the records of the contractor. A copy of the certificate also must be retained in the records of each subcontractor.

(3) Rather than using copies of the construction contract exemption certificate when making purchases of materials, the contractor or subcontractor may use a contractor's exemption certificate when purchasing materials for incorporation into real property pursuant to a contract where the contractee claims exemption under paragraph (D) of this rule.

(J) Forms required to be prescribed by rule are hereby prescribed for use as a construction contract exemption certificate and as a contractor's exemption certificate. The forms may be obtained from the department of taxation and are available on the department's web site. They may be reproduced as needed. To be valid, a construction contract exemption certificate must be signed by the contractee claiming exemption. Each certificate, or copy of a certificate, submitted to a vendor must be signed by the contractor or subcontractor making the purchase. A certificate covers all sales of materials made by the vendor to a contractor or subcontractor for incorporation into real property under that construction contract. The vendor must maintain the certificate to document the reason tax was not charged.

To be valid, all necessary signatures must be dated and all certificates must specify the reason for exemption and must clearly identify the contract and specify the job site.

(K) The forms "STEC CC, Construction Contract Exemption Certificate," and "STEC CO, Contractor's Exemption Certificate," both revised March 2025, located on the department's website, are incorporated in this rule by reference.

Last updated October 1, 2026 at 10:04 AM

History

Effective: October 1, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-9-15 Sales and use tax; coupons, coupon books, and gift cards.

(A) For the purposes of this rule:

(1) "Coupon" means a certificate, ticket, card, digital code or other document which entitles the bearer thereof to a specified discount on the purchase of tangible personal property, specified digital products, or services. Discounts may include either fixed amount or percentage reductions from the cost of merchandise or free merchandise with the purchase of other items.

(2) "Coupon book" means a bound collection of coupons that are redeemable by a merchant or several designated merchants and includes, such things as dining or entertainment discount clubs.

(3) "Gift card" means a document, card, certificate, or other record, whether tangible or intangible, that may be redeemed by a consumer for a dollar value when making a purchase of tangible personal property or services.

(B) Coupons published by a vendor or on behalf of a vendor in a newspaper, handbill, magazine, or by any method and distributed to the public without charge, other than the cost of the newspaper or magazine, and for which the redeeming vendor receives no reimbursement, are discounts allowed prior to the sale and are not part of the taxable price.

(C) Coupons that are published by a manufacturer, distributor, wholesaler, or any other person, and for which the vendor is reimbursed by the manufacturer, distributor, or wholesaler upon surrender of the coupons, are included in the price for sales tax purposes. If the vendor enhances the value of a coupon, the amount of the unreimbursed enhancement will be treated in the manner described in paragraph (B) of this rule. For example:

(1) A customer clipped a manufacturer's coupon from the Sunday newspaper for detergent in the amount of fifty cents off. The customer then went to the local grocery store and purchased the same detergent for seven dollars and ninety-nine cents and utilized the coupon. The price for the detergent is seven dollars and ninety-nine cents because the local grocery store will be reimbursed for the amount on the coupon.

(2) Same facts as above, except that the local grocery store offers to double the coupon. Under these facts, the price of the detergent is seven dollars and forty-nine cents because the vendor offered the additional discount based on the use of the coupon.

(D)

(1) Sales of coupons, coupon books, and gift cards, either by the vendor which anticipates redeeming them or by any corporation, association, or other person for use among a variety of vendors, is not a sale of tangible personal property and no tax should be collected on such sales. For example:

A gift card purchased by a consumer at a chain restaurant that can be utilized at any of those restaurants and not just a specific location would not be a sale of tangible personal property. When the gift card is redeemed by the consumer, the sales tax is calculated on the selling price prior to the application of the dollar value of the gift card.

(2) When a purchased coupon, coupon book, or gift card is used to purchase taxable tangible personal property, specified digital products, or services, the price for tax purposes is the selling price of such property or services before application of the discount or gift card amount. For example:

(a) For twenty-five dollars, a consumer purchases a coupon from a third party unrelated to the vendor and that coupon entitles the consumer to fifty dollars worth of tangible personal property or services at the vendor's location. The vendor should collect sales tax on the full selling price if the tangible personal property or service received by the consumer is taxable. If the consumer receives fifty dollars worth of merchandise or services, the price for sales tax purposes is fifty dollars.

(b) A consumer purchases seventy dollars of taxable tangible personal property or services. The consumer redeems a purchased gift card in the amount of fifty dollars toward this purchase. Sales tax should be calculated on seventy dollars, and the fifty dollar gift card would be applied to the purchase after the sales tax was added.

(E)

(1) The dollar value of a gift card that is distributed pursuant to an awards, loyalty or promotional program is not part of the taxable price if the vendor is not reimbursed or compensated by a third party for all or part of the gift card value. For the purposes of this rule, at the time a gift card is redeemed by the consumer, the vendor knows the card was distributed pursuant to an awards, loyalty, or promotional program. Past and present purchases of tangible personal property, specified digital products or services by the consumer will not be treated as consideration exchanged for a gift card. For example:

A consumer belongs to a loyalty program that provides a member a five dollar gift card after each fifty dollar purchase. The vendor's recordkeeping system at the time the gift cards are redeemed indicates the five dollar gift card was distributed pursuant to an awards, loyalty, or promotional program. The consumer spends sixty dollars and receives a five dollar gift card. On the next purchase, the consumer uses the five dollar gift card toward a twenty-five dollar purchase of taxable tangible personal property. Sales tax should be calculated on twenty dollars because the five dollar gift card was not a purchased gift card and therefore reduces the price for purposes of calculating the sales tax.

(2) If the vendor's recordkeeping system at the time the gift card is redeemed does not indicate whether the gift card was distributed pursuant to an awards, loyalty, or promotional program, the dollar value of the gift card that is not sold by a vendor is part of the taxable price. For example:

A consumer receives a five dollar gift card for the purchase of a product. The vendor's record system at the time the gift card was redeemed does not distinguish gift cards distributed pursuant to an awards, loyalty, or promotional program from those gift cards that may be purchased gift cards. On the next purchase, the consumer uses the five dollar gift card toward a fifty dollars purchase of taxable tangible personal property. Sales tax should be calculated on fifty dollars.

(3) If a gift card distributed pursuant to an awards, loyalty or promotional program is redeemed by a consumer to purchase a mixture of both taxable and non-taxable tangible personal property or services, the amount of the gift card will proportionally reduce the price of the taxable and non-taxable items. If the vendor is unable to proportionally apply the value of the gift card to multiple items, the vendor may apply the value of the gift card in any reasonable, consistent and uniform method based on the vendor's books and records as they existed at the time of the sale and redemption. For example:

(a) A consumer redeems a ten dollar gift card issued pursuant to an awards program for the purchase of an item of taxable tangible personal property priced at twenty-five dollars and exempt tangible personal property priced at seventy-five dollars. At the time of the redemption, the vendor's point-of-sale system allows the vendor to proportionally apply the value of the gift card on a per-item basis. The ten dollar gift card should be proportionally applied to reduce the price of the taxable tangible personal property by two dollars and fifty cents, and sales tax should be calculated on twenty-two dollars and fifty cents.

(b) A consumer redeems a five dollar gift card issued pursuant to an awards program for the purchase of an item of taxable tangible personal property priced at ten dollars and exempt tangible personal property priced at ten dollars. At the time of the redemption, the vendor's point-of-sale system does not allow the vendor to proportionally apply the value of the gift card on a per-item basis. The vendor may apply the five dollar gift card to reduce the price of the taxable or exempt item so long as the vendor is using a reasonable, consistent and uniform method.

Last updated September 21, 2026 at 12:05 PM

History

Effective: November 19, 2021
Promulgated Under: Other

Ohio Adm.Code 5703-9-16 Affiliated group.

"Affiliated group" as used in Chapter 5739. and 5741. of the Revised Code has the same meaning as in division (B)(3)(e) of section 5739.01 of the Revised Code. In the case of a partnership, a general partner that has or controls at least a fifty per cent partnership interest will be considered to control the partnership.

Last updated August 4, 2026 at 11:08 AM

History

Effective: December 19, 2016
Promulgated Under: Other

Ohio Adm.Code 5703-9-17 Conditional sales.

(A) A "conditional sale" is a transaction in which the vendor retains a security interest in the tangible personal property sold to insure fulfillment of one or more conditions before full ownership is granted to the consumer. A "layaway sale" is a conditional sale in which the vendor transfers title but retains possession of the property sold. An "approval sale" is a conditional sale in which the vendor transfers possession but retains title to the property sold. A lease under the terms of which the lessee is obligated to accept ownership and to pay for tangible personal property at a future time is a conditional sale. A lease which does not so obligate the lessee is not a conditional sale and tax must be collected as specified in division (A)(2) of section 5739.02 of the Revised Code.

(B) A conditional sale is effected at the time and place of acceptance of the purchase offer by the vendor. The sales tax must be charged on the full agreed price at that time and reported on the vendor's return for the period in which the sale is effected.

(C) In the event the consumer fails to fulfill the conditions of the sale so that title and possession revert to the vendor, the vendor may treat the transaction as one involving returned merchandise in accordance with rule 5703-9-11 of the Administrative Code if it is shown that the vendor refunded the full amount of all payments made by the consumer, including the sales or use tax paid. The transaction may otherwise be treated as a bad debt in accordance with section 5739.121 of the Revised Code and rule 5703-9-44 of the Administrative Code.

Last updated August 4, 2026 at 11:09 AM

History

Effective: May 5, 2022
Promulgated Under: Other

Ohio Adm.Code 5703-9-18 Definition of subscriber for satellite broadcasting service.

"Subscriber" as used in division (VV) of section 5739.01 of the Revised Code includes both residential and business customers. "Subscriber" does not include an AM or FM radio or television broadcast station, a cable television system, or a telecommunications or mobile telecommunications service provider.

Last updated August 4, 2026 at 11:09 AM

History

Effective: May 5, 2022
Promulgated Under: Other

Ohio Adm.Code 5703-9-19 Installment and credit sales.

An "installment sale" is a sale in which the vendor agrees to accept payment of the price in two or more partial payments at intervals over a period of time. A "credit sale" is a sale in which the vendor agrees to accept payment of the price in minimum partial payments over an indefinite period of time.

The vendor must collect from or charge to the customer the entire amount of the tax as computed on the price of an installment or credit sale, irrespective of the amount of the installment or down payment made by the consumer if any. Each installment sale or credit sale and the tax applicable thereto must be reported on the vendor's return covering the period in which the sale occurred. If the account is underpaid in whole or in part by the consumer, the transaction may be treated as a bad debt in accordance with section 5739.121 of the Revised Code and rule 5703-9-44 of the Administrative Code.

Last updated August 4, 2026 at 11:09 AM

History

Effective: December 19, 2016
Promulgated Under: Other

Ohio Adm.Code 5703-9-20 Sales and use tax; production or fabrication of tangible personal property.

(A) Production or fabrication of tangible personal property for a consideration is included in the definition of "sale" and "selling," as defined in division (B) of section 5739.01 of the Revised Code, whether all or a portion of the materials are supplied by the person performing the production or fabrication, by the consumer, or by a third party. Any change in the substance or form of tangible personal property, so as to create a new article or substantial change in an existing article of tangible personal property, constitutes "production" or "fabrication."

(B) The price of the transaction is the entire amount charged to the purchaser for such production or fabrication, including charges for the cost of materials, labor, overhead, and profit, pursuant to division (H) of section 5739.01 of the Revised Code and rule 5703-9-52 of the Administrative Code.

(C) A person engaged in production or fabrication of tangible personal property for consideration is deemed to be manufacturing for sale and subject to the provisions of rule 5703-9-21 of the Administrative Code.

Last updated August 4, 2026 at 11:09 AM

History

Effective: May 5, 2022
Promulgated Under: Other

Ohio Adm.Code 5703-9-21 Sales and use tax; manufacturing.

(A) For purposes of this rule, all purchases of tangible personal property are taxable, except those in which the purpose of the consumer is to incorporate the thing transferred as a material or a part into tangible personal property to be produced for sale by manufacturing, assembling, processing, or refining or to use the thing transferred, as described in section 5739.011 of the Revised Code and this rule, primarily in a manufacturing operation to produce tangible personal property for sale.

This means that a person who buys tangible personal property and will make it a part or constituent of something that is being manufactured for sale, or buys something that is used in a manufacturing operation, does not have to pay sales or use tax on the thing purchased.

Tangible personal property purchased by a manufacturer as a component or constituent of a product to be manufactured for sale is excepted from sales and use tax. The purchase of all such tangible personal property is not taxable, even though a portion will be lost or removed as waste or for testing. The manufacturer will pay use tax on the price, as defined in division (G) of section 5741.01 of the Revised Code, of any completed product not sold and stored or used by the manufacturer in a taxable manner, except such product that is consumed in testing or is disposed of because it is defective or otherwise unsalable.

(B)

(1) "Manufacturing operation" means a process in which materials are changed, converted, or transformed into a different state or form from which they previously existed and includes refining materials, assembling parts, and preparing raw materials and parts by mixing, measuring, blending or otherwise committing such materials or parts to the manufacturing process. "Manufacturing operation" does not include packaging.

Tangible personal property purchased by a manufacturer for use in packaging is taxable unless exempted pursuant to division (B)(15) of section 5739.02 of the Revised Code.

Any business whose sole activity is a process that does not include conversion or alteration of tangible personal property into a different state or form is not a manufacturer and is not covered by this rule.

The manufacturing operation begins when the raw materials or parts are committed to the manufacturing process. If the raw materials or parts are stored after being received at the manufacturing facility, the raw materials or parts are not committed until after they are removed from such initial storage. The point of commitment is where the materials handling from such initial storage has ceased or the point where the materials or parts have been mixed, measured, blended, heated, cleaned, or otherwise treated or prepared for the manufacturing process, whichever first occurs. If the raw materials or parts are not stored, they are committed at the point where materials handling from the place of receipt ceases or where they are mixed, measured, blended, heated, cleaned, or otherwise treated or prepared for the manufacturing process, whichever first occurs. The commitment of the materials or parts need not be irrevocable, but they must have reached the point, after materials handling from initial storage has ceased, where they normally will be utilized within a short period of time. The point of commitment frequently will be different for particular materials and parts, since they are introduced at different times in the manufacturing operation.

Things used in any activity, including movement or storage of the materials or parts before they are committed are taxable.

See examples 1, 2, 3, 4, 6, 9, 40, 61, 63, and 64.

(2) "Refining" means removing or separating a desirable product from raw or contaminated materials by distillation or physical, mechanical, or chemical processes.

This definition of "refining" describes a type of manufacturing process and is not limited to the petroleum industry. A business whose sole activity is sorting material by size or other physical characteristic, or washing dirt or other contaminates from the surface of parts or other materials is not engaged in refining.

See examples 4, 5, and 63.

(3) "Assembly" and "assembling" mean attaching or fitting together parts to form a product, but do not include packaging a product.

Assembly generally refers to the process whereby previously manufactured parts or components are brought together and attached to create a complete, or more complete, item.

See example 15.

(4) "Manufacturer" means a person who is engaged in manufacturing, processing, assembling, or refining a product for sale and, solely for the purposes of division (B)(12) of section 5739.011 of the Revised Code, a person who meets all the qualifications of that division.

(5) "Manufacturing facility" means a single location where a manufacturing operation is conducted, including locations consisting of one or more buildings or structures in a contiguous area owned or controlled by the manufacturer.

The manufacturer does not have to own or lease the property, but have the legal right to use it. If the property under the control of the manufacturer is not contiguous, it is not a single manufacturing facility.

See examples 21, 23, and 57.

(6) "Materials handling" means the movement of the product being or to be manufactured, during which movement of the product is not undergoing any substantial change or alteration in its state or form.

(7) "Testing" means a process or procedure to identify the properties or assure the quality of a material or part.

(8) "Completed product" means a manufactured item that is in the form and condition as it will be sold by the manufacturer. An item is completed when all processes that change or alter its state or form or enhance its value are finished, even though the item subsequently will be tested to ensure its quality or be packaged for storage or shipment.

A product may be completed, as far as a particular manufacturer is concerned, even though it is not in the form in which it will be sold to the ultimate consumer because it will be further manufactured by another manufacturer. If the product will be further manufactured by the same manufacturer at a different manufacturing facility, the product is still in-process and is not completed.

See examples 8, 13, and 64.

(9) "Continuous manufacturing operation" means the process in which raw materials or components are moved through the steps whereby manufacturing occurs. Materials handling of raw materials or parts from the point of receipt or pre-production storage or of a completed product, to or from storage, to or from packaging, or to the place from which the completed product will be shipped, is not a part of a continuous manufacturing operation.

The continuous manufacturing operation begins at the point where the raw materials or parts are committed and ends at the point where the product is completed.

There may be several continuous manufacturing operations at the same manufacturing facility, each producing a different product.

The things used in the continuous manufacturing operation include all production machinery, the materials handling equipment that moves the product between the production machines, and any equipment, such as tanks, shelves, or racks, that temporarily store or hold the product in between production machines. Even though testing equipment used to test in-process product is not taxable under this rule, no testing procedure is part of the continuous manufacturing operation unless it is physically and functionally integrated between steps on the production line.

See examples 1, 6, 8, 11, 19, and 63.

(1) Production machinery and equipment that act upon the product or machinery and equipment that treat the materials or parts in preparation for the manufacturing operation.

Production machinery is the equipment that actually changes the state or form of the product, that is, the tangible personal property being manufactured for sale. Also included is the equipment that treats the product by blending, mixing, measuring, washing, agitating, filtering, heating, cooling, or similar processes after the material or parts have been committed to the manufacturing operation and before the product is completed.

See examples 1, 4, 7, 8, 18, 24, 27, 32, 35, 56, 60, 61 and 63.

(2) Materials handling equipment that moves the product through a continuous manufacturing operation; equipment that temporarily stores the product during the manufacturing operation; or, excluding motor vehicles licensed to operate on public highways, equipment used in intraplant or interplant transfers of work in process where the plant or plants between which transfers occur are manufacturing facilities operated by the same person.

Any equipment, except motor vehicles registered for highway operation, used to move or transport the in-process product between manufacturing facilities of the same manufacturer, is considered to be used in the manufacturing operation.

See examples 1, 8, 9, 10, 11, 57, 59, 60, 63, and 64.

(3) Catalysts, solvents, water, acids, oil, and similar consumables that interact with the product and that are an integral part of the manufacturing operation.

This describes those substances that do not appreciably become a component part of the product, but which usually come in contact with the product during the manufacturing process.

See examples 1, 13, 14, 28, 35, and 62.

(4) Machinery, equipment, and other tangible personal property used during the manufacturing operation that control, physically support, produce power for, lubricate, or are otherwise necessary for the functioning of production machinery and equipment and the continuation of the manufacturing operation.

Materials which are used to make foundations, supports, and other things which are incorporated into a building or structure and become accessions to the real estate cannot be purchased without payment of tax under this rule. Foundations, structural steel, and similar items which provide physical support and which retain their status as personal property will be treated for purposes of taxation separately from the equipment which they support.

Foundations and supports for production machinery, materials handling equipment, and other equipment used in a continuous manufacturing operation are not taxable. Similarly, foundations and supports for tangible personal property used to manufacture tangible personal property used in the manufacturing operation, as described in paragraph (C)(5) of this rule; for testing equipment, as described in paragraph (C)(6) of this rule; and for equipment used to handle or store scrap for recycling at the same facility, as described in paragraph (C)(7) of this rule, are deemed necessary for the continuation of the manufacturing operation and are not taxable.

Tangible personal property that monitors in-process product or that lubricates, cools, monitors, or controls production machinery, materials handling equipment, and other equipment used in a continuous manufacturing operation is not taxable. Similarly, tangible personal property that lubricates, cools, monitors, or controls equipment used to manufacture tangible personal property used in the manufacturing operation, as described in paragraph (C)(5) of this rule; testing equipment, as described in paragraph (C)(6) of this rule; and equipment used to handle or store scrap for recycling at the same facility, as described in paragraph (C)(7) of this rule, is deemed necessary for the continuation of the manufacturing operation and is not taxable. However, all equipment that makes or stores records of monitoring is taxable.

See examples 1, 15, 16, 17, 18, 25, 29, 52, 55, 57, and 59.

(5) Machinery, equipment, fuel, power, material, parts, and other tangible personal property used to manufacture machinery, equipment, or other tangible personal property used in manufacturing a product for sale.

If a manufacturer makes an item that is used in the manufacturing operation as described in this rule, such as tools, tooling, replacement parts for machinery, or consumable substances, such as acid or solvents, the raw materials and components that go into that item are not taxable.

Certain things used by the manufacturer to make the item that will be used in the manufacturing operation are also not taxable. These things include the machinery which manufactures the item by changing the state or form of the raw materials or components, the materials handling equipment which moves the item between such machinery, and any fuel or power used to operate the machinery or materials handling equipment.

After the item is in the form in which it will be used in the manufacturing operation, any equipment that stores it or moves it to or from the manufacturing operation is taxable.

See example 18.

(6) Machinery, equipment, and other tangible personal property used by a manufacturer to test raw materials, the product being manufactured, or the completed product.

The equipment and supplies that the manufacturer uses to perform testing, and tangible personal property used to physically support, control, lubricate, cool, or monitor such equipment are not taxable. Those things that are merely used in the lab or other area where testing occurs, but play no part in the actual testing procedures, such as furniture, storage equipment, and computers that record or store the test results, are taxable. The testing activity is not part of the continuous manufacturing operation unless it is physically and functionally integrated between steps on the production line. Materials handling equipment used to transport test samples is taxable. Equipment and supplies used to test fuel, consumables, equipment, or anything else that is not a raw material, the product being manufactured, or a completed product are taxable.

See examples 3, 4, 19, and 60.

(7) Machinery and equipment used to handle or temporarily store scrap that is intended to be reused in the manufacturing operation at the same manufacturing facility.

In this context, scrap is any portion or component of the product being manufactured that is removed, intentionally or unintentionally, from the manufacturing process or that is residual after the process is completed. If the manufacturer recycles the scrap back into the manufacturing operation at the same facility, the equipment which moves or stores the scrap is not taxable.

Scrap which is to be sold or to be reused as a raw material by the manufacturer at another facility, is considered to be processed in a manufacturing operation if the state or form of the scrap is changed or altered. In such a case, the scrap, as it is removed from the manufacturing operation, is a raw material and the equipment which transports or stores it before it is committed to the operation where it undergoes manufacturing is taxable. After such manufacturing is over, the processed scrap is a completed product.

See examples 22 to 24, 47, and 61.

(8) Electricity, coke, gas, water, steam, and similar substances used in the manufacturing operation; machinery and equipment used for, and fuel consumed in, producing or extracting those substances; and machinery, equipment, and other tangible personal property used to treat, filter, pump, alter voltage, or otherwise make the substance suitable for use in the manufacturing operation.

Anything that is a fuel or a source of power for machinery used in the manufacturing operation, or that provides energy for the manufacturing process itself, is not taxable. Similarly, substances which transmit energy, such as steam or cooling water which transmits heat to or from the process or machinery, are not taxable. Any equipment that the manufacturer uses to generate, produce, or extract these substances, as well as fuel used to power such generation or extraction, is not taxable.

Tangible personal property which treats the fuel or power is not taxable. Such things may include coal crushers, electrical transformers, fuel or water filters, and water treatment chemicals.

See examples 22 to 32, 59, and 64.

(9) Machinery, equipment, and other tangible personal property used to transport or transmit electricity, coke, gas, water, steam, or similar substances used in the manufacturing operation from the point of generation, if produced by the manufacturer, or from the point where the substance enters the manufacturing facility, if purchased by the manufacturer, to the manufacturing operation.

Such equipment includes wires, conduit, pipes, larry cars, and conveyors.

See examples 12, 22 to 32.

(10) Machinery, equipment, and other tangible personal property that treats, filters, cools, refines, or otherwise renders water, steam, acid, oil, solvents, or similar substances used in the manufacturing operation reusable, provided that the substances are intended for reuse and not for disposal, sale, or transportation from the manufacturing facility.

See examples 1, 20, 33, 34, 35, 36, 37, and 64.

(11) Parts, components, and repair and installation services for items used in the manufacturing operation as described in paragraph (C) of this rule.

Replacement parts for nontaxable equipment are not taxable. Any repair service or installation service purchased from an independent contractor for repairing or installing nontaxable equipment is not taxable.

See examples 38, 44, 55, and 56.

(12) Machinery and equipment, detergents, supplies, solvents, and any other tangible personal property located at a manufacturing facility that are used in the process of removing soil, dirt, or other contaminants from, or otherwise preparing in a suitable condition for use, towels, linens, articles of clothing, floor mats, mop heads or other similar items, to be supplied to a consumer as part of laundry and dry cleaning services as defined in division (BB) of section 5739.01 of the Revised Code, only when the towels, linens, articles of clothing, floor mats, mop heads, or other similar items belong to the provider of the services.

(13) Equipment and supplies used to clean processing equipment that is part of a continuous manufacturing operation to produce food for human consumption.

See examples 63 and 64.

(D) Things transferred for use in a manufacturing operation do not include:

(1) Tangible personal property used in administrative, personnel, security, inventory control, record keeping, ordering, billing, or similar functions.

Those things that are used in the "non-manufacturing" aspects of the manufacturer's business are generally taxable. This includes what is broadly known as office equipment, furniture, and supplies. Anything, including computers and software, used for communication, ordering, billing, inventory control, or record keeping, including testing or production records, is taxable.

Things used in providing security include devices to monitor or observe personnel or detect intruders.

See examples 7, 15, 16, 19, 39, and 55.

(2) Tangible personal property used in storing raw materials or parts prior to the commencement of the manufacturing operation or used to handle or store a completed product, including storage that actively maintains a completed product in a marketable state or form.

(3) Tangible personal property used to handle or store scrap or waste intended for disposal, sale, or other disposition, other than reuse in the manufacturing operation at the same manufacturing facility.

(4) Tangible personal property used to store fuel, water, solvents, acid, oil, or similar items consumed in the manufacturing operation.

All types of storage, be it of raw materials or parts, product (except in-process product), completed product, consumables, fuel, waste, scrap, equipment, tools, supplies, repair parts, etc., is taxable.

Similarly, anything used to handle, move, or transport people or personal property in the manufacturing facility is taxable, except for materials handling during a continuous manufacturing operation or during the manufacture of an item which will be used in the manufacturing operation, as described in paragraph (C)(5) of this rule, or the transmission of fuel, power, and similar substances as described in paragraph (C)(9) of this rule.

See examples 1, 2, 3, 4, 6, 9, 11, 20, 37, 40, 41, 42, 43, 44, 47, 59, 60, 61, and 64.

(5) Tangible personal property that is or is to be incorporated into realty.

Any tangible personal property that will become part of the real estate is taxable under this rule.

See examples 32, 45, and 46.

(6) Machinery, equipment, and other tangible personal property used for ventilation, dust, or gas collection, humidity or temperature regulation, or similar environmental control, except machinery, equipment, and other tangible personal property that totally regulates the environment in a special and limited area of the manufacturing facility where the regulation is essential for production to occur.

All equipment and supplies that monitor, regulate, or improve the environmental conditions in the manufacturing facility are taxable. This includes all lighting, heaters, air conditioning equipment, fans, heat exhaust equipment, air make up equipment, dust control or collection equipment, and gas detection, collection, and exhaust equipment. This should not be read to change the traditional classification of real and personal property.

The only exception to the taxing of these items is equipment which totally regulates the environment in a special and limited area of the facility, such as a clean room or paint booth, where such total regulation is essential for production to occur. Even in such a special area, things that do not provide essential environmental regulation, such as safety or communication equipment, are taxable.

See examples 7, 47, 48, 49, and 54.

(7) Tangible personal property used for the protection and safety of workers, unless the property is attached to or incorporated into machinery and equipment used in a continuous manufacturing operation.

Protective clothing and devices, such as safety shoes, gloves, earplugs, hard hats, respirators, first aid supplies, etc. are taxable. Similarly, equipment installed to protect workers or shield them from harm is taxable, unless it is made a part of machinery or equipment used in a continuous manufacturing operation.

Equipment and supplies used to detect, extinguish, prevent, cure, or mitigate fire, explosion, flood, or other calamity in the manufacturing facility are taxable.

See examples 9, 43, 50, 51, 52, 53, and 54.

(8) Machinery, equipment, and other tangible personal property used to clean, repair, or maintain real or personal property in the manufacturing facility.

Tools, equipment, and supplies made or purchased by the manufacturer for use in maintaining, installing, repairing, or cleaning its property, real or personal, are taxable. This includes any such items used on nontaxable equipment. This does not apply to repair or replacement parts or supplies which are taxable or not, depending on the taxability of the equipment into which they are installed.

See examples 32, 55, 56, and 58.

(9) Motor vehicles registered for operation on the public highways.

See examples 21, 57, and 63.

(E) For purposes of this rule, any tangible personal property used by a manufacturer in both a taxable and a nontaxable manner will be totally taxable or totally exempt from taxation based upon its quantified primary use. If the tangible personal property consists of fungibles, they will be taxed upon the proportion of the fungibles used in a taxable manner.

See examples 19, 25, 59 and 64.

(F) Persons whose only activity is printing and whose product produced for sale consists wholly of printed matter are not manufacturers under this rule. The taxability of things used by printers will be determined pursuant to division (B)(42)(f) of section 5739.02 of the Revised Code.

If a portion of a manufacturer's manufacturing process involves printing, the taxability of the tangible personal property primarily devoted to the printing operation will be determined pursuant to division (B)(42)(f) of section 5739.02 of the Revised Code.

(G) Nothing in this rule restricts or denies any exception or exemption that may be available to a manufacturer under other provisions of the sales tax statutes or rules of the tax commissioner.

EXAMPLES

Example 1

A steel manufacturer galvanizes its flatroll steel to provide its customers with a corrosion resistant product. Through electrolysis and a recirculating zinc solution, zinc is chemically bonded to the steel. Recirculation of the zinc solution involves an intricately-woven system of fibrecast pipes, pumps, dissolution tanks, and electrolytic recirculating tanks, all of which are controlled by computers. As with many other types of manufacturing-related equipment, the size, weight, and configuration of these items require special foundations and supports. The entire system provides the necessary recipe and volume of solution for precise applications of zinc in a high velocity rolling mill.

The zinc solution is a raw material which becomes a component of the completed product.
The solution in which the zinc is dissolved is a consumable that interacts with the product and is not taxable.
The piping system, dissolution tank, pumps, and electrolytic holding tanks are all used in a continuous manufacturing operation and are not taxable.
The computers are used to control production machinery and in-process materials handling. The foundations and structural supports similarly are used in connection with production machinery. Therefore, these items are all not taxable.

Example 2

A manufacturer of concrete owns a ready-mix batch plant. Cement and aggregate are purchased from and delivered by outside suppliers. Cement is removed from delivery trailers by a vacuum system, which deposits the cement in a storage silo. Aggregate of particular sizes is delivered by dump trucks. The aggregate is stored in piles, segregated by size. As needed, cement is removed from the silo by screw conveyor and batched into a mixing drum. Aggregate is moved from the proper pile(s) by a front loader, which deposits the aggregate on a belt conveyor which lifts the stone up and into the mixing drum. Water is added into the drum and mixing commences. After a short time, concrete is discharged into mixer trucks. The mixing drums on the trucks operate via power take off from the truck engines. The concrete continues to be mixed as the trucks deliver it to the customer. One hundred per cent of this batch plant's output is sold to others by the manufacturer.

The cement and water are committed to the manufacturing operation at the mixing drum. The cement vacuum system, storage silo, and screw conveyor are taxable.
The aggregate is committed to the manufacturing operation when materials handling (via the front loader) from initial storage ceases and the aggregate is deposited on the conveyor which deposits it into the mixing drum.
The aggregate conveyor and mixing drum are not taxable.
The manufacturing operation continues in the mixer truck and is not completed until the concrete is discharged from the truck's mixer. Because the truck's mixer operates by power take off from the truck engine, the entire vehicle is production machinery and is not taxable.

Example 3

A secondary smelter of aluminum uses a scale as part of an automated process which measures out quantities of purchased aluminum scrap for use in the casting process in the foundry. The aluminum is delivered to the scale by a crane which removes the material from storage and puts it into a hopper which feeds the scale.

The aluminum scrap is a purchased material, not scrap which is generated at this manufacturing facility; therefore, the equipment for its storage and handling are taxable. This includes whatever storage facility is set up for it and the crane.
Because the raw material is committed to the manufacturing process at the hopper, neither the hopper nor the scale is taxable.

Example 4

An oil refinery obtains supplies of raw crude from numerous sources. It stores this crude in various tanks, withdrawing samples from each so that, in a laboratory in another part of the plant, it can conduct tests to determine the composition of each lot. Subsequently, various crude is metered and piped to another tank for blending to meet process specifications. Thereafter, the blended crude is desalted to remove impurities such as bottom sediments and water, and then is pumped to a preheat furnace to commence the distillation process.

The storage tanks in which the raw crude is placed upon receipt are taxable. The fact that the tanks store the crude while laboratory tests are being conducted upon the samples makes no difference to the status of these tanks.
The meters and piping used to transport the raw crude to the blending tank are not taxable from the point of metering. The crude is committed to the manufacturing process when it is metered after initial storage.
The equipment used to blend the crude is not taxable as the crude has been committed to the manufacturing process.
The storage and handling equipment used after the blending tank is not taxable.
The desalting equipment and preheat furnace treat the crude in preparation for the manufacturing operation after it has been committed to the process and are thus not taxable.
The equipment used to test the raw crude is not taxable.

Example 5

A cement manufacturer purchases limestone which is stored in piles at its facility. Prior to committing the limestone to the process, the manufacturer periodically hoses down the limestone to keep down the dust.

This activity does not constitute refining. Consequently, the hose and other equipment used to hose down the pile would be taxable.

Example 6

A manufacturer makes roofing shingles. It first makes a paper felt. This is passed through a saturator tank which contains asphalt that has been heated with steam to a very high temperature. This saturates the felt with the asphalt. The saturated felt is coated with granite dust; colored granules are then applied to one side and talc to the other. The material is then cooled and either cut to size or rolled up for shipment.

The colored granules are placed in storage when they are purchased. When they are to be used, they are transported to the blending box, where different colors are mixed together and applied to the roofing material. The purchased talc is also placed in a storage tank and then is transported to the manufacturing line by a series of pneumatic handling devices, which deposit it into a hopper over the production line. It then falls onto the shingle material passing underneath the hopper.

The storage facilities for the granules and talc are taxable as they are storing raw materials which will be incorporated into the product.
The handling devices for both the granules and talc are also taxable as they are handling raw materials from their initial storage and before they are committed to the manufacturing process.
The blending box is the point at which the processing involving the colored granules begins, as the granules are mixed and applied to the roofing material at that point. It is therefore not taxable.
The talc hopper is also not taxable as it is the point where handling from initial storage has ceased and the material is committed to the manufacturing process.

Example 7

A paper manufacturer makes special paper for use in full color photocopying. The process to apply the paper coating must be done in a dust and pollution free environment. Rolls of paper are passed through a machine where the coating is applied and dried. This process occurs in a clean room, which is separated from the rest of the plant by airtight partitions and ceiling coated with an easily cleaned plastic. Three of the walls and the ceiling are free standing and not part of the walls and ceiling of the building itself; the fourth wall, however, is a section of a wall of the larger structure. Employees can only enter the clean room through two airlocks, which prevent dirty air from entering. All air is filtered and regulated as to temperature and humidity by heat pumps, electric heaters, dehumidifiers, and exhaust fans that serve only the clean room and maintain a positive air pressure in the room. This equipment is automatically controlled by a small computer using data from air monitoring sensors in the room. Employees must wear disposable paper coveralls, overshoes, and caps. The room has an intercom to minimize personnel traffic in and out of the room. Lighting in the room is by normal fluorescent fixtures attached to the ceiling.

The paper coater is production machinery and is not taxable.
The clean room, including the heaters, heat pumps, light fixtures, etc., remains tangible personal property, since its special use primarily serves the business rather than the real estate.
Since the clean room provides environmental regulation in a special and limited area, and such regulation is essential for the manufacturing to occur, it is not taxable. This includes the partitions and ceiling, airlocks, heat pumps, heaters, dehumidifiers, exhaust fans, ductwork, air monitors, lights, regulating computer, and the special clothing used by the workers to prevent product contamination within the room.
The intercom is taxable.

Example 8

In manufacturing glassware, molten glass is dropped into molds in a forming machine, where it is spun into the desired form. The formed glassware is released from the molds onto a conveyor where it gradually cools. The conveyor enters and annealing lehr which tempers the glass. From annealing, the glassware moves on a long conveyor which again allows it to cool. The glassware is then sprayed with silicone which makes it scratch resistant.

The manufacturing operation ends with the silicon sprayer.

Example 9

A manufacturer purchases castings which will be a component part of the manufacturer's product. The castings are received on trucks in metal boxes on pallets. The pallets are unloaded by forklift and placed in racks in the receiving area of the warehouse. As they are needed, a pallet is removed from storage by a different forklift and moved to a cleaning process. A worker removes the castings from the box by hand, placing them in a wire basket that is attached to a counterweighted arm which allows the worker to lower the basket into a tank containing chemicals which remove dirt, grease, and similar contaminants. After dipping, the worker, who wears rubber gloves for hand protection from the strong chemicals, places the castings on a conveyor which moves them to a grinding operation.

The holding of the castings after receipt is initial storage. Both forklifts and the storage racks are taxable.
The castings have been committed to the manufacturing operation when deposited by the second forklift at the washing operation. The chemicals, dip tank, basket, and arm are not taxable, since they treat a component part after materials handling from initial storage has ended.
The conveyor that moves the castings to the first production machine (the grinder) is not taxable because the continuous manufacturing operation began at the dip tank.
The rubber gloves used to protect the worker are taxable.

Example 10

A manufacturer of clay pipe uses forklift tractors to transport the pipe from the machine in which it is formed to the kiln.

The forklift tractors are used to handle an in-process product and are not taxable.

Example 11

A petroleum refinery produces an intermediate feed, such as naphtha, which is temporarily stored. It eventually will be further processed into a completed product which will be sold.

The equipment used to transport the feed to and from the storage tank, as well as the storage tank, are used to handle an in-process material and are not taxable.

Example 12

Water purchased from a public utility is used by a refiner to quench (cool) a gaseous product stream flowing from a distillation tower so as to lower its temperature or convert it to a liquid for further processing. Since the water does not touch the product directly, it does not need any treatment to make it suitable for use in the manufacturing operation.

The water is used in the manufacturing operation. Any equipment used to handle it from the point where it enters the manufacturing facility is not taxable. Any piping from the utility supply line is therefore not taxable.

Example 13

A steel fabricator purchases coil steel. After the steel is committed to the manufacturing operation, it is dipped in solvent to remove dirt, oil, and grease. It is then further cleaned by dipping in an acid bath. After fabrication is completed, the steel is sprayed with oil to prevent formation of rust on the surface of the product. After the oil spray, the steel is transported to the truck dock for loading and shipping.

The solvent and acid are consumables used to prepare the product during the manufacturing operation and are not taxable.
The spraying of the protective oil on the completed product constitutes the end of the manufacturing operation.
The oil is a consumable which interacts with the product and is therefore not taxable.

Example 14

A catalyst is used by a chemical manufacturer to facilitate or cause a reaction between other chemicals during the processing operation.

The catalyst interacts with the product, is an integral part of the manufacturing operation, and is therefore not taxable.

Example 15

At a motor vehicle assembly plant, the manufacturer uses a bar code system to track the flow of components. As components are received from other manufacturing facilities or outside suppliers, a bar code label is attached and then scanned with a wand to record it in the plant mainframe computer, along with pertinent data keyed in by the employee to identify the part. This computer is also used for various administrative functions. It does not control the assembly line. Particular components are assigned to particular vehicles, in order to assemble vehicles conforming to those ordered by dealers, etc. After the vehicle is fully assembled, an employee scans all labels. A printout is made that permits a comparison between what components were supposed to be included in each vehicle and which components actually were assembled. The label on the emissions equipment is also scanned prior to emissions testing, in order to record the component in the emissions test data base. Purchases include labels, label printers, scanners, printers, computer terminals, and equipment to interface with the plant mainframe.

This bar code system is primarily used to monitor the progress of the product in the continuous manufacturing operation. The labels and scanning wands are not taxable, except for first scanner and the scanner used prior to emissions testing. The first scanner is used to record a part in inventory and is therefore taxable. The scanner prior to emissions testing is taxable because the vehicle is completed before it is used. The scanner is not testing equipment.
Since the bar code labels are used in the manufacturing operation, the label printers are not taxable.
The computer terminals allow employees to monitor the progress of the scanned parts and are not taxable.
The equipment that interfaces with the mainframe computer is taxable. The computer printers, similarly, produce records of the information and are taxable.

Example 16

The functioning of the melt furnace in a glass manufacturing facility is monitored and controlled from an operator's booth, which is on a raised platform about fifty feet from the furnace. Heat sensors in the furnace are wired to the control booth, where the temperature data is drawn on a continuous graph. The operator watches the graph and can adjust the furnace by altering the flow of fuel (natural gas) or oxygen, batch material proportions, or by adjusting the flue in the furnace stack.

The sensors in the furnace monitor production and are not taxable.
The control booth and the equipment and controls in it are not taxable.
The temperature graphing device which records the temperature data is taxable since it functions as a recordkeeping device.
The platform that supports the control booth is not taxable, since it supports the operator of production machinery.
The furnace stack and flue assembly within the stack are not taxable, since they provide regulation of the furnace temperature.

Example 17

A manufacturer of high technology electronic equipment provides its workers with microscopes which enable them to manipulate the components as they are assembled into the product.

The microscopes are not taxable because they are necessary for the continuation of the manufacturing operation.

Example 18

A castings manufacturer upgrades its foundry by installing a new computer controlled mold maker and an automatic caster. Because of their size and weight, both machines require special concrete foundations. Casting sand is blended to proper consistency with water and certain chemicals in a muller. An auger moves the sand to a feed bin attached to the mold maker. Molds are made automatically in accordance with computer instructions. The instructions for each job are developed in the engineering shop using a microcomputer and software which was purchased from the manufacturer of the mold making equipment. The instructions are placed on a computer disk which an employee carries to the computer that controls the mold maker. The completed molds leave the molder on a conveyor which moves them to the caster.

The mold maker and its foundation are not taxable, since the molds are used in manufacturing the product for sale. The nontaxable equipment includes everything from the sand muller to the exit of the molds from the mold maker.
The computer that controls the molder is not taxable.
The purchased software and the computer in the engineering shop are taxable, since they do not actually control the machinery.
The conveyor that moves the molds from the mold making process is taxable, since the molds do not enter the manufacturing operation until they reach the caster.
The caster is production machinery. The caster and its foundation are not taxable.

Example 19

A paint manufacturer makes paint pursuant to customer specifications. After a batch is finished, a sample is ladled into a quart jar and taken to the lab for testing to assure adherence to the customer's specs. In the lab, twenty cubic centimeters are placed in a beaker which is then placed in a centrifuge. After centrifuging, the separated components of the paint are examined under a microscope for content. The test results are manually entered into a computer. The computer generates a printed report and a label, both listing the test results and other information about the particular paint batch, e.g., name of customer and date of manufacture. The label is attached to the quart jar which contains the remainder of the paint sample. The jar is placed in a storage cabinet where it is retained for five years.

The testing procedure assures the quality of the completed product and the equipment which is used in conducting the testing is not taxable. This includes the centrifuge, beaker, and microscope.
The ladle, quart jar, and the storage cabinet are not used in testing nor in any other aspect of the manufacturing operation and are taxable. In addition, the quart jar and storage cabinet are used primarily in a function related to storage, record-keeping, and therefore are taxable.
The computer, computer printer, and jar label are used only to record the test results and are taxable.

Example 20

A manufacturer operates a job shop foundry where it melts ingots of raw pot metal in an electric furnace. The molten metal is poured into jacketed molds, through which water is circulated to speed up the cooling and solidification of the metal. The water is pumped from a tank, chemically treated, and conveyed by pipes to the molds. The heated water is filtered and pumped from the molds to an outside cooling tower and then returned to the same tank. Make-up water is pumped from a well on premises into the tank. The treatment chemicals are stored in liquid form in a tank, from which they are pumped and metered.

The furnace and molds are part of the continuous manufacturing operation and are not taxable.
The water is an energy transmitting substance since it removes heat from the manufacturing operation. The water treatment chemicals, water pumps, pipes, well and cooling tower are not taxable. Since the water tank is part of the recirculation system, it also is not taxable.
The chemical storage tank, meter, and pump are taxable, since they are merely storing or handling consumables prior to their initial use in the manufacturing operation.
Since the trucks are registered for highway use, they are taxable.

Example 21

A large manufacturing facility is located on three hundred fifty acres of land on the outskirts of a large metropolitan area. The production machinery and equipment is spread over several miles. The plant property is divided at various points by a river, a railroad, and a public highway. Work in process is moved from one production phase to another by large licensed trailer trucks. A private bridge was constructed to cross the river, a tunnel was constructed under the railroad, and the trucks cross the public highway.

This property is contiguous since the separations are only public or private rights of way and not land used for other public or private interests.
Since the trucks are registered for highway operation, they are taxable.

Example 22

A plastics manufacturer uses injection molds to form the product. Excess plastic trim is knocked off the molds and collected on a conveyor. The conveyor moves the trim to a grinder where it is reduced in size. Another conveyor moves the plastic to a regrind bin where it is stored until needed. The reground trim is manually removed from the storage bin in hoppers and added, in certain proportions, to the purchased plastic pellets in the feed bins for the mold injection presses.

Since the trim is recycled back into the manufacturing operation, the entire process of collecting, transporting, regrinding, and reintroducing the trim is part of the manufacturing operation and not taxable. The regrind storage bin is holding in-process product between stages of production and is not taxable.

Example 23

A steel manufacturer operates two plants. Plant A produces basic steel in a BOF furnace and has bar and hot rolled strip steel producing lines. Plant B, located several miles away, produces cold rolled strip coils. All production lines produce steel scrap in the form of trimmings or defective product. At plant A, scrap from both lines is chopped to size and taken to a storage area. When needed it is added back to the furnace to be again used in steel production. The scrap from plant B is chopped to size and taken to plant A where it also is used to make new steel.

Since plants A and B are not contiguous, they are separate manufacturing facilities.
Since the scrap at plant A is returned to the furnace, all items of property used to handle and store the scrap are not taxable.
The equipment used to handle and transport scrap produced at plant B is taxable since the scrap is transported to plant A for reuse.
Since the choppers at both plants change the form of the scrap, they are not taxable.

Example 24

During paper manufacturing, the fibers that will comprise the finished paper product are put into a water solution. The water is drawn by an intake pipe and pump from a river that flows next to the manufacturing facility. The water is filtered and chemically treated and pumped into the hydropulper where it is combined with wood chips and other fiber source material. The resulting slurry is pumped to a fourdrinier which removes most of the water by means of vacuum pumps. The water so removed, as well as slurry that otherwise escapes the process is collected, since it contains usable fibers. This slurry is returned to the hydropulper by pumps and pipes.

The water is a consumable that is used in the manufacturing operation. The river intake, pumps, filter, and chemicals are not taxable since they either treat the water or transport the water from the point of extraction at the river.
The hydropulper and fourdrinier are production machinery and not taxable.
The slurry recovery and recirculating is part of the manufacturing operation, since it recycles the product back into the manufacturing operation at the same manufacturing facility. The pumps and piping are not taxable.

Example 25

A plastics manufacturer generates steam in coal-fired boilers. Eighty-five per cent of the steam is used to heat reactor tanks, in which the first step in the manufacturing operation takes place. An insulated steam line carries the steam from the boiler to the reactor vessels. Fifteen per cent of the steam is diverted from the main steam line to heat the buildings in the manufacturing facility.

The coal purchased to fire the boilers is received at a river dock. The coal is unloaded from barges by a crane and is moved from the dock by a conveyor belt to a conical storage tower. As needed, the coal is pushed by a small bulldozer into a feed bin, which dumps the coal onto another conveyor belt which moves it to a coal pulverizer. A screw conveyor moves the pulverized coal from the pulverizer to a storage bin. Another screw conveyor removes the pulverized coal from the bin and a forced air system injects it into the boiler combustion chamber. The rate of injection is computer controlled.

Water for the boiler is pumped from the river, filtered, chemically treated, and stored in a water tank outside the boiler building. As the water is pumped from the storage tank, additional chemicals are added. Both the water and the air used to inject the pulverized coal are preheated by means of a heat exchanger in the boiler exhaust stack.

Eighty-five per cent of the coal and boiler water chemicals are not taxable, since eighty-five per cent of the resulting steam is used in the manufacturing operation.
The boiler and main steam line, including the latter's insulation, are not taxable, since a majority of the steam is consumed in the manufacturing operation. The line which carries steam for building heat is taxable.
The coal unloading and handling equipment and the pulverizer are not taxable. The conical storage tower and the pulverized coal bin are taxable, since they merely store the coal.
The forced air pulverized coal injection system is not taxable.
The river water inlet, pumps, lines, filters, and treatment chemicals are not taxable. The water storage tank is taxable.
The boiler exhaust heat exchanger is not taxable.
The computer that controls the pulverized coal injection is taxable.

Example 26

A manufacturer of ready-mix concrete uses a steam generator to heat water which is used in mixing and warming component materials in the manufacture of ready-mix concrete. The concrete is sold to construction contractors and other consumers.

The water is not taxable, as it transmits heat used in the manufacturing operation and becomes part of the product produced for sale.
The generator is not taxable as it makes the water suitable for use in the manufacturing operation.

Example 27

A manufacturer of extruded rubber products uses injection molding machines to force rubber through dies in order to form the desired shapes. The molding machines are operated by compressed air. The air compressor is fed air from an air dryer. The dryer is necessary to keep moisture out of the air compressor lines and production machinery.

The injection molding machines are not taxable as they are production machinery which act upon the product.
The air dryer and compressor are not taxable because they make the air used to power the molding machines suitable for use in that function.

Example 28

A steel manufacturer uses coke in the production of iron. Coke is a fuel which provides some of the heat required for smelting and it is also the source of carbon, a necessary ingredient in the manufacture of steel, which dissolves into the hot metal.

Coke is manufactured from metallurgical grade coal in a coke plant. The coal is crushed, blended (high and low volatile coals are mixed) and transferred to the ovens by means of conveyor systems. The crushed, blended coal is placed in a larry car which runs across the top of the coke ovens and charges the coal into the ovens. The coke battery consists of a series of ovens lined with refractory brick which bake the coal to produce coke. The coke battery is built from the ground up and does not have a separate foundation.

The coke battery and the coal crushing, blending, and charging systems, and larry cars are not taxable.

Example 29

A manufacturer buys a new coal pulverizer. The coal is fed to a boiler to produce steam to generate electricity to power equipment used to manufacture products.

The pulverizer is used to make the coal suitable for use in the manufacturing operation and is not taxable.

Example 30

A boiler is used to produce steam which primarily operates machinery and equipment used in the manufacturing operation. Other equipment feeds water into the boiler. This includes items such as pumps and a piping system. There is also a system which filters and treats raw water drawn from a creek running through the manufacturing facility.

The boiler is used to produce power for the manufacturing operation and is therefore not taxable.
The water is used to transmit energy to the manufacturing operation and is not taxable.
The piping, pumps, filters, and water treatment equipment are not taxable.

Example 31

A manufacturer installs an electrical distribution system, including generators, transformers, electrical switchgear, cable and related equipment. The electricity is used solely to produce and supply electricity to the manufacturing operation.

The entire electrical generation and distribution system is not taxable.

Example 32

A manufacturer of specialty coil steel products uses natural gas to heat annealing furnaces. The furnaces heat treat the manufacturer's product and are part of the continuous manufacturing operation. In a field owned by the manufacturer and adjacent to the plant, the manufacturer drills two natural gas wells, using a drilling rig, trencher, and various other tools, and installs drips, pumps, and transmission lines to provide gas for these furnaces. The manufacturer also installs a gas line connected to the local utility company line through which purchased gas is piped for heating the buildings in the manufacturing facility. A branch line connects this purchased gas line to the line going from the wells to the annealing furnaces, in order to supplement, if necessary, the gas produced from the wells. One hundred per cent of the well-produced gas is burned in the annealing furnaces. No more than twenty per cent of the purchased gas is burned in the furnaces.

The line connected to the utility's line is incorporated into the real estate, since it primarily carries gas to heat the buildings. The wells, pumps, transmission lines and associated equipment, and the branch line remain personalty, since they carry gas for use in the manufacturing operation only.
The wells, pumps, transmission lines and associated equipment, and the branch line are part of the manufacturing operation and are not taxable since they are extracting and transporting fuel used in the manufacturing operation.
The material for the line connected to the utility's line is taxable.
The drilling rig, trencher, and other tools used to install the well and gas lines are taxable.

Example 33

A manufacturer purchases pumping and filtering equipment and related tanks and tubing to supply lubricating and coolant fluids to drilling and cutting machinery. This equipment is used to recirculate the fluids so that they may be reused in the manufacturing operation.

As the fluids are being treated for reuse in the manufacturing operation, the equipment which moves and treats the fluid is not taxable.

Example 34

A manufacturing operation uses water as a coolant in its production operation. The water is continuously recirculated in a closed system. The recirculation system includes a cooling tower and related pumps and piping.

As the water is a substance used in the manufacturing operation, the recirculation system equipment is not taxable.

Example 35

The production of flatroll metal products requires that an oil mixture, which serves as both a rolling lubricant and a coolant, be continuously sprayed on sheets in the rolling mill. Spent oil is simultaneously removed and passed through a filtering process which is interconnected with the rolling mill, after which the oil is resprayed onto the sheets.

The rolling mill is a production machine and is not taxable.
The oil filtration machinery treats the oil for reuse; therefore, this equipment is not taxable.

Example 36

A manufacturer of truck and tractor engines uses what are known as wet machines in its engine head and block assembly lines. These machines require the presence of a liquid coolant to operate. In the absence of such a coolant the machines would heat up rapidly, ultimately destroying the tool and the part being machined. Therefore, the interface between the tool and the block or head is flooded by spraying it with liquid coolant, a water soluble oil.

In order to save on the expense of the oil, the manufacturer devised a system to recapture the used liquid. After the coolant is sprayed on the component, it drops through a funnel-like chamber into an underground trough. The coolant collects in a u-shaped channel along with the scrap metal chips and dust produced by the machining operations. The coolant is conveyed through the underground trough by means of air pressure to a collecting tank outside the plant where a conveyor lifts the bigger chips from the coolant. These chips then enter a chipwringer which wrings out excess coolant. From the tank, the coolant is pumped back into the plant through a series of pipes. Along the way, it passes through a series of filters which removes any remaining metal particles. Thereafter the coolant is returned to the machining lines where the process begins anew.

The entire recirculating system is not taxable. The oil is used in the manufacture of the engine heads and blocks. The recirculating system is used to filter this oil to make it reusable for the manufacturing operation. The substances are in fact intended for reuse and not for disposal or sale.

Example 37

A producer of alloy steel uses an acid solution to pickle its products. The pickling process removes scale. After pickling, the used acid is filtered to remove impurities. The filtered solution is then pumped into a tank where pure acid is added to the solution in order to raise the acid content. From this tank, the solution is pumped and piped into the pickling tanks. After the acid is reused a certain number of times it can no longer be purified and strengthened sufficiently to be economically useful. It is therefore transported through a series of pipes to an acid disposal plant, where the acid is neutralized by mixing it with lime in a tank designated the neutralizing tank. The mixture is then pumped into a sludge pond.

The acid solution would not be taxable as it interacts with the product. The pickling tanks are production machinery and thus also not taxable.
The pipes from the pickling tanks through the filtration system are not taxable, as this is a treatment system which makes a substance used in the manufacturing operation reusable, and the substance is in fact intended for reuse.
The piping system used to transport the spent acid to the acid disposal plant, the pump into the neutralizing tank, the tank itself, the lime, and the pumps and pipes used to dispose of the neutralized solution are taxable under this rule as at this point the substance is not intended for reuse.

Example 38

An automobile manufacturer has a plant which stamps out steel to make automobile body parts. The manufacturer employs an engineering firm to procure and generally oversee the installation of a cold press machine which presses sheet metal into doors. The engineering firm contracts out the labor for installation of the piece of production machinery in the manufacturer's plant. The contractor which installs the machine bills the manufacturer directly.

The charges from the contractor for the services to install the machine are not taxable as they involve the installation of an item used primarily in a manufacturing operation to produce tangible personal property for sale.

Example 39

A manufacturer builds and furnishes a new administration building. The building contains offices for executives and the personnel and accounting department. The manufacturer leases a computer to process personnel, payroll, accounting, and billing information.

All office equipment and furnishings located in the administration building are taxable.
The computer is taxable.

Example 40

A food processor has an automated batch system for dry ingredients. The ingredients are received from outside suppliers on pallets in bags, cartons, paper drums, etc. They are moved from the receiving warehouse area by forklift, which deposits the pallets near the dry batch mixer. Some ingredients are dumped by employees directly into the mixer. Some are dumped into feed bins which discharge directly onto a scale. The proper amount of ingredient per batch is programmed into the scale by an employee. The scale controls the feed bins, opening them in turn and shutting them when the proper weight is reached. The dry ingredients are mixed and discharged by a covered conveyor to the next stage, where water is added.

The dry ingredients do not undergo a change in state or form until mixed with water; however, the manufacturing operation begins as to the dry ingredients when they are dumped into the feed bins or directly into the dry batch mixer, since they have been committed to the manufacturing operation when the materials handling (via the forklift) from the warehouse ceases. Thus, the bins, mixer, and scale are not taxable.
The forklift is taxable.

Example 41

A manufacturer uses a forklift primarily to move finished goods from a storage warehouse and load them on trucks for shipment to customers.

The tangible personal property in the warehouse and the forklift are taxable, since they are storing or handling a completed product.

Example 42

A manufacturer purchases storage equipment for the purpose of storing raw materials prior to commitment to the manufacturing operation includes tanks, racks, holding bins, and similar equipment.

Such storage equipment is subject to tax.

Example 43

A fiberglass manufacturer generates fiberglass waste as part of its manufacturing process. The waste is collected in various ways, including a vacuum system with collection hoses that permit workers to clean up small particles. The vacuum system deposits the fiberglass into a holding bin. Larger pieces, including rejected material that fails quality assurance testing, is transported in skid boxes by lift truck. All waste fiberglass is baled and transported by the manufacturer's trucks to a landfill for disposal. All employees in the plant are required to wear masks to prevent them from inhaling glass fibers.

Since the waste fiberglass is not sold or recycled by the manufacturer, the baler and all of the handling equipment, including the vacuum system, is taxable.
The protective masks worn by the employees are taxable.

Example 44

Replacement parts for production machinery are kept in storage bins in the plant storeroom.

While the parts are not taxable, the storage bins are taxable.

Example 45

A manufacturer has its employee parking lot repaved. It separately purchases the required materials and contracts the labor.

The materials incorporated into the parking lot are taxable as the lot is real property. The labor is not taxable as it pertains to an improvement to realty. Had the manufacturer entered into an agreement whereby the contractor provided both material and labor, there would be no direct tax consequences to the manufacturer.

Example 46

A manufacturer purchases a heating system and other related parts to be incorporated into a manufacturing facility. The heating system will provide heat and serve solely for the building.

The heating system and all related parts purchased will be taxable since it is used to produce heat for the building and not used in any manufacturing operation.

Example 47

A manufacturer of unassembled furniture has an extensive dust collection system throughout the manufacturing facility. Collecting units are located over the boring mills, saws, edgebanders, planes, and other places in the plant. Fans and ductwork exhaust the dusty air through a series of filters. The saw dust falls from the filters into movable hoppers. These hoppers are periodically dumped into a mixer, where the saw dust is blended with a small amount of liquid adhesive. The mixture is removed from the mixer by a screw conveyor to a press which forms it into briquettes which the manufacturer sells. The briquettes fall onto a conveyor belt which moves through a heat tunnel which causes rapid drying.

The entire dust collection system is taxable, since it provides environmental control throughout the entire manufacturing facility.
The portable dust hoppers are taxable, since they are handling a waste product.
The adhesive, mixer, screw conveyor, press, belt conveyor, and heat tunnel are not taxable, since they are used to manufacture a product for sale.

Example 48

A manufacturer makes various kinds of candy canes. The process requires that temperature and humidity in the plant be maintained within certain narrow parameters.

Since the temperature and humidity are regulated in the plant as a whole, rather than a special, limited area within the plant, all the equipment used to provide such regulation is taxable.

Example 49

A manufacturer of automotive parts paints the parts as part of its manufacturing process. The painting is done in paint booths, which are enclosures containing ventilation and other equipment that provide the booth with a controlled atmosphere so that paint is applied to each piece under nearly identical conditions, resulting in a uniform product. The paint is applied by a spraying system which results in a considerable amount of overspray. To flush this excess paint from the booth, a water spray flows through continuously. The water is drained from the booth into a treatment system which filters out the paint. Neither the paint nor the water is reusable in the process, so they are disposed of in accordance with pollution control regulations.

The paint booth and its ventilation equipment are not taxable since they regulate the environment in a special and limited area of the manufacturing facility.
The water spray equipment is also not taxable as it is necessary for the continuation of the manufacturing operation.

Example 50

An automotive parts manufacturer is ordered by a federal inspector to install guardrails along the sides of aisles traveled by forklifts and a floor sweeper in order to provide a barrier for the protection of employees operating nearby machinery. The inspector also requires the installation of flashing lights on the moving equipment. The forklifts are primarily used to move in-process product.

The guardrails are taxable.
The forklifts themselves are not taxable since they are used for materials handling during the continuous manufacturing operation, so the flashing lights attached to them are not taxable. The flashing lights attached to the floor sweeper are taxable.

Example 51

All of the manufacturer's employees must wear ear plugs, safety glasses, hard hats, and steel toed shoes when in production areas. Some employees must wear leather or rubber gloves and aprons, depending on their jobs. The manufacturer provides all of these protective articles to the employees without charge, except eyeglasses and shoes. Employees must provide their own eyeglasses. However, the manufacturer usually buys, by special order, safety shoes for the employees and sells them, with a minimum markup to cover administrative expenses.

All of these protective articles and clothing are used in taxable functions. The manufacturer consumes everything except the eyeglasses and shoes and must therefore pay tax on its purchases of those items.
Since the manufacturer is making retail sales of safety shoes, it must have a vendor's license and collect sales tax on such sales made to the employees.
The employees must pay tax to the suppliers of their safety glasses.

Example 52

A manufacturer produces electronic equipment. Its process requires that static electricity be eliminated from the environment. If it is not, the static will destroy the electrical components. In order to ensure that the static electricity is properly discharged, the manufacturer has its production employees wear a wrist bracelet which attaches to a grounded object. The manufacturer also requires that the production employees wear contaminant-free overalls so that the production area remains free of dirt.

The wrist bracelets are not taxable since they are equipment necessary to the production process.
The overalls are taxable since they are clothing worn throughout the plant instead of in a special and limited portion of the manufacturing facility where the environment is totally regulated.

Example 53

A manufacturer has several safety concerns in the manufacturing plant for which it has taken various measures. It has attached guards to certain of the production machinery to protect the workers from injury and placed safety signs at various points throughout the plant. It also furnishes clothing and other equipment to workers primarily for the workers' safety and protection. Finally, the manufacturer hangs fire extinguishers on walls throughout the plant.

Machinery guards are attached to the production machinery and are therefore not taxable.
General safety items, unless actually attached to production machinery, are taxable. Therefore, the safety signs, clothing, and other equipment are taxable.
The fire extinguishers are taxable.

Example 54

As part of the manufacturing process, welding robots are used throughout an assembly plant to weld the various components of the final product. Fumes created from the welding process contain harmful complex metal oxide compounds from consumables, base metals and the base metal coatings, creating safety concerns for employees throughout the manufacturing facility. Special ventilation and exhaust systems are installed in the direct vicinity of the welding operation to supply fresh air and exhaust the fumes containing the harmful components. The ventilation and exhaust equipment is not essential for purposes of continuing production, but merely is in place to help cleanse the environment of the manufacturing facility.

*The special ventilation and exhaust systems are neither incorporated into machinery or equipment used in a continuous manufacturing operation and do not qualify as excepted safety equipment, nor totally regulate the environment in a limited area of the facility where such total regulation is essential for production to occur. As such, the systems are taxable.

Example 55

A manufacturer installs probes on a grinding machine, in part by using a special tool that was purchased for that purpose. The grinder is production machinery. The probes measure vibrations in the bearings of the machine while it is operating. A chart recorder records the data from the probes. When vibrations exceed a certain tolerance, new bearings are ordered and installed, thus allowing the manufacturer to make the repair in a controlled fashion and avoid extended downtime and/or more extensive damage to the grinder.

The probes are not taxable, since they monitor the functioning of equipment used in the continuous manufacturing operation.
The chart recorder merely makes a record of the monitoring and is taxable.
The tool purchased to install the probes is taxable.
The replacement bearings are not taxable, since they are incorporated into equipment used in the manufacturing operation.

Example 56

A manufacturer shuts down a reactor, which is used in the manufacturing operation, for routine maintenance. During shutdown, a section of the reactor wall is cut out, removed by crane, and a new section is welded in. Thereafter, the reactor is cleaned and the lines are flushed in preparation for start-up. All work is done by employees of the manufacturer.

The labor performed to remove the old section, install the new section, clean the reactor and flush the lines is not taxable.
The new section of the reactor wall is not taxable as it is part of a production machine.
The welding torch, crane, equipment used to clean and flush the reactor, and related consumables, such as acetylene and cleaning compounds, are items used to clean, repair, install, or maintain personal property in the manufacturing facility and are therefore taxable.

Example 57

A manufacturer purchases two trucks to move work in process between buildings within the manufacturing facility. One truck is not registered for highway use since it is used solely on the manufacturer's private property. The second truck is registered, since it must travel a short distance on a public highway which passes through the manufacturing facility.

The unregistered truck is not taxable, since it is used in materials handling of in-process product.
The truck registered for highway operation is taxable.

Example 58

A manufacturer of paper products uses an extremely large and complex paper-making machine. The machine consists of many parts and requires constant servicing. Some parts themselves are massive and heavy. These parts must periodically be removed and replaced.

The manufacturer uses what it calls the wet end crane to lift, remove, and replace these heavy parts. The crane is sixty feet above the plant floor and it traverses the entire length of the paper-making machine by means of overhead rails.

The wet end crane is taxable as it is machinery used to repair, install, or maintain real or personal property in the manufacturing facility.

Example 59

Concrete pipe is made in a forming kiln. The formed pipe is moved by lift truck to a steam room where it cures for one day. The steam curing speeds up the necessary chemical reaction to harden the pipe. Steam is produced by a propane fueled boiler. The propane is stored in six tanks, with lines going to a single vaporizer which converts the liquid into gas. The concrete pipe is removed from the steam room to an area where employees patch and smooth pits and flaws in the pipe. The pipe is then moved to an outside storage area where it remains for at least twenty days to allow final curing. When sold, the pipe is loaded onto flatbed trailers by a yard boom truck. Movement of the pipe in the facility is done by three interchangeable lift trucks. The lift trucks are used seventy-five per cent of the time moving the pipe to and from the steam room, twenty per cent of the time moving from the finishing area to the yard, and five per cent of the time in miscellaneous activities. The lift trucks are battery powered and share the use of a single battery charger.

The propane, propane lines and vaporizer, boiler, and hand tools used in finishing are not taxable. The propane storage tanks are taxable.
The lift trucks are primarily used for materials handling as part of the continuous manufacturing operation. The lift trucks and battery charger are not taxable.
The boom truck is taxable.

Example 60

A manufacturer produces bottle caps and furnace air filters at its single facility. The bottle caps are die punched from coils of sheet steel strip. The bottle caps are then passed through an inspection device and any caps which are found unacceptable are carried by a conveyor to a bin where they are held for sale. Acceptable caps continue through additional steps which include printing and the insertion of a gasket. After the bottle caps are punched from the sheet steel strip, the remaining perforated strip is recoiled and moved by a lift truck to temporary storage racks, from which point it is further trimmed to length during its assembly into furnace air filters.

This constitutes a single manufacturing operation that produces two different products at the same manufacturing facility.
The punching, printing, and gasket insertion equipment are all used in the production of the bottle caps and are therefore not taxable.
The recoiling equipment and trimming equipment are production machines and not taxable.
The device for inspecting the bottle caps is not taxable since it is used for testing the product.
The lift truck and storage racks are not taxable because they handle or temporarily store in-process product.

Example 61

A manufacturer purchases sheet metal for fabrication into various products. After initial storage, the sheet metal is transported to slitters by a propane powered lift truck. The slitters cut the sheet metal to length, after which it is transported to the stamping presses. As the steel goes through the stamping process, excess metal in the form of chips is produced. The metal chips are removed from the stamping area through a chute and conveyor system which transports the metal chips to a baler. The baler compresses the chips into bales which are then sold to industrial customers as scrap metal.

The sheet metal is committed to the manufacturing operation when deposited at the slitters by the lift truck. The lift truck and the propane used to power it are taxable.
The slitters and stamping presses are production machinery and are not taxable.
The metal chips are scrap. Since the scrap is sold, rather than being reused in the manufacturing operation at the same facility, the chutes and conveyors which handle the scrap metal chips are taxable.
Since the baler changes the form of the chips which are intended to be sold, the baler is production machinery and not taxable.

Example 62

A meat processor makes sausage, wieners, salami, bologna, and similar products. After grinding and mixing, the meat is extruded into casings of various types and sizes. The meat is then smoked and/or cooked. After cooking the casings are removed and discarded.

The casings are consumables that physically interact with the product during the continuous manufacturing operation and are not taxable.

Example 63

A dairy purchases raw milk from farmers. The milk is picked up by trucks owned by the dairy. Upon arrival at the dairy facility, a pump removes the milk from the truck through a pipe and pumps it into a clarifier, which is a centrifuge that removes particle contaminants. From the clarifier, the raw milk is pumped into a storage silo where it is held for period of time. After the raw milk is removed from the silo, it proceeds through various processes, including separation (where cream is removed), blending (where cream is added back to reach proper butterfat content), standardization (where vitamin supplements are added), pasteurization, and homogenization. After homogenization, the milk is pumped to filling equipment which packages the milk in cartons or jugs.

The trucks which deliver the milk from the farmers and the pump which removes the milk from the trucks are taxable.
The clarifier actively refines the raw milk by centrifuging and is not taxable. The clarifier is the beginning of the manufacturing operation and the raw material (milk) is committed at that point.
All equipment, pipes, pumps, and tanks (including the silo holding the raw milk), which process, move, or temporarily store the milk up to and including the homogenization process, are part of the continuous manufacturing operation and not taxable.

*Any equipment or supplies used to clean the processing equipment, pipes, pumps, and tanks discussed above are not taxable because they are part of a continuous manufacturing operation to produce milk.

Example 64

An ice cream manufacturer purchases cream, skim milk, sugar, and various flavorings and additives. The cream and milk are placed into refrigerated tanks when received. Any particular flavoring is placed into one of several storage tanks. All of these tanks are connected by piping to a mixing tank. In-line meters control the amount of cream, milk, and flavoring withdrawn from the tanks and batched in the mixing tank. After mixing, the ice cream is packaged into cartons and moved by conveyor through a freeze tunnel, where most of the ice cream becomes solid. After the freeze tunnel, the packaged product moves slowly through a hardening room on roller conveyors. The hardening room is a large freezer where the temperature is maintained at minus thirty degrees. The solidification of the ice cream is completed in the hardening room. On exit from the hardening room, the product is shrink-wrapped in appropriate quantities (e.g., four half gallons), palletized, and moved by lift truck into a large freezer to await shipment.

The tanks, freezers, and some in-process piping is cooled by a refrigeration system, which consists of compressors, condensers, piping, and an in-line tank for the coolant. Based upon an analysis of the refrigeration system piping used in the various areas of the facility, it has been determined that twenty per cent of the system is used to cool the cream and milk tanks, ten per cent for the mixing tank, in-process piping, and packaging operation, thirty per cent for the freeze tunnel and hardening room, and forty per cent for the freezer warehouse.

The initial storage tanks for the cream, milk, and flavorings are taxable.
The milk, cream, and flavoring are committed to the manufacturing operation at the point they are metered prior to entering the mixing tank. The meters and subsequent piping and the mixing tank are not taxable.
The ice cream is not completed until it leaves the hardening room. The freeze tunnel, hardening room, and roller conveyors are not taxable.

*Any equipment or supplies used to clean the freeze tunnel, processing equipment in the hardening room, and roller conveyors are not taxable because they are part of a continuous manufacturing operation to produce ice cream.

The forklift that moves the palletized product into the freezer warehouse is taxable.
The freezer warehouse is taxable, since it is storing a completed product.
Sixty per cent of the coolant is taxable, since that is the proportion of this fungible used in a taxable manner.
The condensers, compressors, and tank for the refrigeration system are taxable, since their quantified primary use (sixty per cent) is taxable.
Since the refrigeration system piping is essentially identical, it is properly treated as fungible for sales tax purposes and is sixty per cent taxable.

Last updated December 12, 2024 at 8:15 AM

History

Effective: December 12, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-9-22 Personalty used or consumed directly in mining.

Persons engaged in the production of tangible personal property for sale by mining, may claim exemption when purchasing:

(A) Machinery, equipment, or other personal property used or consumed principally in a mine or excavation for the extraction from the earth of a substance classified geologically as a mineral.

(B) Machinery, equipment, or other personal property used or consumed primarily to transport the substance extracted from the earth from the mine or excavation to a plant, factory or tipple where the substance extracted is to be processed by the person conducting such mining operation.

(C) Aggregate, gravel or other materials which will be incorporated into and become a part of temporary private roads or haulways, either during construction or in repair and maintenance, used principally for the transportation of the substance extracted from the earth from the mine or excavation to a plant, factory, or tipple where the substance extracted is to be processed by the person conducting such mining operation.

(D) Machinery, equipment, or other personal property used to repair or maintain the machinery, equipment, and other personal property in paragraphs (A) and (B) of this rule.

(E) Articles primarily for the physical protection of production employees from a danger of the operation in which they are engaged, when used principally in the mine or excavation or in the transportation of the substance mined to a plant, factory or tipple where the substance extracted is to be processed by the person conducting such mining operation.

The tax status of purchases of items for use or consumption in a plant, factory or tipple where the substance extracted from the earth is to be processed by the person conducting such mining operation shall be determined in accordance with rule 5703-9-21 of the Administrative Code.

Last updated July 16, 2026 at 8:04 AM

History

Effective: April 24, 2021
Promulgated Under: Other

Ohio Adm.Code 5703-9-23 Exemption for tangible personal property used or consumed in farming, agriculture, horticulture or floriculture.

(A) The following definitions apply for the purposes of this Rule:

(1) "Farming" means the occupation of tilling the soil to produce crops as a business and includes raising livestock, bees, or poultry, if the purpose is to sell such livestock, bees, or poultry, or the products thereof as a business.

(2) "Agriculture" means the cultivation of the soil for the purpose of producing vegetables and fruits and includes gardening or horticulture, together with the raising and feeding of cattle or livestock for sale as a business.

(3) "Horticulture" means the growing, cultivation, and production of flowers, fruits, herbs, vegetables, sod, mushrooms, and nursery stock for sale as a business and includes the operation of commercial vegetable greenhouses or nurseries.

(4) "Floriculture" is defined as the production of flowers and plants for sale as a business, either in the field or greenhouse.

(B) Purchases of tangible personal property are exempt from sales or use tax pursuant to division (B)(17) of section 5739.02 of the Revised Code if the:

(1) Purchaser is engaged in farming, agriculture, horticulture or floriculture; and

(2) Tangible personal property purchased is:

(a) Used primarily in farming, agriculture, horticulture or floriculture to produce tangible personal property for sale; or

(b) Purchased for incorporation into tangible personal property produced for sale by farming, agriculture, horticulture or floriculture; or

(c) Used primarily in the production of tangible personal property that will be used to produce products for sale by farming, agriculture, horticulture or floriculture; or

(d) Used primarily in the conditioning or holding of products produced for sale by farming, agriculture, horticulture or floriculture.

(C) Any tangible personal property that is incorporated into real property is not exempt under division (B)(17) of section 5739.02 of the Revised Code. The taxability or non-taxability of sales is determined by the use of articles sold. For the sale to be exempt, it is necessary that the articles sold be used in an exempt manner. Implements and articles used to cultivate or stimulate the growth of crops or flowers which are to be sold are within the scope of the exemptions as is livestock and poultry purchased for purposes or resale, or for the purpose of selling the products thereof. Building materials such as lumber, nails, glass and similar items to be used in the construction or repair of buildings are not exempt, unless they are used to build livestock or horticultural structures under divisions (B)(13) or (B)(36) of section 5739.02 of the Revised Code.

(D) Persons engaged in rendering farming, agricultural, horticultural, or floricultural services for others are deemed to be engaged directly in farming, agriculture, horticulture or floriculture. For example, a veterinarian providing services to a farmer's livestock is engaged in farming and can purchase the tangible personal property primarily used in treating the livestock exempt from sales or tax.

Last updated October 7, 2024 at 1:28 PM

History

Effective: July 5, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-9-24 Household good movers engaged in highway transportation for hire.

(A) Household goods movers engaged in "highway transportation for hire" as defined by division (Z) of section 5739.01 of the Revised Code may claim the exemption provided for under division (B)(32) of section 5739.02 of the Revised Code on the purchase or lease of motor vehicles, such as trucks and trailers, used by the household goods mover engaged in highway transportation for hire. Equipment carried on a motor vehicle is exempt under division (B)(32) of section 5739.02 of the Revised Code if it is "attached to or incorporated in" the motor vehicle.

For the purpose of providing guidance as to what is "attached to or incorporated in . . . motor vehicles" this rule sets forth nonexclusive examples of equipment that do and do not qualify for the exemption under division (B)(32) of section 5739.02 of the Revised Code.

(1) The following are examples of items, not inclusive, that are considered "attached to or incorporated in" the motor vehicles and are exempt under division (B)(32) of section 5739.02 of the Revised Code:

(a) Spring loaded logistic straps,

(b) Decking bars,

(d) Tie down straps,

(e) Walkboards,

(f) Padlocks and seal locks.

(2) The following are examples of items, not inclusive, that are not considered "attached to or incorporated in" the motor vehicles and are not exempt under division (B)(32) of section 5739.02 of the Revised Code:

(a) Pads (including "Blue pads," burlap moleskin, and door jamb pads),

(b) Dollies and carts (including four-wheel dollies, appliance dollies and carton dollies),

(d) Ladders,

(e) Refrigerator covers,

(f) Rug runners,

(g) Rubber bands and bungie cords.

(B) No exemption may be claimed under division (B)(32) of section 5739.02 of the Revised Code on a purchase that includes taxable and non-taxable equipment unless the invoice provided by the vendor separates charges for taxable equipment from charges for non-taxable equipment. Failure to separate charges will likely subject both taxable and non-taxable equipment to the tax.

(C) Incidental storage-in-transit provided by household goods movers engaged in "highway transportation for hire" is not the provision of storage under division (B)(9) of section 5739.01 of the Revised Code. As used in this paragraph, "incidental storage-in-transit" means the storage is associated with a move provided by a person engaged in "highway transportation for hire" and at the time the contract was entered into for the move the anticipated time of storage was for one hundred eighty days or less. Any storage that is anticipated to be longer or extends beyond one hundred eighty days is not incidental storage-in-transit.

Last updated August 4, 2026 at 11:09 AM

History

Effective: May 5, 2022
Promulgated Under: Other

Ohio Adm.Code 5703-9-25 Watercraft, outboard motors, and personal watercraft; tax payment or exemption claim required for certificate of title; remittance of tax by clerk of courts.

(A) If any sale of a watercraft, outboard motor, or personal watercraft is claimed to be exempt from the sales or use tax on the basis either of the intended use of the item by the purchaser in this state or of the sale being made to a church or nonprofit organization whose purchase is exempt from the tax levied by or pursuant to Chapters 5739. and 5741. of the Revised Code, the clerk of courts shall refuse to issue a certificate of title unless the application is accompanied by a certificate of exemption executed by the purchaser that specifies the reason the sale is not legally subject to the tax. A form required to be prescribed by rule is hereby prescribed for use as a certificate of exemption regarding sale of a watercraft, outboard motor, or personal watercraft. The form may be obtained from the department of taxation and is available on the department's web site. The form may be reproduced as needed.

(B) If any sale of a watercraft, outboard motor, or personal watercraft is claimed to be exempt from the sales tax on the basis that the sale is in interstate commerce, the clerk of courts shall refuse to issue a certificate of title unless the application is accompanied by a statement of fact regarding the sale. A form not required to be prescribed by rule is available for use as a statement regarding sale of a watercraft, outboard motor, or personal watercraft in interstate commerce. The form is not prescribed by or a part of this rule. The form may be obtained from the department of taxation and is available on the department's web site. The form may be reproduced as needed.

(C) A copy of each of the above-described statements and/or certificates is to be retained by the applicant and two copies presented to the clerk of courts, who shall retain one copy and submit the other copy to the department of taxation.

(D) The clerk of courts shall issue a receipt upon collection of the tax resulting from sales of watercraft, outboard motors, and personal watercraft. The clerk shall retain the original and give a copy to the remitter of the tax.

(E) On Monday of each week, each county clerk of courts shall forward to the treasurer of state the Ohio sales and use tax collections resulting from sales of watercraft, outboard motors, and personal watercraft, accompanied by the remittance report, and shall forward to the department of taxation a copy of each statement and/or certificate required herein to be obtained in lieu of tax payment.

Last updated May 5, 2022 at 8:37 AM

History

Effective: May 5, 2022
Promulgated Under: Other

Ohio Adm.Code 5703-9-26 Sourcing ancillary services and internet access.

(A) As used in this rule:

(1) "Ancillary service" has the same meaning as in division (AA)(2) of section 5739.01 of the Revised Code.

(2) "Internet access service" means a type of electronic information service, as that term is defined in division (Y)(1)(c) of section 5739.01 of the Revised Code, wherein the consumer of the service is granted access to the service provider's computer equipment for the purpose of connecting to the Internet for the purpose of accessing content, information or other services offered over the Internet.

(3) "Place of primary use" has the same meaning as in division (A)(6) of section 5739.034 of the Revised Code.

(B) A sale of ancillary service shall be sourced to the consumer's place of primary use.

(1) "Communications channel" means a physical or virtual path of communications over which signals are transmitted between or among customer channel termination points.

(2) "Customer channel termination point" means the location where the customer either inputs or receives the communications.

Last updated December 5, 2022 at 8:25 AM

History

Effective: December 5, 2022
Promulgated Under: Other

Ohio Adm.Code 5703-9-27 Sale of food to students by public, private and parochial schools, colleges and universities.

Sales of food to students only by a private, public or parochial school, college or university off the premises of such school when made by or under the direct control and supervision of such school shall be deemed to be within the exemption provided in division (B)(3) of section 5739.02 of the Revised Code.

The sales tax shall not apply to the sales of food to students only by fraternities, sororities, cafeterias and dormitories in public, parochial and private schools, colleges and universities.

Dormitories shall include those buildings operated by public, parochial and private schools, colleges and universities in which students make their homes while attending such schools. Dormitories, cafeterias and dining rooms shall not include boarding and rooming houses operated by private individuals.

Fraternities and sororities shall include all student social organizations officially recognized by, under the supervision of and maintained in public, parochial and private schools, colleges and universities operating dining rooms for their student members. Such organizations do not include rooming and boarding houses operated by private individuals.

Last updated November 15, 2023 at 2:06 PM

History

Effective: December 19, 2016
Promulgated Under: Other

Ohio Adm.Code 5703-9-28 Sales and use tax: newspapers and magazines.

(A) As used in this rule:

(1) "Newspaper" means an unbound publication bearing a title or name which is regularly published, at least as frequently as biweekly, and distributed from an established place of business to the general public primarily in a specific geographic area, for a definite price per copy or subscription period. A newspaper must contain in all editions substantial news matter of international, national, or local events and will normally contain advertisements, photographs, illustrations, editorial comment, opinions, legal notices, and other announcements of public interest. Newspaper does not include a newsletter or similar unbound periodical of interest only to certain trade, professional, commercial, or hobby interests and which does not serve the purpose of providing instruction, enlightenment, or entertainment to the general public.

(2) "Community newspaper" means an unbound publication bearing a title or name that is regularly published, from a fixed place of business, at least as frequently as biweekly, the majority of copies of which are distributed to households in its service area, which contains news, editorial comment, opinions, features, advertisements, or other matters of public interest, provided that such publication is not owned or controlled by individuals or business concerns which publish it as an auxiliary to and essentially for the advancement of another non-newspaper business of those who own or control such publication. "Community newspaper" includes any advertising insert actually published by the same person who publishes the community newspaper and is distributed therewith.

(3) "Magazines distributed as controlled circulation publications" means magazines containing at least twenty-four pages, at least twenty-five per cent editorial content, issued at regular intervals four or more times a year, and circulated without charge to the recipient, provided that such magazines are not owned or controlled by individuals or business concerns which conduct such publications as an auxiliary to, and essentially for the advancement of the main business or calling of, those who own or control them.

(B) Sales and use tax do not apply to the sale or use of:

(1) Newspapers;

(2) Community newspapers; and

(3) Magazines distributed as controlled circulation publications.

Last updated December 5, 2022 at 8:25 AM

History

Effective: December 5, 2022
Promulgated Under: Other

Ohio Adm.Code 5703-9-29 Outdoor advertising concerns.

Persons engaged in the business of furnishing space on poster panels, situated on real property owned or leased by them, for the purpose of displaying advertisements to the general public, are not vendors and the charges collected by them are not subject to the tax imposed by section 5739.02 of the Revised Code. The tax shall apply on all sales of tangible personal property to such persons for use or consumption in furnishing such service.

Last updated November 15, 2023 at 2:06 PM

History

Effective: December 19, 2016
Promulgated Under: Other

Ohio Adm.Code 5703-9-30 Auctions and auctioneers.

Where auction sales are conducted at regular or frequent intervals by the same person or persons, at a place of business subject to their control, the person or persons conducting such sales must procure a vendor's license and collect the tax regardless of whether the merchandise sold is owned by them or by other individuals who have contracted to pay, in some way, for the services of the auctioneer in making the sale.

Where the owner of goods sold at auction at the owner's place of business is engaged in the business of selling tangible personal property, the auctioneer is deemed to be the agent of the owner and the owner is responsible for collection of the tax on each transaction.

The auctioneer is not responsible for collecting tax when the transaction is a casual sale of items acquired for non-business use which are sold by the auctioneer employed directly by a person for such purpose, provided the location of such sale is not the auctioneer's permanent place of business. "Permanent place of business" includes any location where such auctioneer has conducted more than two auctions during the year. A "casual sale" can include in person or online sales.

Last updated October 1, 2026 at 10:04 AM

History

Effective: October 1, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-9-31 Florists.

Florists and nurserypersons are vendors and must procure a vendor's license and collect the tax on all sales of tangible personal property.

In cases of sales of tangible personal property by one florist or nurserypersons to another florist or nurserypersons for the purpose of propagation or resale, the tax does not apply.

The tax shall be collected on orders taken by an Ohio florist or nurserypersons to be assigned to a second florist or nurserypersons, whether the delivery is to be made within or without the state. A florist or nurserypersons making deliveries pursuant to orders received from another florist or nurserypersons, shall not collect the tax regardless of whether the florist or nurserypersons forwarding the order is within or without the state of Ohio.

The general situsing provisions found in section 5739.033 of the Revised Code apply.

Last updated November 15, 2023 at 2:07 PM

History

Effective: September 23, 2017
Promulgated Under: Other

Ohio Adm.Code 5703-9-32 Sales and use tax: funeral transactions.

(A) Morticians and funeral directors are the retailers of all items of tangible personal property and taxable services which must be separately stated in the billing and tax collected on the full selling price. Examples of such tangible personal property and services include, but are not limited to:

(1) Clothing

(2) Vaults - All kinds

(3) Outside containers (except pine box furnished with casket)

(4) Flowers

(5) Caskets

(6) Urns or other containers for ashes from cremation

(7) Limousine service if entirely within Ohio

(8) Guest books and prayer cards

(B) Personal and professional services that are not subject to tax should be stated separately from the taxable tangible personal property and services in the billing. Examples of nontaxable personal or professional services include, but are not limited to:

(1) Funeral notices

(2) Gratuities to clergymen and pallbearers, churches, etc.

(3) Cash advances

(4) Embalming and care of the remains

(5) Transportation of the remains

(6) Cremation

(7) Use of the funeral home or chapel for showing or services

(8) Counseling or other professional services

(C) Morticians and funeral directors are the consumers of all items of tangible personal property or taxable services used in performing their personal or professional services and shall pay the tax on the purchase of such articles. Examples of such items include, but are not limited to:

(1) Embalming fluids, cosmetics, and instruments used in preparation of the remains

(2) Crematory equipment and supplies

(3) Funeral home or chapel furnishings

(4) Motor vehicles used for transporting the remains

(D) Cemetery associations are vendors of all items of tangible personal property sold such as vaults and markers, including grave and lot markers, and are responsible for the collection of the tax on taxable transactions.

(E) If the casket and remains are to be shipped to a point outside the state, no Ohio tax shall be collected by the Ohio mortician or funeral director for the tangible personal property shipped.

Last updated November 15, 2023 at 2:08 PM

History

Effective: September 23, 2017
Promulgated Under: Other

Ohio Adm.Code 5703-9-33 Photographers.

The production of still photographs or prints, motion pictures, the developing of negatives, or the mounting of transparencies in frames to create slides, for a consideration, are sales. Unless the sale is otherwise exempted by law, the entire charge is subject to the sales tax without any deduction on account of the cost of property sold, cost of materials used, labor or service cost, or any other expense.

Last updated November 15, 2023 at 2:08 PM

History

Effective: September 23, 2017
Promulgated Under: Other

Ohio Adm.Code 5703-9-34 Sign manufacturers, sign painters and sales agents.

Persons engaged in selling, leasing, installing, maintaining, or repairing electric, neon, or other illuminated signs, where such sale or lease involves a transfer of title or possession or a license to use or consume such signs, are making retail sales and must collect the tax on the selling price or rental fee.

Persons engaged in the business of painting signs on articles of tangible personal property, whether furnished by themselves or by the customer, for the purpose of selling or leasing such signs as finished articles, are vendors of such signs. Each such vendor must possess a vendor's license and collect the tax on the selling price or rental fee of each sign, including the labor charge for painting such signs.

Persons engaged in the business of painting signs on real property owned or leased by others are rendering a service and the charges therefor are not subject to the tax. The tax shall apply on all sales of tangible personal property to such persons for use or consumption in furnishing such service.

Last updated November 15, 2023 at 2:08 PM

History

Effective: September 23, 2017
Promulgated Under: Other

Ohio Adm.Code 5703-9-35 Purchases, as a liquidator of closed institutions, by superintendents of insurance, banks, and building and loan associations.

Sales of tangible personal property to the superintendent of insurance of Ohio, the superintendent of financial institutions and the superintendent of building and loan associations of Ohio, in their capacities as liquidators of closed institutions under their respective jurisdictions, are not sales to the state or any of its political subdivisions within the meaning of division (B)(1) of section 5739.02 of the Revised Code and are subject to the tax.

Last updated November 15, 2023 at 2:09 PM

History

Effective: September 23, 2017
Promulgated Under: Other

Ohio Adm.Code 5703-9-36 Sales and use tax, negative equity in motor vehicle sales and leases.

(A) "Negative equity" is a term applied when a motor vehicle purchaser is trading in a vehicle with a current value that is less than the amount owed on the existing loan for that vehicle. For example, a customer trades in a motor vehicle to a dealer in connection with the purchase of another vehicle. The dealer allows a five thousand dollar trade-in credit towards the purchase of the second vehicle, but the customer still owes seven thousand dollars on the existing loan. The negative equity amount is two thousand dollars.

(B) A motor vehicle dealer may state the amount of negative equity several ways on a retail buyer's agreement. How the trade-in allowance, negative equity, or loan payoff amount is displayed on the retail buyer's agreement determines if it is part of the total vehicle price paid for the newly acquired vehicle and subject to sales tax. If the negative equity amount is included by the dealer in the total vehicle price, it will be included in the base on which sales tax must be charged. If it is not included in the total vehicle price, the negative equity amount will not be included in the calculation of sales tax.

(C) The examples below will show several situations involving the application of Ohio sales and use tax to sales of motor vehicles when the purchaser is trading in a vehicle with negative equity. All examples will involve the same assumed facts: A dealer is selling a motor vehicle to a purchaser for the negotiated cash price of twenty-five thousand dollars; the purchaser is trading in a vehicle; the dealer allows the purchaser a trade-in credit of five thousand dollars towards the purchase of the newly acquired motor vehicle; the trade-in vehicle has an outstanding loan balance of seven thousand dollars; the negative equity amount is two thousand dollars; the consumer has consented to include the negative equity amount as part of the current transaction; title fees are assumed to be fifteen dollars. The applicable tax rate, for the purpose of the examples is assumed to be seven per cent.

To reflect the difference in the treatment of trade-in vehicles when determining the amount subject to sales tax, the examples are given both as a purchase of a new vehicle and as a purchase of a used vehicle. (Note: for purposes of these examples only, all figures, including tax, have been rounded to the nearest dollar.) For the examples involving sales of new vehicles, sales tax is calculated by subtracting the applicable trade-in allowance from the total vehicle price to arrive at a "tax base." The "tax base" is multiplied by the applicable sales tax rate, seven per cent in each example. Calculation B in each example reflects this calculation. For the examples involving sales of used vehicles, sales tax is calculated on the total vehicle price as Ohio law does not allow a deduction from price for the value of a trade-in.

Example 1: In this example, the dealer includes the negative equity amount in the total vehicle price. In this example, the negative equity is itemized. However, whether the negative equity is separately itemized or simply reflected in the base vehicle price (See example 2 in this rule), when negative equity is added to the base vehicle price, it is subject to the tax.

Example 1a: New Vehicle Transaction

Calculation A: Negotiated Vehicle Price

| Base Vehicle Price | $25,000 | | --- | --- | | Negative Equity | $ 2,000 | | Total Vehicle Price | $27,000 |

Calculation B: Sales Tax

| Total Vehicle Price | $27,000 | | --- | --- | | Trade-in Allowance | ($ 5,000) | | Tax Base | $22,000 | | Tax @7.00% | $ 1,540 |

Calculation C: Total Due/Amount Financed

| Total Vehicle Price | $27,000 | | --- | --- | | Tax | $ 1,540 | | Title Fee | $ 15 | | Total Due/Amount Financed | $28,555 |

Example 1b: Used Vehicle Transaction

Calculation A: Negotiated Vehicle Price

| Base Vehicle Price | $25,000 | | --- | --- | | Negative Equity | $ 2,000 | | Total Vehicle Price | $27,000 |

Calculation B: Sales Tax

| Total Vehicle Price | $27,000 | | --- | --- | | Tax @ 7.00% | $ 1,890 |

Calculation C: Total Due/Amount Financed

| Total Vehicle Price | $27,000 | | --- | --- | | Tax | $ 1,890 | | Title Fee | $ 15 | | Total Due/To Be Financed | $28,905 |

Example 2: In this example, the dealer increases the base vehicle price by the negative equity amount. Unlike example 1, the negative equity amount is not separately itemized. However, as noted in example 1, the result would be the same if the negative equity were itemized separately before calculating the total vehicle price. The dealer in this example also increases the trade-in allowance to the full amount of the consumer's outstanding loan balance (seven thousand dollars).

2a: New Vehicle Transaction

Calculation A: Negotiated Vehicle Price

| Base Vehicle Price | $27,000 (includes $2,000 negative equity without itemization) | | --- | --- | | Total Vehicle Price | $27,000 |

Calculation B: Sales Tax

| Total Vehicle Price | $27,000 | | --- | --- | | Trade-in Allowance | ($ 7,000) (increases allowance by $2000 to offset negative equity) | | Tax Base | $20,000 | | Tax @7.00% | $ 1,400 |

Calculation C: Total Due/To Be Financed

| Total Vehicle Price | $27,000 | | --- | --- | | Tax | $ 1,400 | | Title Fee | $ 15 | | Total Due/To Be Financed | $28,415 |

2b: Used Vehicle Transaction

Calculation A: Negotiated Vehicle Price

| Base Vehicle Price | $27,000 | | --- | --- | | | | | Total Vehicle Price | $27,000 |

Calculation B: Sales Tax

| Total Vehicle Price | $27,000 | | --- | --- | | Tax @ 7.00% | $ 1,890 |

Calculation C: Total Due/To Be Financed

| Total Vehicle Price | $27,000 | | --- | --- | | Tax | $ 1,890 | | Title Fee | $ 15 | | Total Due/To Be Financed | $28,905 |

Example 3: In this example, the dealer does not include the negative equity amount in the total vehicle price. Rather, the negative equity is shown as an additional amount due to a third party (perhaps financed) after the computation of the total vehicle price.

3a: New Vehicle Transaction

Calculation A: Negotiated Vehicle Price

| Base Vehicle Price | $25,000 | | --- | --- | | Total Vehicle Price | $25,000 |

Calculation B: Sales Tax

| Total Vehicle Price | $25,000 | | --- | --- | | Trade-in Allowance | ($ 5,000) | | Tax Base | $20,000 | | Tax @7.00% | $ 1,400 |

Calculation C: Total Due/To Be Financed

| Total Vehicle Price | $25,000 | | --- | --- | | Tax | $ 1,400 | | Title Fee | $ 15 | | Negative Equity (Amounts Paid To Others) | $ 2,000 | | Total Due/To Be Financed | $28,415 |

3b: Used Vehicle Transaction

Calculation A: Negotiated Vehicle Price

| Base Vehicle Price | $25,000 | | --- | --- | | Total Vehicle Price | $25,000 |

Calculation B: Sales Tax

| Total Vehicle Price | $25,000 | | --- | --- | | Tax @ 7.00% | $ 1,750 |

Calculation C: Total Due/Amount Financed

| Total Vehicle Price | $25,000 | | --- | --- | | Tax | $ 1,750 | | Title Fee | $ 15 | | Negative Equity (Amounts Paid To Others) | $ 2,000 | | Total Due/To Be Financed | $28,765 |

(D) In the case of a motor vehicle lease, if the lease agreement includes an amount for negative equity or a payoff for a previous loan or lease, that amount is part of the total amount paid by the lessee and is part of the price and subject to sales and use tax.

Last updated April 15, 2024 at 8:30 AM

History

Effective: April 15, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-9-37 Sales and use tax: tire retreading and repairs.

(A) Persons engaged in the business of retreading, recapping, or relugging of tires for consideration are deemed to be producing tangible personal property for sale by processing, as defined in rule 5703-9-20 of the Administrative Code. The taxability of tools and equipment purchased by such persons will be determined under the provisions of rule 5703-9-21 of the Administrative Code.

With respect to sales of retreated, recapped, or relugged tires, the full amount charged to the consumer, including materials and labor, is the price subject to the sales tax, regardless of the manner in which the consumer is billed for such charges.

(B) Persons engaged in performing tire repairs for consideration are engaged in making sales of a service subject to sales tax. The full amount charged to the consumer, including materials and labor, is the price subject to sales tax.

Last updated November 15, 2023 at 2:13 PM

History

Effective: September 23, 2017
Promulgated Under: Other

Ohio Adm.Code 5703-9-38 Photocopying and blue prints.

A person engaged in producing by photocopying, blueprinting, ozaliding, and other similar processes, copies of documents, drawings, photographs, prints, and like items, and transferring the copies so produced for a price charged to customers, is a vendor. Such transfers meet the statutory definition of "sale" and constitute "selling." Hence, a person engaged in the business of making such sales at retail must procure a vendor's license and collect the proper amount of tax with respect to each transaction or obtain from the consumer a properly executed certificate of exemption in the event the tax does not apply.

Last updated November 15, 2023 at 2:13 PM

History

Effective: September 23, 2017
Promulgated Under: Other

Ohio Adm.Code 5703-9-39 Interstate commerce.

When tangible personal property is sold within the state and the vendor is obligated to deliver it to a point outside of the state, or to deliver it to a carrier or to the mails for transportation to a point outside of the state, the Ohio sales tax does not apply. However, where tangible personal property pursuant to a sale is delivered in this state to the buyer or to an agent of his other than an interstate carrier the retail sales tax applies notwithstanding that the buyer may subsequently transport the property out of the state.

Last updated November 15, 2023 at 2:13 PM

History

Effective: June 14, 2018
Promulgated Under: Other

Ohio Adm.Code 5703-9-40 Sales of personalty belonging to another.

Persons engaged in the business of selling tangible personal property who are authorized, engaged or employed to sell tangible personal property belonging to another are the vendors of such tangible personal property and will be responsible for the proper collection and remittance of the sales tax with respect to such sales.

Persons engaged in the business of selling tangible personal property includes persons who hold themselves out to the public as conducting a business regardless of whether the merchandise sold is owned by them or by other persons who have authorized, engaged or employed them to sell tangible personal property, e.g. consignment sales.

Last updated January 8, 2024 at 8:37 AM

History

Effective: January 7, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-9-41 Person engaged in advertising field.

(A) A person engaged in the field of advertising or in the preparation of advertising matter who sells tangible personal property obtained from others or who produces tangible personal property for transfer to another for a consideration is a vendor with respect to such transactions. If the sales are retail sales the vendor needs to hold a vendor's license, collect the sales tax, file returns and remit the tax.

(B) The production of tangible personal property for the advertiser is a sale irrespective of whether the material used in the production is supplied either directly or indirectly by the advertiser or is obtained by the producer on his own behalf. The production of items such as photographs, photostats, art work, plates, mats, printed material, etc., for another for a consideration is a sale of such items.

(C) The full amount charged on the sale or production of tangible personal property is subject to the sales tax even though a part of the charge may be billed as "service charge," "fee," or "commission." Where preliminary art has been prepared, the price or tax base for the finished art work includes the amount attributable to the preliminary art.

(D) A person purchasing tangible personal property from others for the purpose of resale or for the purpose of incorporating it into tangible personal property produced for sale may purchase such property exempt from the sales or use tax. Exemption may also be claimed on the purchase or use of tangible personal property used directly in producing the property for sale.

(E) A person in the advertising field who does not sell or produce tangible personal property, but who is engaged solely in rendering service to others as a true agent, is not considered to be a vendor with respect to such services. In determining whether such a person is acting as a true agent, consideration should be given to the contract between the parties, the conduct of the parties with respect to the property involved, and the facts and circumstances of the transaction. A person who, for example, operates under an agreement wherein the agency relationship is specifically set forth and under which advertising is placed in selected media or tangible personal property is purchased on behalf of, and in the name of, the principal, would be considered a true agent. An agent purchasing for another must either pay the sales tax or furnish a properly executed exemption certificate in the name of, and on behalf of, the principal. In claiming exemption based upon the use of the thing transferred the purpose of the principal, not the agent, is the determining factor.

(F) Transactions not involving the sale of tangible personal property or the production of tangible personal property are considered to be the performance of a service. Examples of such services are:

(1) Recommendations for advertising themes or for merchandising plans;

(2) The placing of advertising matter in advertising media;

(3) The purchase of space or time from advertising media;

(4) The writing of original manuscripts, news releases, copy for use by newspapers or other publications or for broadcast on television or radio;

(5) The purchase of tangible personal property as an agent of the advertiser; or

(6) The preparation of preliminary art (roughs, visualizations, thumbnails) solely for the purpose of displaying the advertising idea to the advertiser.

(G) Where an advertiser is billed for a fee which represents a charge for service not subject to the sales tax, as distinguished from services which are a part of a retail sale or services in the production of tangible personal property, such billing will clearly show the nature of the service rendered.

(H) A person engaged solely in the performance of services is the consumer of the tangible personal property used by him in performing such service and the tax is applicable to these purchases.

Last updated January 8, 2024 at 8:38 AM

History

Effective: January 7, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-9-42 Installation or sale of septic tanks.

A person who, upon order of the owner of land or upon order of a building contractor or subcontractor, furnishes a septic tank for a building and delivers it by placing it in an excavation prepared by another, but does not connect the inlet of the tank to the building and the outlet to the leaching bed, is the vendor of the septic tank and is responsible for collection of the sales tax on the sale.

The mere fact that several sections of the tank may be cemented together by the vendor in the excavation, at the time of delivery, does not result in the tank being incorporated into the structure or an improvement to real property at that time, since it is still unavailable for use until connections are completed.

Last updated October 23, 2023 at 9:13 AM

History

Effective: June 14, 2018
Promulgated Under: Other

Ohio Adm.Code 5703-9-43 Books, manuals, bulletins, lists or similar materials.

Transactions which involve the transfer, for a consideration, of title or possession of books, manuals, bulletins, lists or similar materials providing current information or data on a particular subject which are furnished and/or supplemented on a continuing basis pursuant to a contract are sales.

Books include but are not limited to textbooks, dictionaries, bound volumes of all kinds, instruction books or booklets, and loose-leaf information services such as tax information services, labor information services, credit or financial information services. Printed materials which may supplement, explain, amend, revise, or otherwise alter, expand, or render current a book previously issued (including a so-called supplement or pocket part) are also included. Printed materials includes matter which is mimeographed or multigraphed or duplicated in any other manner.

Last updated January 8, 2024 at 8:38 AM

History

Effective: January 7, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-9-44 Bad debts.

(A) In reporting gross sales and net taxable sales a vendor may exclude an amount equal to the sum of the vendor's bad debts arising from sales occurring on or after July 1, 1980 and charged off as uncollectible on the vendor's books during the sales tax reporting period. The tax collected for the current period may be adjusted by deducting therefrom the amount of tax previously reported and paid as tax collected on the sale giving rise to the bad debt.

"Bad debt" means any debt or account receivable arising from the sale of tangible personal property or a taxable service by the vendor upon which sales or use tax has been reported and paid in a prior reporting period which has become worthless or uncollectible during the period between the vendor's preceding tax return and the present return and which has been uncollected for at least six months. The bad debt must be of a type that is properly deductible pursuant to the "Internal Revenue Code of 1954" 68a Stat. 50, 26 U.S.C. 166, as amended, and the regulations adopted pursuant thereto, or would be so deductible if the vendor kept his accounts on an accrual basis.

The amount of the bad debt is equal to the price, or portion thereof, of the tangible personal property that is uncollectible. No amount can be excluded as a bad debt that represents:

(1) Interest or finance charges on the debt or account;

(2) Sales tax charged on the purchase price;

(3) Uncollectible amounts on property that remains in the possession of the vendor until the full purchase price is paid;

(4) Expenses incurred in attempting to collect the debt or account;

(5) Any portion of the debt or account that is, in fact, collected; or

(6) Any debt or account that is sold to a third party for collection; or

(7) Any uncollectible amount on property repossessed by or on behalf of the vendor.

(B) The burden of establishing the right to, and the validity of, a bad debt deduction is on the vendor claiming such deduction. For each bad debt excluded from gross sales, the vendor must maintain a record of:

(1) The name of the purchaser/debtor;

(2) The date of the sale or sales giving rise to the bad debt;

(3) The price of the property and the amount of sales tax charged thereon;

(4) The amount of interest, finance and service charges charged to the debt or account;

(5) Whether or not the property was retained by the vendor or repossessed;

(6) Any amounts charged to the debt or account representing costs of collection;

(7) The dates and amounts of any payments made on the debt or account; and

(8) Any portion of the debt or account which represents a charge that was not subjected to tax in the original transaction.

All records must be preserved for four years after the filing of the return upon which the bad debt deduction is taken, unless the commissioner consents in writing to a shorter period or requires by order a longer period.

(C) In the event that the commissioner determines that a vendor has not maintained adequate records, the commissioner may test check the vendor's business in order to verify the amounts deducted as bad debts.

In the absence of adequate records showing the contrary, it is presumed that any payments made on a debt or account are applied first to the price of the property and sales tax thereon and secondly to interest, service charges and any other charges. The amount of interest charged to the account is presumed to be computed at the maximum rate of interest charged by the vendor on that type of account that gives rise to the bad debt.

If the vendor maintains a reserve for bad debts, only actual charges against the reserve representing uncollectible debts or accounts may be deducted for sales tax bad debt purposes. Contributions to the reserve are not deductible as a sales tax bad debt.

(D) The tax due on any bad debt found to have been improperly or illegally deducted may be recovered by assessment in the manner provided in section 5739.13 of the Revised Code.

(E) A bad debt may only be deducted on the return for the sales tax reporting period during which the uncollectible debt was written off on the books of the vendor. In the event that the bad debt deduction exceeds the net taxable sales of the vendor for that period, the tax attributable to the excess amount can only be recovered by refund claim pursuant to sections 5739.07 and 5741.10 of the Revised Code. If all or a portion of a bad debt is subsequently paid by the consumer or any other person, the vendor must include the amount paid in gross sales and net taxable sales on the return for the period during which the payment was made and he must remit the tax thereon.

(F) If the vendor's business consists of taxable and nontaxable sales of tangible personal property, and if the vendor is unable to document whether the sale of the property that gives rise to the bad debt was a taxable or nontaxable sale, the amount of the bad debt deduction shall not exceed the amount of the bad debt multiplied by the quotient obtained by dividing the vendor's taxable sales for the preceding calendar year by his gross sales for the preceding calendar year. In the event that the vendor was not engaged in business during at least six months of the preceding calendar year, the amounts of his taxable sales and gross sales for the preceding twelve months, or the amounts for each of the months that he has been engaged in business, whichever period is shorter, shall be the amounts used in computing the bad debt deduction pursuant to this paragraph.

In order to ensure that a bad debt deduction accurately reflects the tax imposed on the sale which gave rise to the bad debt, whenever the sales tax rate applicable to the vendor's place of business changes, such as by statutory change or the enactment of county or transit authority sales and use tax, the amount of the bad debt deduction must be adjusted before it is excluded from gross sales and net taxable sales. The amount to be excluded shall be the amount of the bad debt multiplied by the quotient obtained by dividing the tax rate applicable at the time of the sale by the tax rate applicable at the time of the deduction.

In case the vendor receives payment after the bad debt deduction has been excluded, the amount that must be included in gross sales and net taxable sales is the amount of the payment multiplied by the quotient of the tax rate applicable at the time of sale divided by the tax rate applicable at the time of the payment. This will assure that the vendor only remits the amount of tax that he previously recovered by excluding the bad debt.

In addition to all other records required to be kept by this rule, the vendor must maintain a record of any computation and adjustments made pursuant to this paragraph.

(G) The provisions of this rule also apply to sellers registered with the tax commissioner pursuant to section 5741.17 of the Revised Code.

(H) In situations where the books and records of the vendor or seller claiming the bad debt allowance support an allocation of the bad debt allowance among multiple states, the vendor or seller may make the allocation and claim the appropriate share of the bad debt with this state.

(I) In situations where the vendor has assigned the account receivables to a third party or where the vendor uses a third party to facilitate the financing of the taxable sale, to qualify for the bad debt deduction, the claimant must be the vendor and the bad debt deduction must appear on the books and records of the vendor.

Last updated March 25, 2024 at 11:09 AM

History

Effective: June 14, 2018
Promulgated Under: Other

Ohio Adm.Code 5703-9-45 Sales; alleged exempt sales; submission of additional evidence.

(A) A vendor who files a petition for reassessment pursuant to section 5739.13 of the Revised Code contesting the assessment of sales tax on sales for which the vendor obtained no valid exemption certificate and for which the vendor failed to establish that the sale was not subject to the tax within sixty days after receiving notice by the tax commissioner of the intent to levy an assessment may, pursuant to division (E) of section 5739.03 of the Revised Code, present additional evidence to the commissioner for the purpose of establishing that the contested assessed transactions are properly subject to a statutory claim of exception or exemption from the tax.

(B) Such additional evidence shall be in written or graphic form and may contain whatever factual information the vendor reasonably believes to be relevant and material to the assessed sales contested by the petition for reassessment.

(C) Such additional evidence will be filed with the legal division of the department of taxation within ninety days after the vendor's receipt of the notice of assessment, except that, upon application and for reasonable cause, the period for submitting such additional evidence will be extended thirty days. The vendor or the vendor's representative, at any time prior to any administrative hearing on the petition, may review the results of any preliminary determinations made on the additional evidence submitted.

(D) In making the final determination on the petition, the commissioner will give due consideration to the additional evidence in order to determine if the vendor has carried the burden of proof in establishing that the contested assessed sales are properly subject to a statutory claim of exception or exemption.

(E) Evidence received subsequent to ninety days after the vendor's receipt of the notice of assessment, or after one hundred twenty days if an extension has been granted pursuant to paragraph (C) of this rule, will not be considered by the commissioner in making the final determination on the petition.

Last updated January 8, 2024 at 8:38 AM

History

Effective: January 7, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-9-46 Sales and use taxes: automatic data processing, computer services, and electronic information services.

(A) As used in this rule:

(1) "Automatic data processing" means:

(a) Processing others' data, including all activities incident to processing of data such as keypunching, keystroke verification, rearranging, or sorting of previously documented data for the purpose of data entry or automatic processing, changing the medium on which data is stored, and preparing business documents such as reports, checks, or bills; or

(b) Providing access by any means to computer equipment for the purpose of processing data.

(2) "Computer services" means:

(a) Specifying computer hardware configurations, which is the service of instructing others in the proper set-up, installation, and start-up of computer hardware;

(b) Evaluating technical processing characteristics, which is the service of reviewing, testing or otherwise ascertaining the operating capacity or characteristics of computer hardware or systems software. It does not include conducting feasibility studies or analysis of hardware or software needs or alternatives;

(c) Computer programming, which is, for purposes of the definition of "computer services," the service of writing, changing, debugging, or installing systems software; or

(d) Training computer programmers and operators in the operation and use of computer equipment and its system software.

Computer services are to be provided in conjunction with and to support the sale, lease, or operation of taxable computer equipment or systems to fall within the scope of this rule.

(3) "Electronic information services" has the same meaning as in division (Y)(1)(c) of section 5739.01 of the Revised Code. "Electronic information service" includes such services as providing Internet access, providing access to database information, and providing access to electronic mail systems.

(4) "Systems software" includes all programming that controls the basic operations of the computer, such as arithmetic, logic, compilation or similar functions, whether it is an integral part of the computer hardware or is contained on magnetic disks or other storage media. "Systems software," solely for purposes of Chapters 5739. and 5741. of the Revised Code because of division (Y)(2)(e) of section 5739.01 of the Revised Code, does not include application software programs that are intended to perform business functions or control or monitor processes.

(5) "Personal and professional services" has the same meaning as in division (Y)(2) of section 5739.01 of the Revised Code.

(6) "Provider", for purposes of this rule, means a vendor or seller who provides or supplies automatic data processing, computer services, electronic information services, or personal or professional services for a consideration, and "provision" means the sale of such services.

(7) "Business" means the ongoing conduct of commercial, manufacturing, mining, agriculture, professional, service, or similar enterprise, whether or not the person or persons conducting such enterprise are for-profit or nonprofit entities and includes any activity engaged in by any person with the object of gain, benefit or advantage, either direct or indirect. Business does not include the activity of an individual in managing and investing the individual's own funds.

(B) For purposes of Chapters 5739. and 5741. of the Revised Code:

(1) The provision of automatic data processing services, computer services, or electronic information services in this state for a consideration for use in business by the consumer is a sale that is subject to the sales tax.

(2) The receipt of the benefit of these services in this state for use in business by the consumer constitutes a use subject to the use tax.

(3) When a transaction includes the provision of automatic data processing, computer services, or electronic information services:

(a) The true object of the transaction is the receipt of automatic data processing, computer services, or electronic information services if such services render a significant benefit to the consumer;

(b) The true object of the transaction is the receipt of personal or professional services to which the automatic data processing, computer services, or electronic information services are merely incidental or supplemental if:

(i) The automatic data processing, computer services, or electronic information services are merely utilized by the provider in the performance or delivery of such personal or professional services;

(ii) The benefit sought to be received by the consumer is the personal or professional service; or

(iii) The automatic data processing, computer services, or electronic information services themselves provide no significant benefit to the consumer.

(4) A transaction may include separable components such that the true object of one or more separately stated components is the receipt of automatic data processing, computer services, or electronic information services and the true object of any other separately stated components is the receipt of personal and professional services or consequential tangible personal property or other taxable services. A transaction separable in this manner is a "mixed transaction." The various components of a mixed transaction will be separately stated in the contract or initial billing and the price applicable to each component will similarly be separated. It will be sufficient for purposes of this rule to separate components to the extent they are separate categories under division (B) of section 5739.01 of the Revised Code. Such categories include, but are not limited to, all tangible personal property; all repair and installation services; all personal and professional services; and all automatic data processing, computer services, and electronic information services.

(5) The provision of computer services for consideration is a sale, regardless of whether the provider is also a vendor of computer equipment or software and regardless of whether the work is performed on or off the premises of the consumer, and whether the person performing the service acts under the immediate supervision of the provider or the consumer. Services performed by an employee for the employer are not sales.

(C) Every person in this state who is making sales of automatic data processing, computer services, or electronic information services for use in business needs to be licensed pursuant to section 5739.17 of the Revised Code. Every person outside this state who is providing automatic data processing, computer services, or electronic information services in this state, and who has substantial nexus with this state as provided in division (H) of section 5741.01 of the Revised Code need be registered as a seller pursuant to section 5741.17 of the Revised Code.

(D) For purposes of Chapters 5739. and 5741. of the Revised Code, the provision of automatic data processing, computer services, or electronic information services does not constitute manufacturing.

(E) A provider of automatic data processing, computer services, or electronic information services may claim exemption on purchases of automatic data processing, computer services, or electronic information services when both the following are met:

(1) The purchased service is an integral part of the automatic data processing, computer service, or electronic information services being provided; and

(2) The total cost of the purchased service will be included in the price of the service provided.

(F) A provider of automatic data processing, computer services, or electronic information services may claim resale on any purchase of tangible personal property that is or is to be transferred permanently to the consumer of the service as an integral part of the performance of the service.

Last updated April 15, 2024 at 8:30 AM

History

Effective: April 15, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-9-48 Sales tax; purchases made with food stamp coupons.

The sales tax does not apply to sales of food to persons using food stamp coupons to purchase the food pursuant to the supplemental nutrition assistance program or food stamp program. As used in this rule, "food" and "coupon" have the same meaning as in the Food and Nutrition Act of 2008, 7 U.S.C. 2012, as amended, and federal regulations adopted pursuant to that act.

When a person using food stamp coupons has insufficient coupons to pay the full amount of a transaction, the vendor will apply the value of the coupons first to any food that would otherwise be subject to sales tax if not purchased with food coupons.

Last updated January 8, 2024 at 8:38 AM

History

Effective: January 7, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-9-49 Corporate officer liability.

(A) As used in this rule and in sections 5739.33 and 5741.25 of the Revised Code:

(1) "Officer" or "corporate officer" means the president, vice-president, treasurer, secretary, or chief executive officer of a corporation, or any person holding a similar title or position in a corporation, limited liability company, or business trust. Any person who holds an ownership interest in a corporation or limited liability company or a beneficial interest in a business trust and performs any of the functions specified in paragraphs (C) to (G) of this rule shall be deemed an officer. In the case of an affiliated group of corporations as that term is defined in rule 5703-9-16 of the Administrative Code, any officer of one corporation in that group that performs any of the functions listed in paragraphs (C) to (G) of this rule for another corporation in the group shall be deemed an officer of that corporation.

(2) "Employee" means a person who works for a corporation, limited liability company, or business trust, whether for pay or not. An employee may also be an officer.

(3) "Trustee" means any person responsible for the management, administration or control of a business trust.

(4) "Business trust" has the same meaning as in division (A) of section 1746.01 of the Revised Code.

(B) The officers, employees, or trustees of a corporation, limited liability company, or business trust that fails to file returns or remit taxes required to be filed and paid under Chapter 5739. or 5741. of the Revised Code are liable for the unpaid sales tax, direct pay, or seller's use tax liability of that entity under the conditions set forth in paragraphs (C) to (I) of this rule. The failure to determine liability under any of those paragraphs does not preclude the establishment of liability under any of the other paragraphs. Personal liability may be assessed as provided in section 5739.13, 5741.11, or 5741.13 of the Revised Code.

(C) An officer or trustee is personally liable for the sales tax, direct pay, or seller's use tax liability of a corporation, limited liability company, or business trust if the officer or trustee was responsible for the execution of that entity's fiscal responsibilities on the date on which the return for the period is filed or is required to be filed, whichever is earlier. A person has demonstrated such responsibility if any of the following apply:

(1) The officer or trustee signs any sales tax, direct pay, or seller's use tax return required under Chapter 5739. or 5741. of the Revised Code or prepares and submits without signing any such return;

(2) The officer or trustee signs or prepares and submits without signing any other tax returns required by the laws of this state or any of its subdivisions or the Internal Revenue Code of the United States unless the officer or trustee can provide sufficient evidence to establish that the entity divided the responsibility for filing of tax returns in such a manner that the responsibility for filing sales tax, direct pay, or seller's use tax returns required by Chapter 5739. or 5741. of the Revised Code was assigned explicitly to another officer or trustee;

(3) The officer or trustee exercises management control or authority over employees whose duties include the preparation, signing, or filing of returns described in paragraph (C)(1) or (C)(2) of this rule;

(4) The officer or trustee retains, directs or otherwise exercises control over outside accountants, bookkeepers, or other persons who are charged with filing sales tax, direct pay, or seller's use tax returns required under Chapter 5739. or 5741. of the Revised Code on behalf of the entity;

(5) The officer or trustee exercises authority to sign checks or authorizes the use of his signature stamp or facsimile to sign checks, drawn on the entity's accounts, in payment of tax liabilities;

(6) The officer or trustee determines priorities by which the entity's creditors are paid instead of the state. A payment to a creditor in the form of an in-kind distribution of entity assets is a payment for purposes of this paragraph;

(7) The officer or trustee uses or manages sales or seller's use taxes paid by consumers to the entity as required by division (A) of section 5739.02 or 5741.02 of the Revised Code and held by the entity in trust for the benefit of the state;

(8) The officer or trustee instructs any employee of the entity to use or manage sales or seller's use taxes paid by consumers to the entity as required by division (A) of section 5739.02 or 5741.02 of the Revised Code and held by the entity in trust for the benefit of the state; or

(9) The officer or trustee performs any other function which would indicate control over the fiscal operations of the entity.

(D) An employee is personally liable for the sales tax, direct pay, or seller's use tax liability of a corporation, limited liability company, or business trust as provided in section 5739.33 or 5741.25 of the Revised Code if, for the benefit of that entity, the employee performs one or more of the following actions:

(1) The employee signs or prepares and submits without signing sales tax, direct pay, or seller's use tax returns required under Chapter 5739. or 5741. of the Revised Code;

(2) The employee supervises or controls other employees who perform the activities listed in paragraph (D)(1) of this rule; or

(3) The employee exercises the authority to sign checks drawn on the account of the entity in payment of tax liabilities.

(E) An employee of a corporation, limited liability company, or business trust who meets one or more of the conditions listed in paragraphs (D)(1) to (D)(3) of this rule will not be considered responsible if the employee can establish that his failure to comply with the requirements of Chapter 5739. or 5741. of the Revised Code resulted from orders from an officer, trustee, or supervisory employee of the entity which prevented the employee from complying with the requirements of that chapter.

(F) If the officers of a corporation or limited liability company own, either collectively or individually, more than fifty per cent of the ownership interest in the entity, the shareholder/officers are responsible for the execution of the fiscal responsibility of the entity and personally liable under section 5739.33 or 5741.25 of the Revised Code, regardless of any attempt to delegate such responsibility, if one or more of the following apply:

(1) The entity filed sales tax, direct pay, or seller's use tax returns required under Chapter 5739. or 5741. of the Revised Code showing the liability without submitting payment;

(2) The entity failed to file sales tax, direct pay, or seller's use tax returns required under Chapter 5739. or 5741. of the Revised Code;

(3) The records of the entity or other evidence indicates that the entity collected the sales or seller's use tax required under Chapter 5739. or 5741. of the Revised Code; or

(4) The owner/officer of the entity actually controlled or supervised the preparation and submission of sales tax, direct pay, or seller's use tax returns required under Chapter 5739. or 5741. of the Revised Code.

(G) If the trustees of a business trust own, either collectively or individually, more than fifty per cent of the beneficial interest in the business trust, the owner/trustees are responsible for the execution of the fiscal responsibility of the business trust and liable under section 5739.33 or 5741.25 of the Revised Code, regardless of any attempt to delegate such responsibility, if one or more of the following apply:

(1) The business trust filed sales tax, direct pay, or seller's use tax returns required under Chapter 5739. or 5741. of the Revised Code showing the liability without submitting payment;

(2) The business trust failed to file sales tax, direct pay, or seller's use tax returns required under Chapter 5739. or 5741. of the Revised Code;

(3) The records of the business trust or other evidence indicates that the business trust collected the sales or seller's use tax required under Chapter 5739. or 5741. of the Revised Code; or

(4) The owner/trustee of the business trust actually controlled or supervised the preparation and submission of sales tax, direct pay, or seller's use tax returns required under Chapter 5739. or 5741. of the Revised Code.

(H) If more than one person is personally liable under section 5739.33 or 5741.25 of the Revised Code for the unpaid liability of a corporation, limited liability company, or business trust, their liability shall be joint and several.

(I) The provisions of paragraphs (C) to (H) of this rule are not exclusive and the commissioner may use any available evidence to establish the liability of an officer, trustee, or employee for the unpaid sales tax, direct pay, or seller's use tax liability of the corporation, limited liability company, or business trust.

Last updated December 12, 2024 at 8:15 AM

History

Effective: December 12, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-9-50 Registration using central registration system.

(A)

(1) Any time after the effective date of Ohio's membership in the streamlined sales tax system, any vendor or seller that wishes to register to collect and remit Ohio tax may register through a multi-state central registration system provided by the governing board of the streamlined sales tax system. As used in this rule, that central registration system is the "CRS." By registering through the CRS, the vendor or seller agrees to collect and remit tax on all taxable sales into Ohio and is subject to all applicable penalties, additional charges, and interest for failing to timely and properly remit the taxes or file the tax returns.

(2) A vendor's or seller's registration through the CRS will not be used by the tax commissioner as a factor, in and of itself, to determine whether the vendor or seller has nexus with this state for any tax.

(B)

(1) When registering through the CRS, the vendor or seller may select one of the following models to remit taxes collected:

(a) Model 1, where the vendor or seller selects a "certified service provider" as that term is defined in division (C) of section 5740.01 of the Revised Code, as an agent to perform all the vendor's or seller's sales or use tax functions, other than the vendor's or seller's obligation to remit tax on its own purchases.

(b) Model 2, where a vendor or seller selects a "certified automated system" as that term is defined in division (B) of section 5740.01 of the Revised Code, to use to calculate the amount of tax due on its sales transactions.

(c) Model 3, where a vendor or seller utilizes its own proprietary automated sales and use tax system that has been certified as a certified automated system.

(2) Any vendor or seller that does not use one of the three models of remitting tax provided in paragraphs (B)(1)(a) to (B)(1)(c) of this rule will collect and remit tax as required in Chapter 5739. or 5741. of the Revised Code.

(C)

(1) Any vendor or seller registering through the CRS may be registered by an agent. The appointment of an agent for this purpose need be in writing and submitted to this state if requested.

(2) A request by an agent of the vendor or seller for tax return information need be made using a form prescribed for such purposes, e.g., form TBOR-1, declaration of tax representative or a form approved by the governing board for such purpose.

(D) Subject to paragraphs (E) to (H) of this rule, any vendor or seller that registers through the CRS to collect and remit Ohio's sales or use tax on sales made into Ohio will not be assessed or held liable for its failure to collect tax on sales made into Ohio prior to its registration, provided the following conditions are met:

(1) The vendor or seller will register to collect this state's tax on or after the date on which Ohio first becomes either a full or associate member of the streamlined sales tax system and not later than twelve months after the effective date of Ohio's participation as a full member of the streamlined sales tax system.

(2) The vendor or seller was not registered to collect Ohio's sales or use tax on sales made into Ohio at any time in the twelve-month period preceding the date of registration or the effective date of Ohio's participation in the streamlined sales tax system, whichever is earlier.

(3) Prior to the date of registration, the vendor or seller has not received notice of the commencement of an audit that has not been finally resolved.

(E) Paragraph (D) of this rule does not apply to any vendor or seller that has already paid or remitted sales or use taxes to Ohio and does not apply to any Ohio sales or use taxes that were collected by the vendor or seller and not remitted to Ohio or were assessed by the tax commissioner and not paid by the vendor or seller.

(F) Absent fraud or intentional misrepresentation of a material fact, paragraph (D) of this rule is effective for any vendor or seller as long as the vendor or seller continues its registration with Ohio and continues to collect and remit sales or use taxes on its taxable sales into Ohio for a period of at least thirty-six months. Any vendor or seller that ceases registration or collection and remittance of the tax before the end of such thirty-six month period will be deemed to have waived the application of the statute of limitations for any liability that would have been subject to assessment on the day of its registration with Ohio had the vendor or seller not received the benefit provided by paragraph (D) of this rule. The tax commissioner may require the vendor or seller to put this waiver in writing. Unless mutually agreed to for another term, the waiver will be until the end of one hundred eighty days following the cancellation of the vendor's or seller's registration or following the failure of the vendor or seller to remit taxes to Ohio as required by applicable law or rule of the commissioner.

(G) Paragraph (D) of this rule applies only to sales or use tax liability due from a vendor or seller in its capacity as a vendor or seller and not to taxes due from the vendor or seller in its capacity as a consumer.

(H) Paragraph (D) of this rule does not apply to a vendor or seller whose failure to collect and remit Ohio's sales or use tax is due to fraud or intentional misrepresentation of a material fact. A vendor's failure will be rebuttably presumed to be due to such cause if the vendor has a fixed location in Ohio and needs to be licensed under Chapter 5739. of the Revised Code.

Last updated January 8, 2024 at 8:38 AM

History

Effective: January 7, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-9-51 County and transit authority rates and boundary database.

(A)

(1) After providing the tax commissioner with at least sixty-five days notice, county and transit authority sales and use tax rate changes adopted on or after January 1, 2004 shall become effective only at the beginning of a calendar quarter, i.e., January first, April first, July first, or October first.

(2) Any county or transit authority sales or use tax adopted on or after January 1, 2004 for a limited period of time must expire on the last day of a calendar quarter, i.e., March thirty-first, June thirtieth, September thirtieth, or December thirty-first.

(3) The tax commissioner will provide notice of a rate change by posting information at least sixty days prior to the effective date of the rate change on the department of taxation website. This posting shall constitute the notice required by division (H) of section 5739.021, division (C) of section 5739.023, and division (G) of section 5739.026 of the Revised Code. The commissioner may provide additional notice to vendors, sellers, and other interested parties in any other manner the commissioner deems appropriate.

(B)

(1) The tax commissioner will make available electronic databases that:

(a) Describe boundary changes for all taxing jurisdictions.

(b) Provide all sales and use tax rates for all counties and transit authorities levying sales and use taxes.

(c) Assign each five digit zip code area within this state to the proper tax jurisdiction and rate. If a zip code area contains more than one tax rate, the vendor, seller, or certified service provider may apply the lowest rate in that zip code area unless the vendor, seller, or certified service provider has sufficient information to apply the rate in paragraph (B)(1)(d) or (B)(1)(e) of this rule.

(d) Assign each nine digit zip code area within this state to the proper tax jurisdiction and rate. If a zip code area contains more than one tax rate, the vendor, seller, or certified service provider may apply the lowest rate in that zip code area unless the vendor, seller, or certified service provider has sufficient information to apply the rate in paragraph (B)(1)(e) of this rule.

(e) Assign, to the extent possible, each address in the state to the proper tax jurisdiction and rate.

(2)

(a) If a vendor, seller, or certified service provider has an address for a transaction for which a rate at the time of sale is provided in the database described by paragraph (B)(1)(e) of this rule, the vendor, seller, or certified service provider must apply that rate to the transaction and will not be responsible for any under-collection or over-collection of tax resulting from reliance on that rate.

(b) If a tax rate cannot be determined in the manner described in paragraph (B)(2)(a) of this rule, the vendor, seller, or certified service provider may determine the applicable tax rate for a sale by using the tax rate associated with the nine digit zip code associated with the address for the transaction. If a nine digit zip code designation is not available for a street address or if the vendor, seller, or certified service provider is unable to determine the nine digit zip code after exercising due diligence, the vendor, seller, or certified provider may apply the tax rate associated with the five digit zip code area. If a five digit or nine digit zip code area contains more than one applicable tax rate, in the absence of actual information determining which rate applies to the sale, the vendor, seller, or certified service provider may determine the tax due based on the lowest rate imposed in the appropriate zip code area.

(3) No vendor, seller, or certified service provider will be relieved of liability for collection of an incorrect rate of tax when the sale is sourced to the vendor's or seller's location under the provisions of division (A)(1) of section 5739.033 of the Revised Code.

(C) A customer is not relieved of any additional use tax that may be owed from a vendor, seller, or certified service provider under-collecting by using the incorrect rate of tax and also is not prevented from filing a refund for the over-collection of tax.

Last updated July 10, 2025 at 12:42 PM

History

Effective: July 20, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-9-52 Delivery charges.

(A)

(1) Charges by the vendor or seller for preparation and delivery to a location designated by the consumer of taxable tangible personal property or of a taxable service, including charges for transportation, shipping, postage, handling, crating, and packing, are defined as part of the price for determining the tax.

(2) Charges paid by a customer to a delivery company, and not imposed or collected by the vendor or seller of the delivered property or service, are not subject to sales or use tax.

(B) A vendor or seller should allocate the delivery charge in any shipment to a consumer that includes separately stated taxable and exempt property by using either of the following ratios:

(1) The ratio of the total sales prices of all taxable property in the shipment to the total sales prices of all property in the shipment, or

(2) The ratio of the total weight of the taxable property in the shipment to the total weight of all property in the shipment.

(C)

(1) When a vendor or seller allocates a delivery charge as provided in paragraph (B) of this rule, the vendor or seller must tax the portion of the delivery charge allocated to the taxable property but not the portion allocated to the exempt property.

(2) If a vendor or seller does not allocate the delivery charge in any transaction as described in paragraph (B) of this rule, and any portion of the transaction is taxable, the vendor or seller must charge tax on the entire delivery charge for the shipment.

(D) In any case where a vendor or seller allocates a delivery charge in accordance with paragraph (B)(1) or (B)(2) of this rule, no refund shall be allowed based on an objection to the method of allocation chosen.

Last updated July 10, 2025 at 12:42 PM

History

Effective: July 20, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-9-53 Rate changes; application of effective date to services.

(A) The effective date of any sales or use tax rate change shall apply to sales of services with a billing period starting before and ending after the statutory effective date as follows:

(1) For a rate increase, the new rate shall apply to the first billing period starting on or after the effective date.

(2) For a rate decrease, the new rate shall apply to bills rendered on or after the effective date.

(B) The provisions of this rule do not apply to any rate change effective prior to the effective date of this rule.

Last updated October 7, 2024 at 1:29 PM

History

Effective: July 20, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-9-54 Taxability matrix.

(A) In compliance with section 328 of the "Streamlined Sales and Use Tax Agreement," the tax commissioner will provide a taxability matrix as required by the governing board. The entries into the matrix will be provided and maintained in a downloadable database in a format approved by the governing board.

(B) A vendor, seller or certified service provider that charged and collected an incorrect amount of sales or use tax resulting from the tax commissioner providing erroneous data in the taxability matrix is not liable for any additional liability that may be owed.

(C) The "Streamlined Sales and Use Tax Agreement" means the current version of the "Streamlined Sale and Use Tax Agreement" as approved by the streamlined governing board.

Last updated October 7, 2024 at 1:29 PM

History

Effective: July 20, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-9-55 Sales and use tax, change in state tax rate.

(A) In the case of a state sales and use tax rate change where the effective date of the rate change is less than thirty days after the legislation adopting the rate change is enacted, a vendor or seller who has erroneously collected tax at the preceding rate will not be held liable for the failure to collect the tax at the new rate if:

(1) The vendor or seller collected the tax at the immediately preceding rate, and

(2) The vendor or seller's failure to collect the tax at the new rate does not extend beyond thirty days after the enactment of the new rate.

(B) The relief in paragraph (A) of this rule will not apply to a vendor or seller that fraudulently fails to collect tax at the new rate or solicits purchasers based on the immediately preceding rate.

Last updated October 7, 2024 at 1:29 PM

History

Effective: July 20, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-9-56 Streamlined sales and use tax - review and approval of certified automated system software and liability relief.

(A) The tax commissioner shall review software submitted to the streamlined sales tax governing board for certification as a certified automated system ("CAS") under Section 501 of the "Streamlined Sales and Use Tax Agreement" ("SSUTA"). Such review shall include a review to determine that the program accurately reflects the taxability of the product categories included in the program. Upon approval, the state shall certify to the governing board its acceptance of the determinations of the taxability of the product categories included in the program.

(B) A certified service provider ("CSP"), a vendor, or a seller using a CAS will not be held liable for not collecting sales or use taxes as a result of the CSP, vendor, or seller relying on the certification provided by the tax commissioner.

(C) The tax commissioner is not responsible for the classification of an item or transaction within the product categories certified. The relief from liability provided in this section shall not be available for a CSP, vendor, or seller using a CAS that has incorrectly classified an item or transaction into a product category certified by the tax commissioner. This paragraph shall not apply to the individual listing of items or transactions within a product definition included within the SSUTA.

(D) If the tax commissioner determines that an item or transaction is incorrectly classified as to its taxability, the commissioner shall notify the CSP, vendor, or seller using a CAS of the incorrect classification. The CSP, vendor, or seller will have ten days to revise the classification after receipt of notice from the commissioner of the determination. Upon expiration of the ten days, the CSP, vendor, or seller shall be liable for the failure to collect the correct amount of sales or use taxes due and owing.

Last updated October 7, 2024 at 1:29 PM

History

Effective: July 20, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-9-57 Relief from liability for certified service providers where the consumer claims exemption.

The provisions of division (B) of section 5739.03 of the Revised Code and division (E) of section 5741.02 of the Revised Code that relieve a vendor or seller of liability for sales or use tax on transactions where the consumer has provided the vendor or seller with a fully completed exemption certificate will be applied to a certified service provider, as defined in division (C) of section 5740.01 of the Revised Code, that has been contracted to perform the tax collection and remittance functions for the vendor or seller. If a fully completed exemption certificate has not been provided, the provisions of those sections relating to the establishing of the exempt nature of the transaction on audit will apply to the certified service provider.

Last updated October 7, 2024 at 1:29 PM

History

Effective: July 20, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-9-58 Sales and use tax, relief of liability for purchasers.

No purchaser shall be held liable for unpaid state or local sales or use tax, interest, or penalty in the following circumstances:

(A) The purchaser's vendor, seller, or certified service provider relied on erroneous data provided by the state on tax rates, boundaries, taxing jurisdiction assignments, or, in the taxability matrix provided pursuant to paragraph (A) of rule 5703-9-54 of the Administrative Code; or

(B) The purchaser is a holder of a direct payment permit authorized under section 5739.031 of the Revised Code and the purchaser relied on erroneous data provided by the state on tax rates, boundaries, taxing jurisdiction assignments, or, in the taxability matrix provided pursuant to paragraph (A) of rule 5703-9-54 of the Administrative Code.

(C) The purchaser relied on erroneous data provided by the state in the taxability matrix provided pursuant to paragraph (A) of rule 5703-9-54 of the Administrative Code. In this situation, relief is limited to the erroneous classification in the taxability matrix of items as "taxable" or "exempt," "included in sales price" or "excluded from sales price," or "included in the definition" or "excluded from the definition."

(D) The purchaser using the database provided pursuant to paragraph (B) of rule 5703-9-51 of the Administrative Code relied on erroneous data provided by that database for an address on tax rates, boundaries, or taxing jurisdiction assignments.

Last updated October 7, 2024 at 1:29 PM

History

Effective: July 20, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-9-59 Sales and use tax, transactions involving optional computer software maintenance contracts.

(A) As used in this rule:

(1) "Computer software maintenance contract" means a contract that obligates a vendor or seller of computer software to provide a customer with future updates or upgrades to computer software, support services with respect to computer software or both.

(2) "Mandatory computer software maintenance contract" means a computer software maintenance contract that the customer is obligated by contract to purchase as a condition to the retail sale of computer software.

(3) "Optional computer software maintenance contract" is a computer software maintenance contract that a customer is not obligated to purchase as a condition to the retail sale of computer software.

(B) A charge for a mandatory computer software maintenance contract is considered to be part of the sales price of the computer software to which it relates.

(C) In any case where an optional computer software maintenance contract for prewritten computer software is sold to an Ohio consumer by a vendor or seller, the following treatment shall apply.

(1) If the optional computer software maintenance contract only obligates the vendor or seller to provide upgrades and updates, the contract will be deemed to be a sale of prewritten computer software, which is defined to be tangible personal property by division (YY) of section 5739.01 of the Revised Code. Such a sale will be considered taxable unless the consumer has a claim of exemption.

(2) If the optional computer software maintenance contract only obligates the vendor or seller to provide support services, and no upgrades or updates, the transaction will be considered to be the sale of a non-taxable personal or professional service.

(3) If the optional computer software maintenance contract includes both upgrades or updates and support services that are not itemized separately on the invoice or similar billing document, the contract shall be characterized as a sale of prewritten computer software, which is defined to be tangible personal property by division (YY) of section 5739.01 of the Revised Code. Such a sale will be considered taxable unless the consumer has a claim of exemption.

Last updated October 7, 2024 at 1:29 PM

History

Effective: July 20, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-9-61 Electronic filing and payment of "Consumer's Use Tax".

(A) Every person required to file a return pursuant to division (B) of section 5741.12 of the Revised Code shall file the return electronically using the Ohio business gateway, as defined in section 718.01 of the Revised Code or any other electronic means prescribed by the commissioner.

(B) The electronic returns required by this rule shall be filed as required by sections 5741.12 and 5741.121 of the Revised Code.

(C) Payment of the tax shown due on the return shall be made electronically or in another manner approved by the commissioner.

Last updated October 7, 2024 at 1:30 PM

History

Effective: July 20, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-9-62 Physical Fitness Facilities.

(A) As used in this rule:

(1) "Physical fitness facility service" means all transactions by which a membership is granted, maintained, or renewed, including initiation fees, membership dues, renewal fees, monthly minimum fees, and other similar fees and dues, by a physical fitness facility such as an athletic club, health spa, or gymnasium, which entitles the member to use the facility for physical exercise. Physical fitness facility service includes facilities operated with a principal purpose of fostering or promoting participation in physical exercise. Physical fitness facility service does not include user fees.

(2) "Membership" means the privilege, right, or entitlement to open use or the right to purchase the use of all or part of a facility over an extended period, at least one month, with or without time-of-day or day-of-week restrictions. Open use of the facility does not include the right to only attend instructor-led classes even if the amount of classes are unlimited in the month.

(3) "Dues" means the fee or charge required for membership, affiliation, initiation, use, or subscription.

(4) "Fees" means a charge fixed by a physical fitness facility for certain privileges or services.

(5) "Initiation fee" means a payment as a condition precedent to becoming a member of an organization.

(6) "User fee" is a one-time charge for a limited privilege or service.

(B) The following are instances, not inclusive, in which sales and use tax applies to the sale or use of:

(1) Membership dues or fees whether billed monthly or annually;

A community center, organized and operated to promote social interaction, fellowship and community involvement, offers meeting rooms; a reading room; a cafeteria; a theater for musical and theatrical productions; and a physical fitness center with a pool, weight machines, exercise classes, and a gymnasium for the use by its members. General membership entitles the member to the use of most rooms and discounted admission to performances. For an additional fee, one can purchase a membership to the physical fitness facility. The general membership is not a membership to a physical fitness facility and is not subject to the tax. The additional membership fee is the sale of physical fitness facility service and is subject to the tax. The entire membership fee is subject to the tax if there is no reasonable separation of charges for the general membership and the fitness membership.

(2) Unlimited membership, classes, lessons, or group sessions for at least one month;

A physical fitness facility sells a basic membership to all who want to frequent the facility. This fee will get the individual in the door. In addition, if an individual wants to participate in any one particular program, the individual will pay another monthly fee, which grants the open use of the program. All of these fees are considered membership fees to an organization that promotes and fosters physical exercise and subject to the tax.

(3) Initiation fees, including a one-time equity contribution by a member toward a specific physical improvement to a physical fitness facility;

An applicant for membership into a physical fitness facility will pay an initiation deposit. Upon payment, the applicant is given the right to use the facility. The physical fitness facility treats this payment as an interest-free five-year loan that it accounts for as a long-term liability. If a member cancels its membership, the member is entitled to a refund of the initiation deposit over a period of time not to exceed five-years from the date of the member's original acceptance as a member of the facility. These payments classified as loans or equity transactions do not change their nature as fees or dues that are similar to an initiation fee. The amount is taxable.

(4) Renewal dues; and

(5) Monthly minimum fees.

(1) One-time use of a physical fitness facility;

(a) A physical fitness facility charges separate fees for each court usage by the hour. This fee is a user fee and not a membership fee; the fee is not taxable.

(b) A physical fitness facility charges a separate fee for each trainer-assisted workout. This fee is a user fee and not a membership fee; the fee is not taxable.

(c) A self-defense school charges a one-time registration fee of one hundred dollars for all applicants to the academy. Then, individuals may purchase a variety of ten-week sessions with two classes per week. Additionally, the individual may utilize the academy's floor space and weight bags when classes are not in session. The registration fee grants patrons the right to purchase the use of the facility for physical exercise and meets the requirements of a membership fee. Tax should be charged on the registration fee. The fee for the specified number of classes is a "user fee" and not a membership, thus the charge for the classes is not subject to the tax.

(2) Specified number of classes, lessons, or group sessions for a particular activity; and

(a) A gymnastics school charges a fee for twenty-six classes (two per week for thirteen weeks) that are payable in advance. This gymnastics school is not selling a membership , but rather a specific number of classes.

(b) A physical fitness facility offers exercise classes five days a week, four classes per day. For a monthly fee, an individual can participate in any class they choose. This scenario does not qualify as a membership fee. This fee does not grant the member the right to open usage of the facility for a period of at least one month. Rather, the usage fee provides restricted use of the facility only during an organized instructor-led class.

(3) A facility that is operated with a primary purpose of making available to its patrons a facility or facilities for participation in social or fraternal activities.

(a) A fraternal organization, organized and operated to foster social interaction and to provide community service, charges an initiation fee and an annual membership fee. The social hall of the organization has a weight room available for use by the members if they are so inclined. There is no additional charge for the incidental use of the weight room by a member. This organization is organized and operated for purposes other than fostering and promoting physical exercise. The incidental availability of fitness facilities for the occasional free use by members does not constitute the sale of a physical fitness service.

(b) A fraternal organization, organized and operated to foster social interaction and to provide community service, charges an initiation fee and an annual membership fee. The social hall of the organization has a weight room available for use by the members if they are so inclined. The fraternal club charges a fee for each use of the weight room facility. A pay-for-play fee or user fee is not a membership. It is a fee for the one-time use of the facility. User fees are not to be the sale of physical fitness facility service and are not subject to the tax.

(4) Any program that is not fundamentally for the purpose of fostering or promoting participation in physical exercise but may be offered at the same facility as a physical fitness facility service is not considered a physical fitness facility service, as long as, that program is billed separately by the physical fitness facility. Some examples of include, but are not limited to, lifeguard training, child care (including afterschool or early learning), adult literacy programs, English language learning, G.E.D. classes, substance abuse programs, Alzheimer's management, obesity intervention, first aid, injury rehabilitation, or college preparation classes.

(D) Unless an exemption based on who purchases the product or who sells the product applies, a physical fitness facility is unable to claim an exemption on purchases of equipment or supplies used or consumed at the facility to provide the service.

Last updated September 9, 2025 at 12:39 PM

History

Effective: May 9, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-9-63 Crude oil and natural gas production.

(A)

(1) For the purposes of Chapters 5739. and 5741. of the Revised Code and this rule, all purchases of tangible personal property are taxable, except those in which the purpose of the consumer is to use or consume the thing transferred directly in the production of crude oil and natural gas for sale. This means that a person who buys tangible personal property and directly uses or consumes it in the production of crude oil and natural gas for sale does not have to pay sales or use tax on the thing purchased.

(2) "Production" means operations and tangible personal property directly used to: expose and evaluate an underground reservoir that may contain hydrocarbon resources; prepare the wellbore for production; and lift and control all substances yielded by the reservoir to the surface of the earth.

(3) Additionally, this rule applies to persons engaged directly in rendering services in the exploration for and production of crude oil and natural gas for others. To that end, persons engaged in rendering the exploration or production services can take advantage of this exemption if the person directly uses or consumes the item in the production of crude oil and natural gas for sale.

(4) Nothing in this rule prohibits a taxpayer to avail themselves of other exemptions, including but not limited to, the exemptions found in Chapter 5709. of the Revised Code.

(B) Any term not defined below has the same meaning as in Chapter 5739. or 5741. of the Revised Code. For purposes of this rule, the following definitions apply:

(1) "Acidizing" includes acid fracturing, matric acidizing, and acid washing.

(2) "Artificial lift system" includes the process used on oil and gas wells to encourage oil or gas to the surface, including beam pumping, hydraulic pumping, electric submersible pumping, and gas lift injection.

(3) "Casing" means a pipe placed in an oil or gas well as drilling progresses to prevent the wall of the hole from caving in during drilling, to prevent seepage of fluids, and to provide a means of extracting oil or gas if the well is productive. Types of casing include conductor casing, intermediate casing, production casing, and surface casing.

(a) "Conductor casing" means one or more strings of casing set and cemented to provide a base for an air body for diversion of shallow naturally occurring natural gas including coalbed methane and to accomplish one or more of the following well construction objectives:

(i) Stabilize unconsolidated sediments;

(ii) Isolate shallow aquifers that provide or are capable of providing groundwater for water wells and springs in the vicinity of the well; or

(iii) Isolate groundwater before penetrating the workings of an active underground mine.

(b) "Intermediate casing" means one or more strings of casing set after surface casing has been cemented through the base of the deepest underground source of drinking water, but before drilling into the permitted hydrocarbon reservoir(s) to isolate hydrocarbon or brine bearing flow zones, stabilize the wellbore, to isolate protected groundwater if encountered after drilling below surface casing, isolate lost circulation zones or other potential geologic hazards, or serve as a base for well control equipment.

(c) "Production casing" means a string of casing set to isolate the permitted hydrocarbon bearing reservoir(s), and other pressurized flow or corrosive, hydrogen sulfide-bearing zones not effectively isolated by previous casing(s).

(d) "Surface casing" means a string of casing set and cemented to isolate and protect the deepest underground source of drinking water and to serve as a base for well control equipment.

(4) "Centralizing equipment" means any device used to keep downhole equipment in the center of the tubing, casing, or wellbore.

(5) "Completing a well" includes the steps taken to transform a drilled well into a producing one. The steps of completion include but are not limited to casing, cementing, perforating, gravel packing and installing a production tree

(6) "Drilling" means the use of a rig for exposing the underground reservoir.

(7) "Drilling byproducts" includes wastewater, brine, fracking water, mud, cuttings, natural gas, oil, hydrocarbons, hydrogen sulfide and all other chemicals. Liquids that flow back from the wellbore during the drilling or fracturing process that are recirculated downhole in a continuous process are not considered drilling byproducts.

(8) "Downhole" includes equipment, materials, or processes that are used inside the well.

(9) "Expose and evaluate" includes drilling activities used in the search for a viable well that may produce crude oil or natural gas.

(10) "Field" means the general area underlaid by one or more pools.

(11) "Float" means a valve , collar, joint, shoe or similar component of a casing string that is used during cementing or downhole chemical injections to prevent backflow during a drilling operation.

(12) "Gas" means all natural gas and all other fluid hydrocarbons that are not oil, including condensate.

(13) "Hydraulic fracturing" means the use of fluid and material to create or restore small fractures in a formation in order to stimulate production from new and existing crude oil and natural gas wells.

(14) "Hydrocarbon gas" means a combustible organic gas containing only one carbon and one hydrogen. Hydrocarbon gas includes, but is not limited to, propane, compressed natural gas, liquified petroleum gas, methane, or any chemically similar gas, but does not include gasoline or diesel fuel.

(15) "Hydrocarbon resource" includes a resource that contains hydrocarbon molecules, such as a fossil fuel resource, natural gas, oil, or coal.

(16) "Lift and control" includes all methods used to raise oil, gas, or other comingled substances to the surface after a well ceases to flow; techniques used to control and manage the unexpected release of natural gas or crude oil pressure; and operations that monitor the pressure throughout the life of the exploratory or productive phase of the well.

(17) "Mud logging" means recording information derived from the examination and analysis of formation cuttings made by the bit and of mud circulated out of a borehole.

(18) "Oil" means crude petroleum oil and all other hydrocarbons, regardless of gravity, that are produced in liquid form by ordinary production methods, but does not include hydrocarbons that were originally in a gaseous phase in the reservoir.

(19) "Perforation" means a hole made in the casing, cement, and formation through which formation fluids enter a wellbore.

(20) "Pool" means an underground reservoir containing a common accumulation of oil or gas, or both, but does not include a gas storage underground reservoir. Each zone of a geological structure that is completely separated from any other zone in the same structure may contain a separate pool.

(21) "Prepare the wellbore" includes the drilling of initial conductor pipe (or casing to support the surface formations) or surface holes, and placement of the conductor strings and pipes.

(22) "Pressure pumping equipment" includes equipment used in the propagation of fractures through layers of rock using pressurized fracturing fluid and pumping the cement into the wellbore to complete the well.

(23) "Production equipment" means wellhead and wellsite equipment used to refine, stabilize, pump and compress hydrocarbon resources, including phase management and produced water.

(24) "Reservoir stimulation" includes hydraulic fracturing, acidizing, and any means by which the reservoir is acted upon, by chemicals, gases, pressure related services, or otherwise as a way to stimulate production of the hydrocarbons.

(25) "Subsurface wellbore" means a wellbore created below the surface of the ground.

(26) "Temporary Impoundment" means all water, sediment, slurry, or other liquid or semi-liquid holding structures and depressions, either naturally formed or artificially built, that will not remain as part of the land use after the exploration for or production of crude oil or natural gas.

(27) "Tubular" means any type of pipe, such as drill pipe, drill collars, pup joints, casing, production tubing, and pipeline.

(28) "Underground reservoirs" means the stratum and subsurface area that are used or are to be used for or in connection with the underground storage of oil or natural gas.

(29) "Wellbore" means a bore, whether drilled or bored, within the state for production or extraction of gas or liquid mineral.

(30) "Wellbore pathway" means the manmade trail created to access underground reservoirs at surface level.

(31) "Well site" means the area near the wellbore, including but not limited to, the well pad and production operations that are directly associated with the well pad.

(32) "Workover services" means the repair or stimulation of an existing production well for the purpose of restoring, prolonging, or enhancing the production of hydrocarbons.

(33) "Wireline evaluation" means a cabling technology service used to lower equipment or measurement devices into the well for the purpose of reservoir evaluation.

(C) In order to determine whether an item qualifies for an exemption, it is important to review how the item is used or consumed. Simply because an item is an enumerated thing transferred under division (B)(42)(q) of section 5739.02 of the Revised Code does not automatically mean that the item is directly used or consumed in the production of crude oil and natural gas for sale. The following items and examples are intended to illustrate different scenarios that are applicable to an exemption analysis under this section.

(1) Services provided in the construction of permanent access roads; services provided in the construction of the well site; and services provided in the construction of temporary impoundments, when sold, are never, by themselves, considered taxable transactions. To the extent an item is transferred in the use of these services, the item may be directly used or consumed in the production of crude oil and natural gas for sale.

For example, company B is in the business of selling crude oil and natural gas. company B hires company A to clear, level and stabilize the site. Company A also constructs the well pad and drills the wellbore. The fees charged by company A for site clearing, leveling and stabilizing services are generally not taxable.

Any tangible personal property company A utilizes in creating the wellbore such as a drill or casing for the wellbore are considered exempt because those items are directly used or consumed in the production of crude oil and natural gas for sale. In addition, the sale or transaction whereby company B acquires the wellbore is also considered exempt, because the wellbore is directly used in the production of crude oil and natural gas for sale.

The well pad is part of the wellsite, but is considered a business fixture and not directly used in production of crude oil or natural gas. Accordingly, the materials company A purchases and consumes in creating the well pad are not directly used or consumed in the production of crude oil and natural gas for sale so the materials are not considered exempt under division (B)(42)(q) of section 5739.02 of the Revised Code. Furthermore, the sale or transaction whereby company B acquires the well pad is also not considered exempt under division (B)(42)(q) of section 5739.02 of the Revised Code.

Company A also provides for the seeding of the grass after these activities described in this paragraph are complete. Such service is considered a taxable service pursuant to section 5739.01 of the Revised Code. A grass seeding service is not directly used or consumed in the production of crude oil and natural gas for sale so the service is not considered exempt pursuant to division (B)(42)(q) of section 5739.02 of the Revised Code.

(2) Equipment and rigging used for the specific purpose of creating with integrity a wellbore pathway to underground reservoirs may be directly used or consumed in the production of crude oil and natural gas for sale.

For example, well integrity begins with design and moves to properly constructed wellbore pathways. A company utilizes computer software for wellbore placement and to test the stress felt on the wellbore pathways. The same company also uses cement on the wellbore pathway to ensure that the groundwater is protected from the chemicals and product being removed from the underground reservoir.

Here, the computer software utilized to determine placement is taxable because drilling has not commenced and is therefore not directly used or consumed in the production of crude oil or natural gas for sale. The computer software used to test the stress felt on the wellbore pathways and the cement that encases the wellbore pathway is exempt because it is directly used or consumed in the production of crude oil and natural gas for sale by interacting with a necessary function of the integrity of the wellbore pathway

(3) Drilling and workover services used to work within a subsurface wellbore are never, by themselves, considered taxable transactions. To the extent tangible personal property is directly used in providing such services and directly used or consumed in the production of crude oil and natural gas for sale, the item is exempt.

For example, company B is in the business of selling crude oil and natural gas. company D provides the equipment and crew that drills a well and will also workover a well when restricted flow begins. These activities take place within the wellbore. The fees charged for these services are not taxable. Such services are not considered taxable services pursuant to section 5739.01 of the Revised Code. Additionally, any rig company D utilizes is considered exempt because that rig is directly used or consumed in the production of crude oil and natural gas for sale.

(4) Casing, tubulars, and float and centralizing equipment that are directly used or consumed in the production of crude oil or natural gas for sale are exempt.

For example, a company installs a float collar to prevent over-displacement of the cement and a float shoe to prevent cement from flowing back into the casing after placement in the wellbore. The float collar and the float shoe are exempt.

(5) To the extent production equipment is exempt under division (B)(42)(q) of section 5739.02 of the Revised Code, the trailers to which production equipment is attached are also exempt.

For example, a company leases a pumpjack on a trailer that is used to lift liquid out of the wellbore, as well as electrical equipment on a trailer used to light up operations in the evening. The pumpjack and corresponding trailer are exempt because the pumpjack is used directly in the production of crude oil or natural gas for sale. The lighting and corresponding trailer are taxable because the lighting is not used directly in the production of crude oil or natural gas for sale.

(6) Services provided to complete a well, including the services of cementing a well casing are not, by themselves, considered taxable transactions. To the extent tangible personal property is directly used in providing such services and directly used or consumed in the production of crude oil and natural gas for sale, the item is exempt.

For example, company B is in the business of selling crude oil and natural gas. Company G is hired to insert production tubing and safety valves to complete the well. The fees charged for these services are not taxable. Such services are not considered taxable services pursuant to section 5739.01 of the Revised Code. Additionally, the tubing and safety valve company G utilizes in its services are considered exempt because those items are directly used or consumed in the production of crude oil and natural gas for sale.

(7) Services provided to perform wireline evaluation, mud logging, and perforation are not, by themselves, considered taxable transactions. To the extent tangible personal property is directly used in providing such services and directly used or consumed in the production of crude oil and natural gas for sale, the item is exempt.

For example, company B is in the business of selling crude oil and natural gas. company H is hired to lower equipment down the wellbore and operate such equipment for testing. The fees charged for these services are not taxable. Such services are not considered taxable services pursuant to section 5739.01 of the Revised Code. Additionally, the cable used to lower the logging equipment and the logging company H utilizes in its services are exempt because those items are directly used or consumed in the production of crude oil and natural gas for sale.

(8) Services to perform reservoir stimulation, hydraulic fracturing, and acidizing services are not, by themselves, considered taxable transactions. To the extent tangible personal property is directly used in providing such services and directly used or consumed in the production of crude oil and natural gas for sale, the item is exempt.

For example, company B is in the business of selling crude oil and natural gas. Company J is hired to perform hydraulic fracturing and acidizing services at the well site. The fees charged for these services are exempt. Such services are not considered taxable services pursuant to section 5739.01 of the Revised Code. Additionally, the chemicals and equipment used to perform hydraulic fracturing and acidizing services at the well site are considered exempt because those items are directly used or consumed in the production of crude oil and natural gas for sale.

(9) All material pumped downhole during reservoir stimulation, hydraulic fracturing, and acidizing are exempt.

For example, drilling mud, fracking solution, pumping fluids and acid a company pumps downhole during drilling, fracking or to complete the well would be exempt.

(10) Pressure pumping equipment directly used or consumed in the production of crude oil and natural gas for sale is exempt.

For example, a company is in the business of selling crude oil and natural gas. The company utilizes a frac pump that is paired with an engine used to power the pump that stimulates the well. The frac pump is exempt because it is used to pump the hydraulic fracking fluids into the well and is therefore directly consumed in the production of crude oil or natural gas. The engine used to power the pump is exempt because it functions in unison to create the high-pressure injection that actually fractures the rock formation and frees the crude oil and natural gas.

(11) Artificial lift systems equipment directly used or consumed in the production of crude oil and natural gas for sale is exempt. These systems alter pressure within the reservoir and encourage oil or natural gas to the surface. These systems are exempt because they are directly used in the production of crude oil and natural gas.

(12) Equipment used to separate, stabilize, and control hydrocarbon phases and produced water at the wellhead and well site, when the equipment is directly used or consumed in the production of crude oil and natural gas for sale, is exempt.

For example, a company is in the business of selling crude oil and natural gas. At the wellhead, the company utilizes a condensate stabilizer to reduce the vapor's pressure of natural gas for insertion into the storage tanks. The condensate stabilizer is exempt.

(13) Tangible personal property directly used to control production equipment is exempt.

For example, a company is in the business of selling crude oil and natural gas. The company purchases a software package that programs and operates the drilling rig. Additionally, the company purchases software that monitors the level of fracking fluid that is distributed into the blenders. The software that programs and operates the drilling rig is exempt as directly used in the production of crude oil and natural gas. The equipment that monitors the fracking fluid is used before actual fracturing takes place. Therefore, the software that monitors the fracking fluid is taxable.

(D)

(1) In contrast to the items described herein, items that are statutorily not considered things transferred are enumerated in division (B)(42)(q)(ii) of section 5739.02 of the Revised Code.

(2) Unless another exemption exists for the items enumerated in division (B)(42)(q)(ii) of section 5739.02 of the Revised Code or the entity utilizing or consuming such items, the items are taxable.

(E) Repair and installation services for items directly used or consumed in the production of crude oil and natural gas for sale are not considered taxable. Division (B)(3)(a) or (B)(3)(b) of section 5739.01 of the Revised Code states that the repair or installation of an item of tangible personal property is not a taxable service if the purchase of the underlying item would not be subject to the tax imposed by section 5739.02 of the Revised Code.

(F) Pursuant to division (SS) of section 5739.01 of the Revised Code, "lease" or "rental" means any transfer of the possession or control of tangible personal property for a fixed or indefinite term, for consideration. "Lease" or "rental" includes future options to purchase or extend, and agreements described in 26 U.S.C. 7701(h)(1) covering motor vehicles and trailers where the amount of consideration may be increased or decreased by reference to the amount realized upon the sale or disposition of the property. "Lease" or "rental" does not include providing tangible personal property along with an operator for a fixed or indefinite period of time, if the operator is necessary for the property to perform as designed. For purposes of that division and this rule, an operator has to do more than maintain, inspect, or set-up the tangible personal property in order for the transaction to fall outside a "lease" or "rental" and instead, be considered the sale of a service. Leased or rented tangible personal property without an operator may still be taxable or exempt based based upon its function or use in the hands of the lessee.

For example, company B is in the business of selling crude oil and natural gas. company B hires company C, and company C is responsible for the operation of a compressor. However, the use of the compressor by company B in the business of selling crude oil and natural gas does not warrant an onsite employee to operate the compressor. Therefore, this is the lease or rental of this tangible personal property without an operator and is a taxable retail sale. Company B's lease or rental of the compressor may be taxable or exempt based upon its function or use in the hands of company B.

(G) The enumeration of certain tangible personal property in this rule is not intended to be exhaustive. Any tangible personal property not enumerated in this rule is not necessarily construed to be a "thing transferred" or not a "thing transferred" for the purposes of the exemption discussed herein.

Last updated February 10, 2022 at 8:47 AM

History

Effective: February 10, 2022
Promulgated Under: Other

Ohio Adm.Code 5703-9-64 Sleeping Accommodations and Transient Guests.

(A) For the purposes of divisions (M) and (N) of section 5739.01 of the Revised Code, a "sleeping accommodation" is an individual room set aside for purposes of sleeping. A cabin, house, or any other stand-alone structure can be a sleeping accommodation if it is rented in its entirety. Five or more such structures will be treated as a "hotel" for the purposes of division (M) of that section. If rooms within such structures are occupied and rented separately, each room will be considered an individual "sleeping accommodation."

(B) For the purposes of divisions (B)(2) and (N) of section 5739.01 of the Revised Code, "transient guests" are any individual customers or entities that rent a sleeping accommodation for less than thirty consecutive days. A transient guest can include a corporation or other entity that rents blocks of rooms in its own name for use by its employees or designated guests.

If a transient guest rents a room or block of rooms for more than thirty consecutive days, those rentals are not subject to the tax in division (B)(2) of section 5739.01 of the Revised Code if the rooms are actually and continuously occupied for that time, or the rooms have been purchased and there is a right to continuously occupy the rooms for that time.

Last updated December 12, 2024 at 8:15 AM

History

Effective: December 12, 2024
Promulgated Under: Other

Chapter 5703-11 Motor Vehicle Fuel Tax

Ohio Adm.Code 5703-11-01 Surety company certificate of compliance.

All corporate surety companies that write motor vehicle fuel tax bonds for Ohio shall furnish, upon request, a certificate of compliance issued by the department of insurance.

Last updated March 10, 2026 at 8:08 AM

History

Effective: January 12, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-11-02 Evidence of purchase of motor vehicle fuel.

(A) Each claim for refund of motor vehicle fuel tax filed pursuant to sections 5735.14 and 5735.142 of the Revised Code, shall be supported by evidence of purchase of such fuel. The evidence of purchase shall be made by the seller of the fuel and shall specify:

(1) The name and address of the seller;

(2) The name of the purchaser;

(3) The date of purchase;

(4) The type of fuel; and

(5) The number of gallons of fuel purchased, and, if applicable, the water content of the fuel.

The original of the evidence of purchase shall be given to the purchaser and a copy retained by the seller for a period of one year.

(B) Purchase may be evidenced by an invoice, credit card purchase receipt, cash purchase receipt, or any other document that meets the requirements of paragraph (A) of this rule.

(C) If the evidence of purchase submitted with the claim does not contain all of the information required by paragraph (A) of this rule or is otherwise deficient, the tax commissioner may require that the claimant supplement such evidence or may deny that portion of the claim that is not supported by sufficient evidence.

Last updated March 10, 2026 at 8:08 AM

History

Effective: January 12, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-11-03 Reimbursement for fuel used outside Ohio.

(A) A user of motor vehicle fuel upon which the Ohio tax has been paid may make application for a reimbursement of the tax for such motor vehicle fuel used by the user in another state on which a tax is paid for such usage. The application shall be made on a refund form prescribed by the tax commissioner.

(B) The refund application must be received by the tax commissioner within the time prescribed by Chapter 5735. of the Revised Code. It shall be accompanied by evidence of purchase in accordance with rule 5703-11-02 of the Administrative Code and by evidence of compliance by the claimant with the motor vehicle fuel tax laws of the state in which the fuel was used.

Evidence of compliance shall consist of:

(1) A copy of the claimant's fuel tax report to such other state, with a copy of the canceled check which paid such tax;

(2) A copy of the fuel report certified as to its correctness by the state official with whom it was filed; or

(3) A certification by the state official having jurisdiction over fuel taxes to the effect that the claimant is in compliance with that state's fuel tax laws for the period for which the application is made.

(C) No application for refund of tax on less than one hundred gallons of fuel shall be filed and, if filed, shall not be processed. No reimbursement shall be allowed for motor vehicle fuel used in a state that does not impose an excise tax on such use.

(D) Any application or portion of an application not supported by evidence of purchase and compliance as required by paragraph (B) of this rule shall be denied.

Last updated March 10, 2026 at 8:08 AM

History

Effective: January 12, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-11-04 Motor fuel tax return and report filers must file and pay electronically.

(A) Except as provided in paragraph (B) of this rule, each dealer, transporter, terminal operator and exporter required to file a motor fuel tax report shall file such report and remit any required payment of the tax liability as follows:

(1) The reports shall be filed electronically by using the Ohio business gateway as defined in Chapter 718. of the Revised Code or by any other electronic filing and payment system established by the department of taxation.

(2) All payments shall be made electronically by using the Ohio business gateway or through another electronic filing and payment system established by the department of taxation.

(3) All refund claims and applications may be filed electronically by using the department of taxation's online filing system, but such electronic submission is not required.

(B)

(1) Any person may apply to the tax commissioner to be excused from the requirement to file and pay electronically under paragraph (A) of this rule. If a form is prescribed by the commissioner for such purpose, which shall be posted on the department of taxation's web site, the person shall complete such form.

(2) The commissioner will notify the person in writing of the commissioner's decision. Unless an earlier date is specified in the notice, the excuse shall continue to apply until revoked in writing by the commissioner. The denial or revocation of an excuse under this paragraph is not a final determination of the commissioner and is not subject to further appeal.

(C) Nothing in this rule affects any person's obligation to timely file all returns and reports and timely pay all amounts required by Chapter 5735. of the Revised Code.

Last updated May 19, 2026 at 7:56 AM

History

Effective: May 18, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-11-05 Required information for aviation fuel dealers.

(A) Pursuant to section 5735.024 of the Revised Code, each monthly aviation fuel dealer report filed with the tax commissioner will contain the following information:

(1) The seller's name and address;

(2) The seller's tax identification number (FEIN/SSN) and Ohio motor fuel/aviation fuel account number;

(3) The purchaser's name;

(4) The purchaser's tax identification number (FEIN/SSN);

(5) The city and state of origin of the aviation fuel;

(6) The destination of the fuel by street address, city, state and zip code;

(7) The type of fuel;

(8) The total gallons sold to airports in Ohio;

(9) The number of gallons of fuel sold by product type; and

(10) The number of gallons on which sales tax was not charged.

(B) This rule applies to all aviation fuel reported on or after January 1, 2018.

Last updated December 1, 2023 at 9:47 AM

History

Effective: November 30, 2023
Promulgated Under: Other

Chapter 5703-13 Highway Use Tax

Ohio Adm.Code 5703-13-03 Maintenance of records for purposes of reporting fuel use tax.

(A) As used in this rule:

(1)

(a) "Primary records" include:

(i) Driver's trip reports;

(ii) Vehicle trip reports;

(iii) Electronic logging device reports;

(iv) Daily dispatch sheets;

(v) Driver's daily logs;

(vi) Global position system (GPS) reports for each vehicle, which show the date, time, and location of each GPS reading and calculated distance between each reading;

(vii) Fuel receipts, fuel card statements, or fuel lists for all tax-paid retail purchases, which show the date, quantity of fuel purchased, type of fuel, price per gallon or liter, vehicle unit number, and name of purchaser; and

(viii) Bulk fuel receipts, including delivery invoices, inventory reconciliations, and bulk withdraw records for each vehicle unit number for each tank, which show the receipts for all deliveries, quarterly inventory reconciliations for each tank, and capacity of each tank.

(b) Primary records described in paragraphs (A)(1)(a)(i) to (A)(1)(a)(vi) must show the vehicle unit number, starting and ending dates, origin, intermediate points and destination, total distance travelled, distance travelled in each jurisdiction, routes of travel, and beginning and ending odometer, hubometer, or engine control module readings for each vehicle.

(2) "Secondary records" include weekly, monthly, or quarterly summary sheets or data processing accumulations or any other records in which data from the primary records is recorded.

(B) Every person who is or becomes liable for the tax levied in section 5728.06 of the Revised Code shall keep complete and accurate primary and secondary records of distance traveled and fuel purchased for each vehicle owned, operated or driven in this state.

(C) Any record in which accumulated data is recorded must be supported by the complete detail records from which such data was accumulated.

(D) If any person fails to maintain complete and accurate records as required by this rule and section 5728.07 of the Revised Code, the tax commissioner may use a representative portion of the taxpayer's business to estimate the amount of tax due in relation to the amount of tax reported. The commissioner will apply the estimate to the entire period of time for which complete and accurate records were not maintained to determine any additional tax due.

Last updated January 3, 2022 at 10:47 AM

History

Effective: January 3, 2022
Promulgated Under: Other

Ohio Adm.Code 5703-13-04 Single-trip permits.

Pursuant to section 5728.03 of the Revised Code:

(A) An operator of a motor vehicle that is subject to section 5728.06 of the Revised Code, and that does not have an annual motor fuel use permit, may be issued a fuel use tax single-trip permit through either an electronic means prescribed by the commissioner or an authorized independent permit service.

(1) Fuel use single-trip permits will be issued for periods of twenty-four hours. A maximum of four permits totaling ninety-six consecutive hours may be issued for any vehicle at one time.

(2) The cost of a fuel use single-trip permit will be twenty-four dollars for each twenty-four hour period. The twenty-four dollars is an estimate of the motor fuel use tax required by division (B)(4) of section 5728.03 of the Revised Code.

(B)

(1) To be authorized to issue fuel use single-trip permits, an independent permit service will:

(a) Enter into a signed agreement with the department on forms prescribed by the tax commissioner; and

(b) Provide twenty-four hour nationwide service.

(2) The commissioner may require an independent permit service to post a surety bond, of cash or other security satisfactory to the commissioner, in the amount of five thousand dollars to guarantee payment of all fees and taxes associated with the issuance of single-trip permits are paid.

(3) In the event the electronic means prescribed by the commissioner for issuing single-trip permits is unavailable, an authorized independent permit service shall do both of the following:

(a) File a report on a form prescribed by the commissioner and remit all amounts related to the fees and taxes charged for the issuance of fuel use single-trip permits during the reporting period when the electronic means for issuing single-trip was unavailable.

(b) Maintain records of each single-trip permit issued for two years and make those records available for inspection by agents of the commissioner.

For purposes of paragraph (B)(3) of this rule, the reporting period shall be Monday through Sunday. Reports must be received by the department of taxation by the close of business on the Friday following the end of the reporting period.

(4)

(a) An authorized independent permit service shall not knowingly issue a single-trip permit to any person who has a motor fuel use tax permit that has been suspended in accordance with section 5728.11 of the Revised Code.

(b) The commissioner may provide authorized independent permit services with the names of persons who may not obtain single-trip permits due to a suspension of a motor fuel use tax permit.

(5) The commissioner may revoke authorization if the independent permit service violates any of the provisions of this rule.

Last updated October 5, 2026 at 9:16 AM

History

Effective: October 4, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-13-06 International registration plan, audits and hearings.

Pursuant to section 5703.12 of the Revised Code and the "International Registration Plan" adopted pursuant to division (A) of section 4501.02 of the Revised Code:

(A) A person who receives international registration plan audit findings from the tax commissioner may protest the findings by filing a written objection with the commissioner.

(B) Unless the person described in paragraph (A) of this rule files with the commissioner, within sixty days of the date on the audit closing letter, a written objection, signed by the person, or by the person's authorized agent having knowledge of the facts, the audit findings become final.

(C) Upon completion of the review and hearing, if requested by the person described in paragraph (A) of this rule, the commissioner shall issue a final determination that upholds or modifies the audit findings. A copy of the final determination shall be served on the person in the manner provided by section 5703.37 of the Revised Code, and it is subject to appeal under section 5717.02 of the Revised Code.

(D)

(1) After the person described in paragraph (A) of this rule has exhausted all appeals or the time for filing an appeal has expired, the commissioner or registrar of motor vehicles will transmit any adjustments resulting from the audit, and any subsequent appeal, to the appropriate authorities in all jurisdictions as provided by the "International Registration Plan."

(2) If the person described in paragraph (A) of this rule fails to timely file a written objection as provided for in paragraph (B) of this rule, but provides additional information related to the audit to the commissioner prior to the commissioner or registrar notifying the jurisdictions described in paragraph (D)(1) of this rule, the commissioner or registrar may review and adjust the audit findings and notify the appropriate authorities in all jurisdictions based on the adjustments. If such audit adjustments are made, they are not subject to appeal.

Last updated January 3, 2022 at 10:48 AM

History

Effective: January 3, 2022
Promulgated Under: Other

Ohio Adm.Code 5703-13-07 "International Fuel Tax Agreement" taxpayers must file and pay electronically.

(A) Except as provided in paragraph (B) of this rule, each taxpayer required to file returns, applications, or any other forms and remit payments in accordance with Chapter 5728. of the Revised Code and the international fuel tax association (IFTA) "Articles of Agreement" will submit such returns, applications, or forms and payments electronically in a manner prescribed by the commissioner.

(B)

(a) Until the date, or for the duration, specified in the notice granting the exemption,

(b) If no date or duration is specified in the notice, until revoked in writing by the commissioner.

(3) A denial or revocation by the commissioner under paragraph (B)(2) of this rule is not a final determination of the commissioner and is not subject to further appeal.

(C) Nothing in this rule affects any person's obligation to file all returns and pay all amounts due in a timely manner in accordance with Chapter 5728. of the Revised Code and the IFTA "Articles of Agreement."

Last updated October 5, 2026 at 9:16 AM

History

Effective: October 4, 2026
Promulgated Under: Other

Chapter 5703-15 Cigarette Tax

Ohio Adm.Code 5703-15-02 Notice relative to license revocation proceeding.

Whenever the tax commissioner finds that a wholesale or retail dealer is advertising, offering to sell, or selling cigarettes at a price in violation of the provisions of section 1333.11, et seq. of the Revised Code, a written notice will be sent to such dealer by certified mail charging him with such violation and advising him that thirty days from the date of receipt of such notice an order will be issued by the commissioner suspending or revoking his wholesale or retail cigarette dealer's license unless, within said thirty-day period, a hearing is requested in accordance with the provisions of section 119.07 of the Revised Code.

If a hearing is requested, the commissioner will set a date, time and place for same in accordance with the provisions of section 119.07 of the Revised Code, at which time the dealer may appear in person or be represented by his attorney or such other person as he may designate, to present his position, arguments, or contentions relative to said charge.

Last updated November 19, 2025 at 11:49 AM

History

Effective: November 23, 2018
Promulgated Under: Other

Ohio Adm.Code 5703-15-03 Use of stamp applying machines or other devices.

Any machine designed to affix heat applied decalcomania stamps, or any other device, as approved by the tax commissioner, may be used in lieu of hand application of heat applied decalcomania stamps to evidence payment of the taxes levied in sections 5743.02, 5743.021, 5743.024 and 5743.026 of the Revised Code.

The commissioner may prescribe which of the stated types of equipment may be used by any wholesale cigarette dealer.

Last updated January 13, 2026 at 12:01 PM

History

Effective: January 13, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-15-04 Sales of stamps on credit.

(A) Cigarette tax stamps, or other means of identification, as authorized by the tax commissioner, may be sold to a licensed wholesale cigarette dealer on thirty-day credit periods upon written application together with a bond in the amount of the aggregate net tax value of purchases to be made during such credit periods.

(1) The surety on any bond may cancel such bond by filing a sixty-day written notice thereof with the commissioner, in which event the liability of the surety shall terminate upon the expiration of said sixty-day period, except as to such liability of the principal as may have accrued prior to the expiration of said period.

(2) All bonds shall remain in full force and effect until cancelled in the manner provided herein.

(B) The net tax value of stamps sold on credit shall be paid to the treasurer of state or the tax commissioner, as required, within thirty days from the date of the invoice therefor and in no event shall the aggregate net tax value of all such sales during any thirty-day credit period exceed the amount of the bond furnished for this purpose.

(C) The failure of any person to remit to the treasurer of state or the tax commissioner, as required, payment of the net tax value of stamps, or other means of identification, purchased on credit, within thirty days from the date of the invoice therefor will constitute a sufficient basis for suspension or revocation of the authority issued to that person to make such purchases.

Last updated January 13, 2026 at 12:01 PM

History

Effective: January 13, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-15-05 Discount on sales of tax stamps.

The discount on sales of cigarette tax stamps to licensed wholesale dealers shall be one and eight-tenths per cent of the tax value thereof, irrespective of the amount of such sales.

Last updated November 19, 2025 at 11:49 AM

History

Effective: September 21, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-15-06 Denial of discount in stamp purchases.

In addition to the power to revoke any cigarette dealer's license the department of taxation may, by final determination, after ten days' notice to any licensed wholesale cigarette dealer, deny such dealer the right to any discount in the further purchase of cigarette tax stamps for such period of time as the department of taxation may determine in each case, under the following circumstances:

(A) Upon finding that any licensed wholesale cigarette dealer has violated any provision of the cigarette tax law of Ohio or any rule of the department of taxation with respect thereto.

(B) Upon finding by the department of taxation that any wholesale cigarette dealer is delinquent in payment of the cigarette excise tax and failure to pay such delinquency upon the expiration of ten days after final date fixed by the department of taxation for such payment or any extension of such payment date granted by the department.

Last updated November 19, 2025 at 11:55 AM

History

Effective: December 8, 2016
Promulgated Under: Other

Ohio Adm.Code 5703-15-08 Sales of packages of cigarettes for which tax indicia are not available.

With respect to packages containing any number of cigarettes for which tax indicia are not available, the taxes levied by sections 5743.02, 5743.021 and 5743.024 of the Revised Code shall be paid to the department of taxation on or before the tenth day of each month on all such packages of cigarettes sold in this state during the preceding calendar month.

In lieu of the manner otherwise provided by law to evidence payment of said taxes, each person liable for payment of the taxes levied by sections 5743.02 and 5743.021 of the Revised Code shall, prior to the sale of any such packages of cigarettes in this state, print or otherwise stamp on the bottom of each package the words "ohio tax paid"; each person liable for payment of the taxes levied by section 5743.024 of the Revised Code shall, prior to the sale of any packages of cigarettes into any county in which the tax is in effect, print or otherwise stamp on the bottom of each package the words "OHIO & COUNTY TAX PAID."

The provisions herein shall not be construed to alter in any respect those provisions of law pertaining to sales of said packages of cigarettes in this state other than the manner of payment of said taxes and the manner of evidencing such payment.

Last updated November 19, 2025 at 11:55 AM

History

Effective: December 8, 2016
Promulgated Under: Other

Ohio Adm.Code 5703-15-09 Tax rate on long cigarettes capable of being cut into parts.

In case cigarettes or the packages containing them are perforated so that each cigarette may be conveniently cut into two or more parts so as to make two or more cigarettes, the number of cigarettes in such packages for the purpose of taxation shall be the number as though they were cut.

Last updated November 19, 2025 at 11:55 AM

History

Effective: December 8, 2016
Promulgated Under: Other

Ohio Adm.Code 5703-15-10 Vending machines.

All cigarette vending machine owners or operators, upon request, have a duty to report under oath to the department of taxation the number and location of cigarette vending machines owned, operated or controlled by said owners, operators or controllers, in use or in stock or subject to use.

Last updated April 15, 2024 at 8:26 AM

History

Effective: April 14, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-15-11 Sales by railroad dining and club cars.

Railroad companies operating dining and club car service within this state are permitted to traffic in cigarettes at retail sale by securing a retail cigarette license in the county where the headquarters of such dining and club car service is established in the state, as provided by section 5743.15 of the Revised Code.

Last updated April 15, 2024 at 8:26 AM

History

Effective: April 14, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-15-12 Delivery of cigarettes for manufacturers' agents.

Prior to shipment or delivery of cigarettes to any person in Ohio for the use of any manufacturer's agent or representative, cigarette manufacturers shall notify the department of taxation in writing, in advance of the shipment or delivery, giving information as to the approximate date or dates, location or locations, brand and method of distribution, and provide a copy of the invoice covering such shipment or delivery.

Last updated April 15, 2024 at 8:26 AM

History

Effective: April 14, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-15-13 Monthly reports of cigarettes shipped by wholesale cigarette dealers.

(A)

(1) As used in this rule:

(a) "Unstamped cigarettes" means packages of cigarettes that do not bear an Ohio cigarette tax stamp.

(b) "Sale" has the same meaning as in division (D) of section 5743.01 of the Revised Code and includes delivery or other distribution.

(2) On or before the last day of each month, all licensed wholesale cigarette dealers have a duty to submit to the tax commissioner cigarette sales reports that cover the sale of both stamped and unstamped cigarettes during the preceding month to points outside of Ohio to other cigarette wholesale dealers, and sales made to an agency of the federal government. The reports shall be filed on a form and in a manner prescribed by the commissioner and be filed with the monthly report described in rule 5703-15-14 of the Administrative Code.

(B) Whenever a licensed wholesale cigarette dealer has a duty to file an inventory return pursuant to rule 5703-15-16 of the Administrative Code, the dealer shall also file cigarette sales reports, in substance the same as those described in paragraph (A) of this rule, reporting the sale of cigarettes during the period from the first day of the month through the day upon which the inventory was conducted. The reports shall be filed on or before the last day of the month following the inventory and be submitted with the reports filed pursuant to paragraph (B) of rule 5703-15-14 of the Administrative Code.

(C) When reports have been filed pursuant to paragraph (B) of this rule, the next cigarette sales reports due pursuant to paragraph (A) of this rule will include the sale of cigarettes during the period from the day after the inventory to the end of the month.

Last updated April 15, 2024 at 8:26 AM

History

Effective: April 14, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-15-14 Monthly reports by cigarette dealers receiving cigarettes in Ohio.

(A) On or before the last day of the month, all licensed wholesale cigarette dealers that receive or cause to be received in this state cigarettes have a duty to file reports on a form and in a manner prescribed by the tax commissioner indicating the quantities of cigarettes received during the preceding month, the person from whom the cigarettes were purchased, and any other information requested by the tax commissioner. All dealers have a duty to file reports each month whether or not cigarettes were actually received during the preceding month.

(B) Whenever a licensed wholesale cigarette dealer has a duty to file an inventory return pursuant to rule 5703-15-16 of the Administrative Code, the dealer shall also file reports, in substance the same as the monthly reports described in paragraph (A) of this rule, on or before the last day of the month following the inventory, reporting the receipt of cigarettes during the period from the first day of the month through the day upon which the inventory was conducted.

(C) When a report has been filed pursuant to paragraph (B) of this rule, the next monthly reports due to be filed pursuant to paragraph (A) of this rule will report the receipt of cigarettes during the period from the day after the inventory to the end of the month.

Last updated April 15, 2024 at 8:27 AM

History

Effective: April 14, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-15-15 Applications for refund on unsaleable cigarettes.

(A) A wholesale dealer may make application for refund of cigarette tax previously paid by the dealer on unsaleable cigarettes returned to the manufacturer. Such application shall be made on a form prescribed by the tax commissioner, filed within the period prescribed by section 5743.05 of the Revised Code, and supported by the following original documents:

(1) The manufacturer's returned goods authorization;

(2) The bill of lading;

(3) The manufacturer's affidavit of receipt that includes taxing jurisdiction, number of packs, number of stamps, and stamp type; and

(4) The manufacturer's credit memorandum.

(B) A wholesale dealer may make application for refund of cigarette tax previously paid by the dealer on stamped cigarettes rendered unsaleable due to theft. Such application shall be made on a form prescribed by the tax commissioner, filed within the period prescribed by section 5743.05 of the Revised Code, and supported by the following documentation or copies thereof:

(1) The police or sheriff's report;

(2) The claim or report to the insurance company and the results of the insurance company investigation; and

(3) Any other information requested by the department of taxation.

The burden of proof is on the claimant to show that the cigarettes were, in fact, stolen. Tax on unaccounted loss or inventory shrinkage is not subject to refund.

(C) A wholesale dealer who has lost cigarettes to a theft must notify the department of taxation within twenty-four hours of the discovery of the theft. Failure to so notify the department may result in the denial of any claim for refund filed on account of such stolen stamped cigarettes.

(D) The documentation described in paragraphs (A) and (B) of this rule must be submitted with the application or within a reasonable time thereafter. If approved by the tax commissioner, a copy in lieu of the original may be submitted for documentation described in paragraph (A) of this rule.

Last updated April 15, 2024 at 8:27 AM

History

Effective: April 14, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-15-16 Cigarette wholesaler inventories and inventory returns.

(A) The department of taxation may conduct an inventory of a licensed cigarette wholesale dealer's stock of cigarettes, cigarette tax stamps, and other means of identification, at any time during regular business hours, and then leave a copy of the inventory findings with the wholesale dealer or the dealer's authorized agent or employee.

(B) In addition to the return described in section 5743.03 of the Revised Code, each licensed cigarette wholesale dealer, whose stock has been the subject of an inventory conducted by the department of taxation, has a duty to file with the department of taxation a return showing the dealer's entire purchases and sales of cigarettes, tax stamps, and other means of identification, together with any other information requested by the tax commissioner, for the period from the last day covered by the dealer's preceding tax return through the day on which the inventory was conducted. The return shall be made on a form prescribed by the tax commissioner, delivered to the dealer at the same time as the inventory report, and filed on or before the last day of the month following the inventory. When an inventory return has been filed pursuant to this paragraph, the dealer's next return as described in section 5743.03 of the Revised Code, will report the purchases and sales for the period from the day after the inventory to the end of the monthly period.

(C) Remittance of any tax deficiency shall be made with the inventory return described in paragraph (B) of this rule. Failure to file the return shall subject the wholesale dealer to the same penalties mandated by section 5743.03 of the Revised Code for failure to file the return as described in that section.

Last updated April 15, 2024 at 8:27 AM

History

Effective: April 14, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-15-17 Storage of unstamped cigaretes by dealer.

(A) As used in this rule:

(1) "Dealer" means the holder of a current valid wholesale cigarette dealer's license issued pursuant to section 5743.15 of the Revised Code and who is authorized to purchase cigarette tax indicia from the department of taxation.

(2) "Unstamped cigarettes" means packages of cigarettes, to which Ohio cigarette tax indicia have not been applied and upon which the Ohio cigarette tax has not been paid.

(3) "Place of business" means the location where the dealer applies tax indicia to cigarettes, as referenced on his license.

(4) "Public warehouse" means a place operated by a person in the business of storing goods for others for consideration.

(5) "Warehouseman" means the individual, partnership, corporation, or other person that controls and operates a public warehouse.

(B) Except as provided in this rule, no dealer shall store unstamped cigarettes at any place other than their place of business.

(C) A dealer may store unopened cases of unstamped cigarettes at the same public warehouse where the manufacturer of the cigarettes, from whom the dealer purchased them, stored the cigarettes immediately prior to such purchase. The dealer may store unopened cases of unstamped cigarettes at any other public warehouse only after approval of the department of taxation.

(D) Within forty-eight hours of the purchase from the manufacturer, the dealer has a duty to notify the department of taxation, in writing, that they are storing unstamped cigarettes at a public warehouse and include the name and location of the warehouse and the quantity of cigarettes purchased.

(E) Any cigarettes owned by the dealer and stored at a place other than their place of business are considered part of the dealer's inventory for purposes of Chapter 5743. of the Revised Code and Chapter 5703-15 of the Administrative Code.

(F) Except as provided in rule 5703-15-22 of the Administrative Code, regulated common carrier is the only method available to transport unstamped cigarettes between warehouses, or between a warehouse and a dealer's place of business.

(G) Except as provided in rule 5703-15-22 of the Administrative Code, a dealer shall not transfer title of unstamped cigarettes to any person in this state except the cigarette manufacturer from whom they were purchased, or transfer possession of such unstamped cigarettes to any person other than a warehouseman or regulated common carrier.

(H) A warehouseman or other person who acquires an interest in unstamped cigarettes through lien or judgment may only sell such cigarettes to a dealer or cigarette manufacturer, and then, only after prior approval of the department of taxation.

(I) Any violation of this rule constitutes cause for revocation of the dealer's wholesale license by the tax commissioner.

Last updated April 15, 2024 at 8:27 AM

History

Effective: April 14, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-15-18 Suspension of discount for selling cigarettes below cost.

(A) In addition to the power to revoke or suspend a wholesale cigarette dealer's license, the tax commissioner may suspend a dealer's right to any discount in the further purchase of cigarette tax stamps upon finding by the commissioner that the dealer has violated section 1333.12 of the Revised Code by advertising, offering to sell, or selling cigarettes below cost.

(B) Notice of the suspension shall be delivered to the wholesale dealer personally or by certified mail. Such notice shall describe the reason for suspending the discount and the length of the time for which the suspension will be effective.

(C) After the expiration of ten days after the dealer received the notice of suspension, the tax commissioner shall prepare a journal entry ordering the suspension of discount as specified in the notice. Certified copies of the journal entry shall be delivered to the dealer and the treasurer of state personally or by certified mail. From the date of his receipt of the journal entry the treasurer shall refuse to allow a discount on the dealer's purchases of cigarette tax stamps until the period of suspension has expired.

(D)

(1) A dealer notified of discount suspension under this rule may, within ten days after receipt of the notice of suspension, protest the suspension to the tax commissioner. The protest must be filed personally or by certified mail and must specify the basis of the protest.

(2) In the protest, the dealer may request a personal appearance hearing. If such a hearing is requested, it shall be held in Columbus within thirty days of the filing of the protest. The hearing may be postponed by the commissioner for up to fifteen days if necessary. The commissioner shall give the dealer reasonable notice of the date and time for the hearing by mailing the notice of hearing by certified mail to the last known business address of the dealer. At the hearing, the dealer may present any evidence to show he was not in violation of section 1333.12 of the Revised Code or any other information relevant to the proposed suspension. No transcript or stenographic record of the hearing will be made.

(3) If no hearing is requested, the commissioner shall consider any information presented with the protest filed by the dealer.

(4) The commissioner shall issue a journal entry setting forth the final determination on the protest and suspension and shall deliver the journal entry to the dealer personally or by certified mail. The final determination of the commissioner may be appealed to the board of tax appeals pursuant to section 5717.02 of the Revised Code.

(E) The first suspension of any dealer's discount shall be for a period not to exceed sixty days. Any subsequent suspension shall be for a period not to exceed one year.

(F) For purposes of this rule, selling below the presumptive cost to the wholesaler as published by the department of taxation constitutes sufficient cause to issue a notice of suspension of the discount.

(G) For any violation of section 1333.12 of the Revised Code, the commissioner may elect to pursue either the suspension of discount as provided by this rule or the suspension or revocation of the dealer's license as provided in section 1333.21 of the Revised Code.

Last updated November 19, 2025 at 11:55 AM

History

Effective: August 17, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-15-20 Licensing cigarette manufacturers and importers and registration of other tobacco products manufacturers and importers.

(A)

(1) Cigarette manufacturers and cigarette importers will be required to make and deliver an application to the tax commissioner, which states the name of the applicant, the nature of the applicant's business, and any other information required by the commissioner. Any license issued under such application will be valid for a period of one year commencing on thefirst day of June.

(2) All cigarette manufacturers and importers that apply for a license under paragraph (A) of this rule may be required to provide documentation satisfactory to the commissioner that their products are legal for sale. Manufacturers whose cigarette brands are listed on the attorney general's web site under section 1346.05 of the Revised Code will be presumed to have met this requirement. Any cigarette manufacturer or importer shipping cigarette brands not listed on the attorney general's web site may be required to provide documentation showing that the cigarettes are legal for sale into another state and that such cigarettes will only be shipped to cigarette wholesalers licensed to do business in such other state.

(B)

(1) Unless the tax commissioner grants an alternative filing frequency, all cigarette manufacturers and cigarette importers are required to file reports with the commissioner by the end of each month. This report shall set forth the brands and quantity of all cigarettes shipped into this state, including the quantity of all brands of cigarettes not manufactured by signatories to the "Master Settlement Agreement," that were shipped into this state during the preceding month. Additionally, the report shall detail the recipient's name and address, the invoice numbers, invoice dates, and any other information the commissioner prescribes.

(2) Failure to file the report required under section 5743.072 of the Revised Code and described in paragraph (B)(1) of this rule shall be grounds for revocation of the license authorizing such manufacturer or importer to send cigarettes into this state. The commissioner shall send, by certified mail or personal delivery, a notice of the intent to revoke such manufacturer's or importer's license. In the event such manufacturer or importer contests the commissioner's determination, such person must, within ten days of the receipt of this notice, petition the commissioner on such finding. The commissioner shall timely provide such person with a hearing on the matter in accordance with Chapter 119. of the Revised Code and will issue a final determination on the revocation of such license. Upon any such revocation, the commissioner shall immediately notify the attorney general to take necessary actions, including those prescribed under section 1346.05 of the Revised Code.

(C)

(1) Section 5743.66 of the Revised Code requires all manufacturers and importers of other tobacco products to register with the tax commissioner prior to selling or distributing other tobacco products in this state. All manufacturers and importers of other tobacco products will be required to make and deliver an application to the commissioner that states the name of the applicant, the nature of the applicant's business, and any other information required by the commissioner. Such manufacturer or importer must register by the first day of February of each year. Any registration issued under such application will be valid for a period of one year commencing on the first day of February.

(2) Unless the commissioner grants an alternative filing frequency, all registered manufacturers and importers of other tobacco products shall file a report with the commissioner by the end of each month. This report shall be on a form and in a manner prescribed by the commissioner and shall detail all sales of roll-your-own tobacco by brand and quantity; all sales of other tobacco products to distributors located in this state for the prior month; a current list of prices; invoice numbers; invoice dates; invoice amounts; and any other information the commissioner prescribes.

(3) All manufacturers and importers of roll-your-own tobacco that register under paragraph (C) of this rule may be required to provide documentation satisfactory to the commissioner that their products are legal for sale. Manufacturers whose roll-your-own brands are listed on the attorney general's web site under section 1346.05 of the Revised Code will be presumed to have met this requirement. Any manufacturer or importer shipping roll-your-own tobacco brands not listed on the attorney general's web site may be required to provide documentation showing that the roll-your-own tobacco is legal for sale into another state and that such roll-your-own tobacco will only be shipped to distributors licensed to do business in such other state.

(4) Failure to file the report required under section 5743.66 of the Revised Code and described in paragraph (C)(3) of this rule shall be grounds for revocation of the registration authorizing such manufacturer or importer to send other tobacco products into this state. The commissioner shall send, by certified mail or personal delivery, a notice of the intent to revoke such manufacturer's or importer's registration. In the event such manufacturer or importer contests the commissioner's determination, such person must, within ten days of the receipt of this notice, petition the commissioner on such finding. The commissioner shall timely provide such person with a hearing on the matter in accordance with Chapter 119. of the Revised Code and will issue a final determination on the revocation of such registration. Upon any such revocation, the commissioner shall immediately notify the attorney general to take necessary actions, including those prescribed under section 1346.05 of the Revised Code.

(D) Nothing in this rule shall hinder the attorney general from removing from the list issued under section 1346.05 of the Revised Code any manufacturer that is not in compliance with the reporting requirement or any other rule promulgated by the tax commissioner under these provisions.

(E)

(1) Except as provided in section 5743.20 of the Revised Code, no cigarette wholesaler may purchase cigarettes from anyone other than a licensed cigarette manufacturer or importer.

(2) The list of licensed cigarette manufacturers and importers is public information pursuant to section 5743.20 of the Revised Code.

(3) Except as provided in section 5743.20 of the Revised Code, no distributor of other tobacco products shall purchase other tobacco products from anyone other than a registered manufacturer or importer of other tobacco products.

(4) Any cigarettes held for sale or distribution in violation of this rule are subject to confiscation under section 5743.08 of the Revised Code, and any other tobacco products held for sale or distribution in violation of this rule are subject to confiscation under section 5743.55 of the Revised Code. Such confiscation is in addition to any penalties available under section 5743.99 of the Revised Code or any other applicable provision of law.

Last updated January 13, 2026 at 12:01 PM

History

Effective: January 13, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-15-21 Sale of other tobacco products between licensed other tobacco product distributors.

(A)

(1) As used in this rule, "sale" has the same meaning as in division (D) of section 5743.01 of the Revised Code and includes delivery or other distribution.

(2) All persons dealing in sales of other tobacco products or vapor products, including persons dealing in sales of previously taxed other tobacco products or vapor products (secondary distributor), other than persons dealing exclusively in sales of previously taxed other tobacco products or vapor products to ultimate consumers, must be licensed under section 5743.61 of the Revised Code.

(B)

(1) Retail dealers must purchase other tobacco products or vapor products only from licensed other tobacco products or vapor products distributors and cannot purchase from unlicensed distributors or other retailers.

(2) Licensed other tobacco products or vapor products distributors selling to retailers must use the account number assigned by the tax commissioner pursuant to section 5743.54 of the Revised Code on all transactions of other tobacco products or vapor products and may not use another licensed distributor's license number, even though that other distributor paid the tax.

(C)

(1) Unless the out-of-state supplier of other tobacco products or vapor products provides an invoice stating that the tax imposed by section 5743.51 of the Revised Code has been paid along with such supplier's assigned account number as required by section 5743.54 of the Revised Code, the first receiver of untaxed other tobacco products or vapor products in this state is liable for the tax imposed under section 5743.51 of the Revised Code.

(2) Unless the out-of-state supplier of untaxed other tobacco products or of vapor products is a registered manufacturer or importer of other tobacco products or vapor products under section 5743.66 of the Revised Code, such supplier may not ship untaxed other tobacco products or vapor products after July 1, 2020, into this state without an authorization from the commissioner. The commissioner may authorize repeated transactions of such shipments for a specified period of time.

(3) The request must be made on a form and in a manner prescribed by the commissioner for such purpose and must contain the brands, quantity, date of shipment, method of shipment, and supplier, as well as any other information required by the commissioner. If such shipment involves roll-your-own tobacco not contained on the directory provided for in section 1346.05 of the Revised Code, documentation may be required that such roll-your-own tobacco is legal for sale in another state.

(4) Approved requests will be sent to both the supplier and receiving distributor and must be carried in the vehicle transporting such other tobacco products or vapor products. The receiving distributor must, within seventy-two hours excluding weekends and holidays, notify the commissioner if the quantities received do not correspond with the quantities contained on the commissioner's authorization form. Absent notification to the commissioner, the receiving distributor will be presumed to have received the quantity approved for shipment along with the resulting tax liability.

(5) Shipments of untaxed other tobacco products or vapor products between distributors in this state are prohibited.

(6) Shipments of other tobacco products or vapor products on which the tax is paid are permitted between licensed other tobacco products or vapor products distributors, provided that the distributor selling such products purchases the products from a registered manufacturer or importer.

(7) The commissioner reserves the right to verify, upon request, that the supplier is the first purchaser from an other tobacco products or vapor products manufacturer or importer.

(8) Sales invoices made by licensed distributors of other tobacco products or vapor products received from another licensed distributor must contain the license number issued to the distributor receiving the products from such other distributor.

(D) All licensed distributors of other tobacco products or vapor products are required to file monthly reports on a form and in a manner prescribed by the commissioner detailing the invoice number, the invoice date, the price, the volume and any other information prescribed by the commissioner. Alternative filing frequencies may be established if the commissioner determines that monthly filing is not warranted.

(E)

(1) Both the supplying distributor and receiving distributor are required to file reports of shipments made and received. These reports are in addition to any tax returns required to be filed under section 5743.52 of the Revised Code.

(2) Records of all licensed distributors must be made available to the commissioner, upon request, including purchases of both taxed and untaxed products, and any other information the commissioner deems necessary to verify the transaction.

(F) Whoever violates any provision of this rule is subject to having its products confiscated under section 5743.55 of the Revised Code. Such confiscation is in addition to the penalties available under sections 1346.09, 1346.10, and 5743.99 of the Revised Code or any other applicable provision of law.

Last updated November 19, 2025 at 11:56 AM

History

Effective: July 2, 2021
Promulgated Under: Other

Ohio Adm.Code 5703-15-22 Sale of unstamped cigarettes between licensed cigarette wholesalers.

(A)

(1) Shipments of unstamped cigarettes between licensed cigarette wholesalers located in this state require the authorization of the tax commissioner. Such authorization shall be on a form prescribed by the commissioner for such purpose. Absent special circumstances, such authorization will only be given for shipments between two licensed cigarette wholesalers.

(2) Absent special circumstances, the licensed wholesaler selling the cigarettes must have purchased the cigarettes from either a licensed cigarette manufacturer or a licensed cigarette importer.

(3) The request to ship unstamped cigarettes must be made on a form and in a manner prescribed by the commissioner for such purpose and must contain the brands, quantity, date of shipment, method of shipment, and supplier of the cigarettes, as well as any other information required by the commissioner. If such shipment involves cigarettes not contained on the directory provided for in section 1346.05 of the Revised Code, documentation may be required that such cigarettes are legal for sale in another state.

(4) Approved requests will be sent to both the supplying and receiving cigarette wholesalers and must be carried in the vehicle actually transporting such cigarettes. The receiving wholesaler must, within seventy-two hours excluding weekends and holidays, notify the commissioner if the quantities received do not correspond with the quantities contained on the commissioner's authorization form. Absent notification to the commissioner, the receiving wholesaler will be presumed to have received the quantity approved for shipment along with the resulting tax liability.

(5) Both the supplying wholesaler and receiving wholesaler are required to file monthly reports of shipments made and received.

(6) The commissioner reserves the right to request documentation verifying that any shipment across state lines of unstamped cigarettes between wholesalers has received approval from any other state involved.

(B) The commissioner reserves the right to verify, upon request, that the supplying wholesaler is the first purchaser from a cigarette manufacturer or importer.

(C) Shipments through this state (i.e., not originating and/or terminating in this state) are allowed without an authorization from the commissioner, provided the shipment is made using a common carrier accompanied by a proper bill of lading or invoice that states the quantity, source, and destination of the cigarettes.

(D) Nothing in this rule permits a non-stamping cigarette wholesaler or retailer from purchasing cigarettes from a manufacturer or importer.

(E) Whoever violates any provision of this rule is subject to having its cigarettes confiscated under section 5743.08 of the Revised Code. Such confiscation is in addition to any penalties under sections 1346.09, 1346.10, and 5743.99 of the Revised Code, or any other applicable provision of law.

Last updated November 19, 2025 at 11:56 AM

History

Effective: August 17, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-15-23 Cigarette, other tobacco products, vapor products taxpayers and master settlement agreement filers must file and pay electronically.

(A) Except as provided in paragraph (B) of this rule, each person that has a duty to file a cigarette, other tobacco products and vapor products tax return or master settlement agreement return or report will file such return or report and remit any payment of the tax liability as follows:

(1) The returns and reports are to be filed electronically by using the Ohio business gateway as defined in Chapter 718. of the Revised Code or by any other electronic filing and payment system established by the department of taxation.

(2) All payments are to be made electronically by using the Ohio business gateway, in the manner prescribed by rules adopted by the treasurer of state under section 113.061 of the Revised Code or through another electronic filing and payment system established by the department of taxation.

(B)

(1) Any person may apply to the tax commissioner to request to be excused from the requirement to file and pay electronically under paragraph (A) of this rule by completing the form that is prescribed by the commissioner for such purpose and is posted on the department of taxation's web site.

(2) The commissioner will notify the person in writing of the commissioner's decision. Unless an earlier date is specified in the notice, an approved excuse will continue to apply until revoked in writing by the commissioner. The denial or revocation of an excuse under this paragraph is not a final determination of the commissioner and is not subject to further appeal.

(C) A person has a duty file cigarette, other tobacco products and vapor products tax returns and master settlement agreement reports and make any payments electronically.

(D) Nothing in this rule affects any person's obligation to file all returns and reports or pay all amounts due in a timely manner in accordance with Chapter 5743. of the Revised Code.

Last updated November 22, 2024 at 7:45 AM

History

Effective: November 22, 2024
Promulgated Under: Other

Chapter 5703-17 Beer and Malt Beverage Tax

Ohio Adm.Code 5703-17-01 Definitions.

As used in Chapters 4301., 4303., 4305. and 4307. of the Revised Code:

"Barrels" includes barrels, kegs, and any other containers having a capacity of more than one gallon, or one hundred twenty-eight fluid ounces.

"Bottles" and "cans" include glass, metal, paper or other containers having a capacity of one gallon, or one hundred twenty-eight fluid ounces, or less.

Last updated December 6, 2023 at 12:19 PM

History

Effective: October 26, 2017
Promulgated Under: Other

Ohio Adm.Code 5703-17-03 Measuring bottle content.

Independently of the designation of liquid content appearing on the label or bottle of any taxable beer or malt beverage in sealed bottles or cans, the computation of the tax is based upon the liquid content actually contained in such sealed bottles. The bottle-filling machine's content setting device in use by a manufacturer or bottler establishes the actual content. Thus, if a bottle-filling machine is set to deliver twelve ounces of liquid, the content for the purpose of computing the tax is the amount of such setting, notwithstanding a slight variation due to age, type or other condition of the machine used.

Should the machine be set to deliver twelve and one-half or thirteen ounces, the actual content will be considered to be in excess of twelve ounces and the tax is computed the same as for eighteen ounces.

The department of taxation may in case of uncertainty, however, determine the tax upon the tested liquid content of assumed average bottles of a given brand as found in the market, or the statement of the label, whichever is higher.

Last updated February 4, 2024 at 8:46 AM

History

Effective: February 3, 2024
Promulgated Under: Other

Chapter 5703-19 Wine and Mixed Beverage Tax

Ohio Adm.Code 5703-19-01 Liability for payment of the wine and mixed beverage tax.

For the purpose of this rule, "bottled" wine or mixed beverage is deemed to be that beverage which has been placed in the bottle or other container in which it will be sold or distributed to the ultimate consumer.

If wine is bottled in this state in an internal revenue bonded warehouse, the bottler becomes liable for payment of the tax levied thereon upon removal of such wine from said warehouse.

If wine is bottled in this state other than in an internal revenue bonded warehouse, the bottler becomes liable for payment of the tax levied thereon upon bottling of such wine.

If wine or mixed beverage which has been bottled in an internal revenue bonded warehouse outside this state is transferred to a like warehouse in Ohio, the consignee becomes liable for payment of the tax levied thereon upon removal from the Ohio warehouse.

If mixed beverage is bottled in this state, the bottler becomes liable for payment of the tax levied thereon upon transfer of ownership, for valuable consideration, to a wholesaler or retailer.

If wine or mixed beverage which has been bottled outside this state is imported into Ohio other than into an internal revenue bonded warehouse, the first consignee thereof in this state becomes liable for payment of the tax levied thereon upon receipt or possession of such wine or mixed beverage.

Every permit holder who becomes liable for payment of the tax levied on wine or mixed beverage must report and pay such tax to the department of taxation on or before the eighteenth day of the month immediately following that month in which such liability was incurred.

Last updated September 9, 2025 at 12:39 PM

History

Effective: July 29, 2018
Promulgated Under: Other

Chapter 5703-23 Horseracing Tax

Ohio Adm.Code 5703-23-01 Filing and payment of horseracing tax.

(A) Except as provided in paragraph (B) of this rule, each permit holder required to file a daily horseracing tax report shall file such report and remit payment of the tax liability pursuant to section 3769.103 of the Revised Code as follows:

(1) For each racing day, the permit holder shall prepare and transmit to the tax commissioner a report, on a form prescribed by the commissioner, showing for each race and simulcast:

(a) The amount wagered on win, place, or show and the breakage thereon;

(b) The amount wagered on other than win, place, or show and the breakage thereon;

(d) The amount of tax due; and

(e) Any other information the commissioner deems necessary.

The report shall be signed by the permit holder or an authorized agent. The report shall be filed electronically with the commissioner by using an electronic method authorized by the commissioner, unless the commissioner specifies a different method of filing.

(2) For each racing day, the permit holder shall make a payment of the tax liability electronically by using an electronic method authorized by the commissioner. This payment shall be remitted to the commissioner with the report required by paragraph (A)(1) of this rule for that racing day.

(3) A county fair, independent fair, or agricultural society is not required to file or pay electronically, but may do so.

(B)

(1) Any permit holder may request an exemption from the electronic filing and payment requirements of paragraph (A) of this rule. If a form is prescribed by the commissioner for such purpose, which shall be posted on the department of taxation's web site, the person shall complete such form.

(2) Upon review and receipt of a request under paragraph (B)(1) of this rule, the commissioner will notify the permit holder in writing of the decision. If granted, the exemption from the electronic filing and payment requirements of paragraph (A) of this rule shall apply: The denial or revocation of an excuse under this paragraph is not a final determination of the commissioner and is not subject to further appeal.

(a) Until the date, or for the duration, specified in the notice granting the exemption; or

(b) If no date or duration is specified in the notice, until revoked in writing by the commissioner.

(3) The denial or revocation by the commissioner under paragraph (B)(2) of this rule is not a final determination of the commissioner and is not subject to further appeal.

(C) Nothing in this rule affects any permit holder's obligation to timely file all returns and timely pay all amounts required by Chapter 3769. of the Revised Code.

Last updated October 8, 2026 at 7:59 AM

History

Effective: October 8, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-23-02 Payment of additional horseracing tax.

(A) Within ten days after the close of a racing meeting, the permit holder shall prepare and transmit to the tax commissioner a final report, on a form prescribed by the tax commissioner, showing the total amount wagered during the racing meeting and any other information required by the commissioner relative to the levying of the tax. The final report shall be signed by the permit holder or his authorized agent. The report shall be filed with the commissioner by using an eletronic method authorized by the commissioner, unless the commissioner specifies a different method of filing.

(B) With the report required to be filed by paragraph (A) of this rule, the permit holder shall remit the additional horseracing tax due on the total amount wagered for the horseracing meeting. The payment shall be remitted electronically by using an electronic method authorized by the commissioner.

Last updated September 28, 2026 at 8:29 AM

History

Effective: October 8, 2026
Promulgated Under: Other

Chapter 5703-25 Equalization - Appraisals

Ohio Adm.Code 5703-25-05 Definitions.

As used in rules 5703-25-05 to 5703-25-17 of the Administrative Code:

(A) "True value in money" or "true value" means one of the following:

(1) The fair market value or current market value of property and is the price at which property should change hands on the open market between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having a knowledge of all the relevant facts.

(2) The price at which property did change hands under the conditions described in section 5713.03 of the Revised Code, within a reasonable length of time either before or after the tax lien date, unless subsequent to the sale the property loses value due to some casualty or an improvement is added to the property.

(B) In compliance with the provisions of sections 5713.01, 5713.03, 5715.01 and 5715.24 of the Revised Code, the "taxable value" of each parcel of real property and the improvements thereon shall be thirty-five per cent of the "true value in money" of said parcel as of tax lien date in the year in which the county's sexennial reappraisal is or was to be effective beginning with the tax year 1978 and thereafter or in the third calendar year following the year in which a sexennial reappraisal is completed beginning with the tax year 1978.

(C) "Computer assisted appraisal systems" - A method in which the value of a property is derived by any or all of the following computerized procedures:

(1) Multiple regression analysis using sales to form the data base for valuation models to be applied to similar properties within the county.

(2) Computerized cost approach using building cost and other factors to value properties by the cost approach as defined in this rule.

(3) Computerized market data approach where a subject property is valued by adjusting comparable sales to subject by adjustments based on regression or other analyses.

(4) Computerized income approach using economic and income factors to estimate value of properties.

(5) Computerized market analysis to provide trend factors used by appraisers as basis of market valuation.

(D) "Cost approach" - A method in which the value of a property is derived by estimating the replacement or reproduction cost of the improvements; deducting therefrom the estimated physical depreciation and all forms of obsolescence if any; and then adding the market value of the land. This approach is based upon the assumption that the reproduction cost new normally sets the upper limit of building value provided that the improvement represents the highest and best use of the land.

(E) "Effective tax rate" - Real property taxes actually paid expressed as a percentage rate in terms of actual true or market value rather than the statutory rate expressed as mills levied on taxable or assessed value. In Ohio four factors must be considered in arriving at the effective tax rate:

(1) The statutory rate in mills;

(2) The composite tax reduction factor as calculated and applied under section 319.301 of the Revised Code;

(3) The percentage rollback prescribed by section 319.302 of the Revised Code;

(4) The prescribed assessment level of thirty-five per cent of true or market value.

(F) "Income approach" - An appraisal technique in which the anticipated net income is processed to indicate the capital amount of the investment which produces the net income. The reliability of this technique is dependent upon four conditions:

(1) The reasonableness of the estimate of the anticipated net annual incomes;

(2) The duration of the net annual income, usually the economic life of the building;

(3) The capitalization (discount) rate;

(4) The method of conversion (income to capital).

(G) "Market data approach" - An appraisal technique in which the market value estimate is predicated upon prices paid in actual market transactions and current listings, the former fixing the lower limit of value in a static or advancing market (price wise), and fixing the higher limit of value in a declining market; and the latter fixing the higher limit in any market. It is a process of correlation and analysis of similar recently sold properties. The reliability of this technique is dependent upon:

(1) The degree of comparability of each property with the property under appraisal;

(2) The time of sale;

(3) The verification of the sale data;

(4) The absence of unusual conditions affecting the sale.

(H) "Qualified project manager" has the same meaning as division (A)(2) of section 5713.012 of the Revised Code.

(I) "Replacement cost"

(1) The cost that would be incurred in acquiring an equally desirable substitute property;

(2) The cost of reproduction new, on the basis of current prices, of a property having a utility equivalent to the one being appraised. It may or may not be the cost of a replica property;

(3) The cost of replacing unit parts of a structure to maintain it in its highest economic operating condition.

Last updated July 1, 2021 at 11:25 AM

History

Effective: July 1, 2021
Promulgated Under: Other

Ohio Adm.Code 5703-25-06 Equalization procedures.

(A) "True value in money" will be determined, in the first instance, by the county auditor as the assessor of real property in the county on consideration of all facts tending to indicate the current or fair market value of the fee simple estate, as if unencumbered of property including, but not limited to, the physical nature and construction of the property, its adaptation and availability for the purpose for which it was acquired or constructed or for the purpose for which it is or may be used, its actual cost, the method and terms of financing its acquisition, its value as indicated by reproduction cost less physical depreciation and all forms of obsolescence if any, its replacement cost, and its rental income-producing capacity, if any. The auditor will likewise take into consideration the location of the property and the fair market value of similar properties in the same locality.

(B) At least once each six-year period the county auditor of each county, in conformity with the provisions of section 5713.01 of the Revised Code, will view and appraise each parcel of real property and the improvements thereon in the county and this appraisal will reflect the one hundred per cent true value in money of each parcel appraised, and the auditor will place each parcel of real property on the tax duplicate at its "taxable value" which is thirty-five per cent of its true value in money.

(C) In the update year the county auditor will determine whether each parcel of real property and the improvements thereon is appraised at its true value in money, as defined in paragraph (A) of rule 5705-25-05 of the Administrative Code, as of tax lien date of said year. If the auditor finds that there has been either an increase or decrease in value, the auditor will adjust the tax records to show the true value in money of each parcel and the improvements thereon as well as the "taxable value" thereof, which "taxable value" will be thirty-five per cent of the true value in money thereof as redetermined by the county auditor as of tax lien date.

(D) In making this triennial update of the true value in money and the "taxable value" of each parcel of real property, the county auditor will be guided by sales of comparable property for a like use; the sales ratio and other related studies compiled by the tax commissioner for the three calendar years immediately preceding the update year; by the increase or decrease in current building costs and changes in construction technique both after the proper application of depreciation and obsolescence; by the increase or decrease in the net rental income, expenses, and services for comparable property since the year in which the preceding sexennial reappraisal had been completed; and such other indications of increase or decrease in value as may be pertinent, such as test or sample appraisals on a current basis, where sales of real property are limited or in question.

(E) In implementing any increase or decrease in valuation of real property pursuant to this rule or ordered by the tax commissioner pursuant to section 5715.24 of the Revised Code, the county auditor will, when practicable, increase or decrease the taxable valuation of parcels in accordance with actual changes in valuation of real property which occur in different subdivisions, neighborhoods, or among classes of real property in the county. The auditor may increase or decrease the true or taxable value of any lot or parcel of real estate in any township, municipal corporation, or other taxing district by an amount which will cause all real property on the tax list to be valued as required by law, or the auditor may increase or decrease the aggregate value of all real property, or any class of real property, in the county, township, municipal corporation, or other taxing district, or in any ward or other division of a municipal corporation by a per cent or amount which will cause all property to be properly valued and assessed for taxation in accordance with section 36, Article II and section 2, Article XII, Ohio Constitution, and sections 5713.03 and 5715.01 of the Revised Code, and this rule.

(F) In determining the true value in the year of the sexennial reappraisal or update year of any tract, lot, or parcel of real estate if such tract, lot or parcel has been the subject of an arm's length sale between a willing seller and a willing buyer within a reasonable length of time, either before or after the tax lien date, the auditor may consider the sale price of such tract, lot, or parcel to be the true value for taxation purposes. However, the sale price in an arm's length transaction between a willing seller and a willing buyer will not be considered the true value of the property sold if subsequent to the sale:

(1) The tract, lot, or parcel of real estate loses value due to some casualty;

(2) An improvement is added to the property.

(G) The lien for taxes attaches to all real property on the first day of January. If a building, structure, fixture or other improvement to land is under construction on January first of any year, its valuation will be based upon its value or percentage of completion as it existed on January first.

(H) When the county auditor revalues real property, notifications of the change in value will be made as provided in section 5713.01 of the Revised Code.

Last updated October 20, 2023 at 1:51 AM

History

Effective: October 20, 2023
Promulgated Under: Other

Ohio Adm.Code 5703-25-07 Appraisals.

(A) Each general reappraisal of real property in a county will be initiated by an entry and order of the tax commissioner directed to the county auditor of the county concerned which will specify the time for beginning and completing the appraisal as provided by section 5715.34 of the Revised Code. In January of each year the commissioner will adopt a journal entry wherein is set forth the status of reappraisals in the various counties and the tax year upon which the next reappraisal and the next triennial update of real property values in each county will be completed.

(B) Each lot, tract, or parcel of land, and all buildings, structures, fixtures, and improvements to land will be appraised by the county auditor according to true value in money, as it or they existed on tax lien date of the year in which the property is appraised. It will be the duty of the county auditor to so value and appraise the land and improvements to land that when the two separate values for land and improvements are added together, the resulting value indicates the true value in money of the entire property.

(C) Land will be valued in accordance with the provision of rule 5703-25-11 of the Administrative Code. All land will be valued according to its true value except where the owner has filed an application under section 5713.31 of the Revised Code for such land to be valued for real property tax purposes at the current value the land has for agricultural use, and the land is qualified to be so valued and taxed as provided in section 5713.30 of the Revised Code.

Buildings, structures, fixtures, and improvements to land will be valued in accordance with the provisions of rule 5703-25-12 of the Administrative Code.

(D) In arriving at the estimate of true value the county auditor may consider the use of any or all of the recognized three approaches to value:

(1) The market data approach - The value of the property is estimated on the basis of recent sales of comparable properties in the market area after allowance for variation in features or conditions. The use of the gross rent multiplier is an adaptation of the market approach useful in appraising rental properties such as apartments. This is most applicable to the types of property that are sold often.

(2) The income approach - The value is estimated by capitalizing the net income after expenses, including normal vacancies and credit losses. While the contract rental or lease of a given property is to be considered the current economic rent should be given weight. Expenses should be examined for extraordinary items. In making appraisals by the income approach for tax purposes in Ohio provision for expenses for real property taxes should be made by calculating the effective tax rate in the given tax district as defined in paragraph (E) of rule 5703-25-05 of the Administrative Code, and adding the result to the basic interest and capitalization rate. Interest and capitalization rates should be determined from market data allowing for current returns on mortgages and equities. The income approach should be used for any type of property where rental income or income attributed to the real property is a major factor in determining value. The value should consider both the value of the leased fee and the leasehold.

(3) The cost approach - The value is estimated by adding to the land value, as determined by the market data or other approach, the depreciated cost of the improvements to land. In some types of special purpose properties where there is a lack of comparable sales or income information this is the only approach. Due to the difficulties in estimating accrued depreciation, older or obsolete buildings value estimates often vary from the market indications.

(E) Ideally, all three approaches should be used but due to cost and time limitations, the cost approach as set forth in these rules is generally an appropriate first step in valuation for tax purposes. Values obtained by the cost approach should always be checked by the use of at least one of the other approaches if possible. In the event the auditor uses approaches of estimating true value other than the cost approach appropriate notations will be shown on the property record.

(F) The appraiser is urged to refer to standard appraisal references as well as the excellent publications by many trade associations, etc., which provide valuable income, expense, and other types of information that may be used as benchmarks in making the appraisal.

(G) Nothing set out in these rules will be construed to prohibit the county auditor from the use of advanced techniques, such as computer assisted appraisals, in the application of the three approaches to the appraisal of real property for tax purposes. However, such programs must be submitted to the tax commissioner for the approval on an individual basis.

Last updated October 20, 2023 at 1:51 AM

History

Effective: October 20, 2023
Promulgated Under: Other

Ohio Adm.Code 5703-25-08 Procedure prior to actual appraisal.

(A) Before commencing the appraisal, reappraisal, or revaluation of real property for the tax purposes in connection with a sexennial reappraisal, triennial update, or for annual maintenance each county auditor is required to appoint and employ the experts, deputies, clerks or other employees as the auditor deems necessary in the performance of the auditor's duties as assessor with the approval of the tax commissioner. The tax commissioner hereby grants such general approval. All such employees shall be appointed as deputies under the provisions of section 319.05 of the Revised Code. The tax commissioner may order any particular county auditor to seek, in writing, prior approval from the tax commissioner to appoint and employ any such experts, deputies, clerks or other employees, as the tax commissioner deems necessary, in the manner and for the time period the tax commissioner prescribes.

(B) A county auditor proposing to make an in-house sexennial reappraisal shall first prepare a detailed plan for making such appraisal which shall include, but is not limited to, the following provisions:

(1) Outline of appraisal procedure to be followed.

(2) Number of persons to be employed.

(3) The names and addresses of key persons and supervisors to be employed and their qualifications.

(4) Compensation and salaries to be paid and estimate of total cost.

(5) Period of employment.

(6) The date actual appraisal work is to begin.

(7) Date of completion of the appraisal, and the specific tax year for which the appraised values shall be placed on the tax duplicate.

(C) Such plan shall be prepared in duplicate, one copy to be kept in the office of the auditor and open to public inspection, and one copy to be filed with the department of taxation as a part of the foregoing application. Such plan, after being approved by the tax commissioner, shall not be departed from and there shall be no changes or alterations of the same without the written approval of an application to the tax commissioner setting forth specifically the changes, alterations, additions or subtractions requested by the county auditor.

(D) Progress of work reports shall be made during the course of the appraisal as determined and requested by the tax commissioner.

(E) A county auditor proposing to employ professional appraisal firms or an individual appraiser to make a complete or partial appraisal, either for a sexennial reappraisal, triennial update, or for annual maintenance, is required to request and obtain approval of the tax commissioner of any contract entered into with such appraisal firm and to file a copy of such contract with the tax commissioner as a part of the application of the county auditor to commence an appraisal, reappraisal or revaluation of real property for tax purposes.

(F) Such application shall contain a fully completed statement on department of taxation form 92, a copy of which form shall be supplied to each county auditor by the department of taxation. A contract between a county auditor and a professional appraisal firm shall include, but is not limited to, the following provisions:

(1) Date actual appraisal work is to begin.

(2) Date of completion of all appraisals provided for in the contract and submitting of all reports concerning same to the county auditor, and the specific tax year for which the appraised values shall be placed on the tax list and duplicate. The dates provided in paragraphs (F)(1) and (F)(2) of this rule shall conform to the dates previously fixed by the entry and order of the tax commissioner issued pursuant to rule 5703-25-07 of the Administrative Code and in accordance with section 5715.34 of the Revised Code.

(3) Provision that the contract shall not be effective until it is approved by the tax commissioner.

(4) Provision for the support of values and a retention of a part of the consideration of the contract by the county auditor as a guarantee of the support of values until all complaints have been resolved either by the board of revision or higher authority in an amount deemed to be satisfactory to the county auditor of not less than two per cent of the total consideration of the contract entered into. The support of values before the board of revision shall be by a responsible and competent employee of the appraisal firm. The support of values, upon appeals from the board of revision to the board of tax appeals or to a common pleas court shall be by a competent witness who can qualify as an expert and who has personally inspected the real property in litigation and has made his independent written appraisal thereof.

The following language shall be included in the support of value clause of all appraisal contracts:

"Within ten days after the filing of a notice of appeal from a decision of the county board of revision in any valuation complaint the company or individual appraiser shall be notified by the county auditor that such notice has been filed and the company shall see that a competent witness is well prepared to give proper evidence and testimony at such time as the appeal is heard by either the board of tax appeals or the court of common pleas and the witness must be one who can qualify as an expert and who has personally inspected the property in litigation and has made an independent written appraisal thereof."

(5) Provision that the services to be rendered under the contract, with the exception of the provision regarding the support of values, are to be completed in time to use the values of the real property in connection with the tax list and duplicate for the collection of taxes for the year in which the work is completed and that ten per cent of the contract price be retained by the county auditor. Upon completion of required services, other than support of values, and delivery of required reports said retainage shall be paid by the auditor to the appraisal firm less the retainage provided for the guarantee of support of values in paragraph (F)(4) of this rule. In the event all such services covered by the contract, except the support of values, are not completed upon the date of completion date agreed to, the contract shall provide that all payments thereafter are to be suspended at the time and withheld by the county auditor until there has been full compliance with the terms of the contract of the appraisal firm. Provisions shall be made in the contract for a penalty of not less than two hundred dollars per day as liquidated damages to begin on the day following the date of completion as agreed to in the contract and to apply for each and every day thereafter, excepting Saturdays, Sundays and legal holidays, up to and including the date of full and complete compliance by the appraisal firm of the terms of the contract. In the event that it is necessary for the county auditor to suspend all payments under the contract for the failure of the appraisal firm to complete all the services set forth in the contract on the date of completion agreed to therein, no further payments shall be made to the appraisal firm under the contract without the approval of the county prosecuting attorney and the approval of the department of taxation being first obtained.

The contract shall also provide that in the event the appraisal firm for any reason is unable to start the appraisal on the date set in the contract, then the firm shall immediately notify the tax commissioner and shall appear before the tax commissioner to explain, under oath, the reason or reasons it is unable to start the appraisal.

(6) The contract shall specifically provide that in the event that the appraisal firm maintains that the appraisal could not be completed within the time set in the contract because of an act of God or because of elements not within the control of the firm such as riots, war, organized work stoppage, or other delay not caused by the appraisal firm, then the tax commissioner shall hear the matter and if, in the tax commissioner's opinion, which shall be final, the delay was actually caused by any of the above stated reasons or for any other good reason over which the appraisal firm had no control, then the penalty herein provided for in the contract shall be dispensed with.

(7) As an alternate to the retainage for the guarantee of the support of values, required by paragraph (F)(4) of this rule and the ten per cent retainage and the minimum two hundred dollars a day penalty required by paragraph (F)(5) of this rule a performance bond for the full amount of the contract satisfactory to the county auditor, approved by the county prosecuting attorney and the tax commissioner will be accepted. The performance bond must provide for the completion of the contract including the guarantee of the support of values. A copy of the performance bond must be filed with the tax commissioner at the time of filing the appraisal contract.

(8) Provision that the employees of the appraisal firm meet the approval of the county auditor and that such employees shall be appointed deputies of the county auditor for the purpose of the reappraisal as well as acting as agents for the appraisal firm.

(9) Provision that clearly recites that there is to be no departure from the terms of the contract or no change or alterations of the same without the written approval of the tax commissioner being first obtained.

(10) Provision that progress of work reports shall be made during the course of the appraisal referred to in the contract as determined and requested by the tax commissioner on D.T.E. form 108.

(11) Provision that there is to be no subcontracting of all or any part of the services provided under the contract without the written consent of the county auditor and tax commissioner obtained prior to execution of the subcontract.

(G) A general sexennial reappraisal or revaluation of real property for tax purposes shall include all of the real property situated in the county and all types and classes of such real property shall be accounted for in a contract contained in the application on form 92 or in a detailed plan filed by the auditor pursuant to this rule as set forth above. No such application and no such sexennial reappraisal or revaluation of real property shall be approved by the tax commissioner unless all types and classes of real property (land, buildings, structure improvements and fixtures) are to be, or are, appraised, reappraised or revalued and placed on the tax list and duplicate for the same tax year.

(H) Each employee engaged in field work, including the employees furnished by an appraisal firm, shall be provided with a proper identification card by the county auditor.

(I) Paragraphs (A) to (H) of this rule are not to be construed as a prohibition or limitation upon the authority of the county auditor to include in a contract with an appraisal firm any additional provisions which, in the judgment of the auditor, will insure that the appraisal be performed and completed in the best possible manner, provided however, that such additional provisions shall be in writing and shall be included as a clause in the written contract.

(J) Professional appraisal firms or individual professional appraisers, prior to contracting with a county auditor to make a complete or partial appraisal either for a general reappraisal or for annual maintenance for real property tax purposes as provided by these rules, shall have submitted to the tax commissioner the following documents:

(1) A list of officers and management with their qualifications as of the fiscal year preceding the thirty-first of December of the year in which submitted; or if a newly formed corporation or partnership, a list of present officers and management with their qualifications.

(2) A list of all regional or project appraisal supervisors, or equivalent, that operate in Ohio.

(3) A list of taxing authorities with addresses for which the firm or individual professional appraiser has completed a general reappraisal of real property in the last ten years or the appraisal is currently in progress.

(4) A list of references from financial institutions.

(5) After the initial submission of such lists the firm or individual appraiser shall file such documents by the thirty-first of December of each year.

(K) After receiving the documents submitted by the appraisal firms and individual appraisers, the tax commissioner shall create a file of the same. The tax commissioner shall review the documents and may require an informal discussion with the representatives of each firm or individual appraiser who has filed such documents. After this review is complete, the tax commissioner shall issue an entry in the month of February of each year, listing all appraisal firms and individual appraisers that have created a proper file for that year. This file will be used by the tax commissioner when considering the approval or disapproval of a county auditor's application requesting authority to employ an appraisal firm or individual appraiser. This file will also be available to the county auditors for their use when selecting an appraisal firm or an individual appraiser.

(L) Nothing set out in this chapter shall be construed as a prohibition on the county auditor with respect to the auditor's duty to revalue and assess at any time all or any part of the real property in the county where the auditor finds that the same has changed in value or is not on the tax list at its taxable value as provided by section 5713.01 of the Revised Code.

(M) For purposes of seeking approval of assessment contracts by filing the form 92 with the tax commissioner, the county auditor should seek approval only for appraisal-related contracts, which include contracts for the following appraisal purposes: general reappraisal, triennial update, annual maintenance and new construction, consulting, current agricultural use valuation compliance, exempt study, land-based and aerial photography used directly for appraisal purposes, sales review, split-parcel appraisal, support of valuation, soil study, manufactured home appraisal, and any other appraisal services. The tax commissioner hereby grants approval to the county auditors, without having to file the form 92, to enter into assessment-related contracts that are not for appraisal services, which include contracts for the following purposes: mapping, aerial photography used in mapping, computers (hardware, software, and maintenance), Internet, technical support, copiers, fiber optics, microfilm, bond or debt service contracts, and any other assessment-related contracts that are not for appraisal services. The tax commissioner may order any particular county auditor to seek, in writing, prior approval from the tax commissioner to enter into assessment-related contracts that are not for appraisal services, as the tax commissioner deems necessary, in the manner and for the time period the tax commissioner prescribes.

Last updated July 1, 2021 at 11:26 AM

History

Effective: July 1, 2021
Promulgated Under: Other

Ohio Adm.Code 5703-25-09 Adoption and use of property records.

Each county auditor shall adopt a system of currently maintained property records for each lot, tract or parcel of real property in the county of the auditor's jurisdiction as provided in section 5713.03 of the Revised Code. Such property records shall be in either sheet, card, or electronic form as determined by the county auditor. The information contained on this record, in conjunction with the actual viewing of the property by the appraiser and other pertinent information available, shall be used in estimating the true value in money of each parcel of real property in the county. Each such record shall provide, insofar as applicable and/or practical, the following information:

(A) General:

(1) Name of the taxing district.

(2) Name and address of the owner of record.

(3) Legal description.

(4) Address and location of the property.

(5) Number of acres.

(6) Lot or tract frontage and depth..

(B) Residential, industrial and commercial land factors:

(1) Type of road or street.

(2) Utilities - gas, electric, water, sewer, septic tank.

(3) Sidewalk.

(4) Topography

(5) Shape of lot or tract.

(6) Type of neighborhood.

(7) Neighborhood trend - improving, static, declining, blighted.

(8) Industrial and commercial land shall be classified according to present or probable use as plant or building site, parking area, storage area, waste or dump area, etc. Appropriate unit values (acre, square foot, or front foot) shall be established for each type of use and the computation of value shown for each type of land, insofar as applicable.

(9) The computation of land value shall include the following, insofar as applicable:

(a) Frontage of lot or tract.

(b) Depth of lot or tract.

(d) Street or other unit price.

(e) Depth factor.

(f) Corrective factors - corner influence, alley influence, etc.

(1) Soil type.

(2) Topography

(3) Erosion.

(4) Drainage.

(5) Land use (number of acres) classified as follows:

(a) Homesite.

(b) Tillable land.

(d) Permanent pasture.

(e) Woodland.

(f) Waste.

(6) The computation of agricultural land value shall include the following insofar as applicable.

(a) Price per acre for each grade and use of land.

(b) Total land value for each tract of land different grade and use.

(D) Building details and construction features

(1) Coding as provided in rule 5703-25-10 of the Administrative Code.

(2) Type of construction.

(3) Dimensions.

(4) Grade.

(5) Age - actual or estimated.

(6) Condition.

(7) Foundation.

(8) Basement area - full; 3/4; 1/2; 1/4.

(9) Story heights.

(10) Exterior walls.

(11) Roofing.

(12) Floors.

(13) Interior finishing.

(14) Attic finish.

(15) Air conditioning (heating or cooling type).

(16) Plumbing.

(17) Tiling.

(18) Lighting.

(19) Number of rooms.

(20) Porches and additions.

(21) Fireplace.

(22) Built-in equipment - disposals, dishwashers, incinerators, etc.

(23) Alterations - betterments - improvements (date).

(24) Reproduction or replacement cost in dollars (units and price per unit) based on costs for similar buildings, structures, fixtures or improvements to land as provided in rule 5703-25-12 of the Administrative Code.

(25) Depreciation - type and rate used in per cent and amount of dollars.

(26) Obsolescence - type and rate used in per cent and amount of dollars.

(27) Space for computing building values.

(28) Space for sketch of buildings (property record cards used in appraising agricultural lands and buildings shall have sufficient space for describing and computing value of all farm buildings, including the dwelling)

(29) Each property record card, sheet, or form required to be prepared by this rule shall contain space for and shall have set out thereon the following information:

(a) The "true value in money" of the land, improvements to the land, and the total value of the parcel as appraised.

(b) The "true value in money" of the land, improvements to the land, and the total value of the parcel as adjusted each year by the county auditor in compliance with rule 5703-25-06 of the Administrative Code.

(c) The "taxable value" of the land, improvements to the land, and the total value of the parcel as calculated each year. In counties using computers taxable values may be shown on a data processing printout rather than on the property record card. The parcels should be listed in the same order as the tax list along with the following information: The parcel number of each property, the owner's name, the class of property, the previous year's true value, the new true value, and the new thirty-five per cent or tax value of land and improvements of each parcel of real property as well as the factor applied.

(E) Description of commercial and industrial property.

Each county auditor, insofar as applicable and/or practical, shall describe in detail on the record card, sheet, or form, and shall itemize, the precise commercial and industrial property that the auditor is valuing as "real property" as distinguished from "personal property."

(F) Additional information

The county auditor shall set forth on the property or appraisal record this additional data, insofar as applicable and/or practical.

(1) The date of any sale or transfer of the parcel involved since its prior appraisal.

(2) The sales price thereof from the statement of value required by division (A) of section 319.202 of the Revised Code.

(3) The annual rental income, both gross and net, earned or capable of being earned by commercial or investment type property.

(4) If, for any reason, any necessary information is not obtainable, or the property owner neglects or refuses to divulge such information, the facts and reasons therefor shall be noted on the appraisal card or sheet.

(5) The dates on which the parcel was measured, listed and reviewed with identification of the appraiser by name, initials or number.

The county auditor is authorized to use any additional information for property or appraisal records when the auditor deems it necessary. In the event the auditor uses other approaches of estimating true value than the cost approach, the auditor's reasonings and calculations should show on the appraisal record

(G) Provision shall be made for the coding of appraisal cards, sheets, or forms according to the use or coding of property as provided in rule 5703-25-10 of the Administrative Code.

Last updated November 15, 2023 at 2:14 PM

History

Effective: October 9, 2014
Promulgated Under: 5703.14

Ohio Adm.Code 5703-25-10 Classification of real property and coding of records.

(A) As required by section 5713.041 of the Revised Code, the county auditor shall classify each parcel of taxable real property in the county into one of the two following classifications, which are:

(1) Residential and agricultural land and improvements;

(2) All other taxable land and improvements, including commercial, industrial, mineral and public utility land and improvements.

(B) Each separate parcel of real property with improvements shall be classified according to its principal and current use, and each vacant parcel of land shall be classified in accordance with its location and its highest and best probable legal use. In the case where a single parcel has multiple uses the principal use shall be the use to which the greatest percentage of the value of the parcel is devoted. The following definitions shall be used by the county auditor to determine the proper classification of each such parcel of real property:

(1) "Agricultural land and improvements" - The land and improvements to land used for agricultural purposes, including, but not limited to, general crop farming, dairying, animal and poultry husbandry, market and vegetable gardening, floriculture, nurseries, fruit and nut orchards, vineyards and forestry.

(2) "Mineral land and improvement" - Land, and the buildings and improvements thereon, used for mining coal and other minerals as well as the production of oil and gas including the rights to mine and produce such minerals whether separated from the fee or not.

(3) "Industrial land and improvements" - The land and improvements to land used for manufacturing, processing, or refining foods and materials, and warehouses used in connection therewith.

(4) "Commercial land and improvements" - The land and improvements to land which are owned or occupied for general commercial and income producing purposes and where production of income is a factor to be considered in arriving at true value, including, but not limited to, apartment houses, hotels, motels, theaters, office buildings, warehouses, retail and wholesale stores, bank buildings, commercial garages, commercial parking lots, and shopping centers.

(5) "Residential land and improvements" - The land and improvements to the land used and occupied by one, two, or three families.

(C) Each property record of taxable real property shall be coded in accordance with the code groups provided for in this paragraph. Each property record of exempt property shall also be coded in accordance with the code groups for exempt property. The county auditor shall annually furnish to the tax commissioner an abstract of taxable values in which is set out in separate columns the aggregate taxable values of land and improvements in each taxing district for each of the major code groups provided for in this paragraph, and an abstract of exempt values in which is set out in separate columns the aggregate exempt values of land and improvements in each taxing district for each of the major exempt code groups provided for in this paragraph.

| Major Use and Codes | | | --- | --- | | Code No. Group | Use | | | | | 100 to 199 Incl. | Taxable agricultural real property | | 200 to 299 Incl. | Taxable mineral lands and rights | | 300 to 399 Incl. | Taxable industrial real property | | 400 to 499 Incl. | Taxable commercial real property | | 500 to 599 Incl. | Taxable residential real property | | 600 to 699 Incl. | Exempt real property | | 700 to 799 Incl. | Special tax abatements for improvements | | 800 to 899 | Public Utilities |

The first digit identifies the major use and the last two digits the sub-use or group. Parcels, other than exempt property, that are vacant (no structures or improvements present) shall be coded 100, 200, 300, 400 or 500 depending on the respective class unless part of an existing unit. Certain numbers are left blank to provide for future expansion.

| Use | | | --- | --- | | 100 | Agricultural vacant land | | 101 | Cash - grain or general farm | | 102 | Livestock farms other than dairy and poultry | | 103 | Dairy farms | | 104 | Poultry farms | | 105 | Fruit and nut farms | | 106 | Vegetable farms | | 107 | Tobacco farms | | 108 | Nurseries | | 109 | Green houses, vegetables and floraculture | | 110 | Agricultural vacant land "qualified for current agricultural use value" | | 111 | Cash - grain or general farm "qualified for current agricultural use value" | | 112 | Livestock farms other than dairy and poultry "qualified for current agricultural use value" | | 113 | Dairy farms "qualified for current agricultural use value" | | 114 | Poultry farms "qualified for current agricultural use value" | | 115 | Fruit and nut farms "qualified for current agricultural use value" | | 116 | Vegetable farms "qualified for current agricultural use value" | | 117 | Tobacco farms "qualified for current agricultural use value" | | 120 | Timber or forest lands not qualified for the Current Agricultural Use Value program pursuant to section 5713.31 of the Revised Code or the Forest Land Tax program pursuant to section 5713.23 of the Revised Code | | 121 | Timber land taxed at its "current agricultural use value" as land used for the growth of noncommercial timber pursuant to section 5713.30(A)(1) of the Revised Code | | 122 | Timber land taxed at its "current agricultural use value" as land used for the commercial growth of timber | | 123 | Forest land qualified for and taxed under the Forest Land Tax program in compliance with the program requirements in place prior to November 7, 1994 | | 124 | Forest land qualified for and taxed under the Forest Land Tax program in compliance with the program requirements in place on or after November 7, 1994 | | 190 | Other agricultural use | | 199 | Other agricultural use "qualified for current use value" | | 210 | Coal lands - surface and rights | | 220 | Coal rights - working interest | | 230 | Coal rights - separate royalty interest | | 240 | Oil and gas rights - working interest | | 250 | Oil and gas rights - separate royalty interest | | 260 | Other minerals | | 300 | Industrial - vacant land | | 310 | Food and drink processing plants and storage | | 320 | Foundries and heavy manufacturing plants | | 330 | Manufacturing and assembly, medium | | 340 | Manufacturing and assembly, light | | 350 | Industrial warehouses | | 360 | Industrial truck terminals | | 370 | Small shops (machine, tool & die, etc.) | | 380 | Mines and quarries | | 390 | Grain elevators | | 399 | Other industrial structures | | 400 | Commercial - vacant land | | 401 | Apartments - 4 to 19 rental units | | 402 | Apartments - 20 to 39 rental units | | 403 | Apartments - 40 or more rental units | | 410 | Motels and tourist cabins | | 411 | Hotels | | 412 | Nursing homes and private hospitals | | 415 | Trailer or mobile home park | | 416 | Commercial camp grounds | | 419 | Other commercial housing | | 420 | Small (under 10,000 sq. ft.) detached retail stores | | 421 | Supermarkets | | 422 | Discount stores and junior department stores | | 424 | Full line department stores | | 425 | Neighborhood shopping center | | 426 | Community shopping center | | 427 | Regional shopping center | | 429 | Other retail structures | | 430 | Restaurant, cafeteria and/or bar | | 435 | Drive-in restaurant or food service facility | | 439 | Other food service structures | | 440 | Dry cleaning plants and laundries | | 441 | Funeral homes | | 442 | Medical clinics and offices | | 444 | Full service banks | | 445 | Savings and loans | | 447 | Office buildings - 1 and 2 stories | | 448 | Office buildings - 3 or more stories - walk up | | 449 | Office buildings - 3 or more stories - elevator | | 450 | Condominium office units | | 452 | Automotive service station | | 453 | Car washes | | 454 | Automobile car sales and services | | 455 | Commercial garages | | 456 | Parking garage, structures and lots | | 460 | Theaters | | 461 | Drive-in theaters | | 462 | Golf driving ranges and miniature golf courses | | 463 | Golf courses | | 464 | Bowling alleys | | 465 | Lodge halls and amusement parks | | 480 | Commercial warehouses | | 482 | Commercial truck terminals | | 490 | Marine service facilities | | 496 | Marina (small boat) | | 499 | Other commercial structures | | 500 | Residential vacant land | | 510 | Single family dwelling | | 520 | Two family dwelling | | 530 | Three family dwelling | | 550 | Condominium residential unit | | 560 | House trailers or mobile homes affixed to real estate | | 599 | Other residential structures |

In the residential coding the third or last digit indicates the size of tract used for residential property.

| 0 | Platted Lot | | | --- | --- | --- | | 1 | Unplatted | -0 to 9.99 acres | | 2 | " | 10 to 19.99 acres | | 3 | " | 20 to 29.99 acres | | 4 | " | 30 to 39.99 acres | | 5 | " | 40 or more acres |

| 600 | Exempt property owned by United States of America | | --- | --- | | 610 | Exempt property owned by state of Ohio | | 620 | Exempt property owned by counties | | 630 | Exempt property owned by townships | | 640 | Exempt property owned by municipalities | | 645 | Exempt property owned or acquired by metropolitan housing authorities | | 650 | Exempt property owned by board of education | | 660 | Exempt property owned by park districts (public) | | 670 | Exempt property owned by colleges, academies (private) | | 680 | Charitable exemptions - hospitals - homes for aged, etc. | | 685 | Churches, etc., public worship | | 690 | Graveyards, monuments, and cemeteries | | 700 | Community urban redevelopment corporation tax abatements (R.C. 1728.10) | | 710 | Community reinvestment area tax abatements | | 720 | Municipal improvement tax abatements (R.C. 5709.41) | | 730 | Municipal urban redevelopment tax abatements (R.C. 725.02) | | 740 | Other tax abatements (R.C. 165.01 and 303.52) | | 800 | Agricultural land and improvements owned by a public utility other than a railroad | | 810 | Mineral land and improvements owned by a public utility other than a railroad | | 820 | Industrial land and improvements owned by a public utility other than a railroad | | 830 | Commercial land and improvements (including all residential property) owned by a public utility other than a railroad | | 840 | Railroad real property used in operations | | 850 | Railroad real property not used in operations | | 860 | Railroad personal property used in operations | | 870 | Railroad personal property not used in operations | | 880 | Public Utility personal property other than rail-roads |

(D) The coding system provided in this rule shall be effective for tax year 1985.

(E) Nothing contained in this rule however, shall cause the valuation of any parcel of real property to be other than its true value in money or be construed as an authorization for any parcel of real property in any class in any county to be valued for tax purposes at any other value than its "taxable value" as set out in rule 5703-25-05 of the Administrative Code.

Last updated November 15, 2023 at 2:14 PM

History

Effective: October 3, 2016
Promulgated Under: Other

Ohio Adm.Code 5703-25-11 Valuation of land.

(A) General - All land shall be appraised at its true value in money as of tax lien date of the year in which the appraisal or update of values is made. In arriving at the true value in money the county auditor shall consider, along with other factors, not only the present use of the land but also its highest and best probable legal use consistent with existing zoning and building regulations. The requirement that land be classified under rule 5703-25-10 of the Administrative Code according to its principal use shall not affect the requirement of this rule that it be appraised at its highest and best probable legal use. The present improvements to the land, the demand and supply of land, the demand and supply of land for such use, financing method, the length of time until developed and the cost of development are factors that should be considered in determining the highest and best probable legal use of the land.

(B) All relevant facts tending to influence the market value of land should be considered, including, but not limited to, size, shape, topography, soil and subsoil, drainage, utility connections, street or road, land pattern, neighborhood type and trend, amenities, zoning, restrictions, easements, hazards, etc.

(1) The preferred method is the market data or comparative process requiring the collection and analysis of actual arms-length sales and other market information on comparable sites made within a reasonable time of the date of the appraisal with adjustments for variations. This method should be used except in unusual circumstances.

(2) The allocation method in which the land value is estimated by subtracting the value of the improvements from a known sale price. This is primarily used in an area where there are very few sales of vacant land and the improvements to land are of a generally uniform type.

(3) The land residual method estimates land value by capitalizing the residual income imputable to land as derived from actual or hypothetical new improvements assuming highest and best use. This method is useful in arriving at land value when there are few or no sales or as a check against the market approach.

(4) The development method can be used in valuing land ready for development by estimating value as fully developed and subtracting the development, administrative and entrepreneurial costs.

(D) The county auditor shall deduct from the value of each separate parcel of real property the amount of land occupied and used by a canal or used as public highway as provided in section 5713.04 of the Revised Code.

(E) Agricultural - Agricultural lands shall be classified and valued according to their characteristics and capabilities for use, based primarily on what they will produce under average conditions and typical management in the locality. Assessors should obtain and use information available relating to soil classification, land capabilities, land use and soil maps, production records, price records and other information from the Ohio state university, Ohio agricultural research and development center, county A.S.C., soil conservation service, soil and water conservation districts and other sources. All agricultural lands shall first be valued according to their true value. Then if the owner applies to have the land valued according to its current value the land has for agricultural use the land may be valued according to rules 5703-25-30 to 5703-25-36 of the Administrative Code

(F) Industrial - Additional factors that shall be considered in valuing industrial land are the convenience of location to shipping and labor sources as well as the proximity to related industries. Land not used in manufacturing shall be valued according to its value for use as parking lots, storage, waste or dump area, or other uses both present and probable.

(G) Commercial - In the valuation of commercial sites the location in the trading area, the purchasing power of the entire area, and the relative availability of sites shall be considered in addition to previously mentioned factors.

(H) Residential - Residential sites located in suburban and rural areas shall be valued by using the same factors that are used in valuing urban residential lands with the same facilities and amenities.

(I) Coal, mineral deposits, oil and gas - Coal and minerals shall be valued in the same manner and on the same price level as other real property. Some of the factors that shall be considered in valuing coal and mineral deposits are the quality and extent of the deposit, the active working area which at current production will be mined within five years, active reserves that will not be worked for five to ten years, inactive reserves that will not be worked until after ten years, and mined out or depleted areas.

Separate oil and gas rights shall be valued in accordance with the annual entry of the tax commissioner in the matter of adopting a uniform formula in regard to the valuation of oil and gas deposits in the eighty-eight counties of the state.

When rights to coal, minerals, oil and gas have not been separated from the fee, the value of the mineral deposits shall be added to the value of the surface.

(J) Pricing units and preparation of land unit price schedules, and depth tables. Land unit prices (price per acre, square foot or front foot) used shall be those appropriate and typically used in the market in pricing similar land. Generally per acre prices shall be used in pricing agricultural lands. Large industrial, commercial or residential tracts may be priced by the use of per acre or square foot prices. Front foot prices shall be used, generally, for the pricing of residential and commercial lots and lands in congested areas. Regardless of the pricing unit used, the result shall be the true value in money of the land.

(K) Each county auditor shall prepare, or have prepared, under the auditor's direction and supervision:

(1) Land schedules, setting forth land unit prices to be used in appraising the different classes of land.

(2) Tables, where applicable, showing depth, corner and alley influence factors, etc., to be used in conjunction with the unit prices.

(3) Tax maps that shall accurately indicate the area, acreage or dimensions of each lot, tract, or parcel of land in the county, together with the name of the owner, if possible, and the lot section, or survey number, showing the unit price used in pricing the various types of land.

One set of all land unit price schedules, depth, corner and alley influence tables, and tax maps with unit prices shall be kept on file in the county auditor's office, open for public inspection during regular office hours.

Last updated November 15, 2023 at 2:15 PM

History

Effective: October 3, 2016
Promulgated Under: Other

Ohio Adm.Code 5703-25-12 Valuation of buildings, structures, fixtures and improvements to land.

(A) General - The true value of improvements may be determined by either the market data, income or cost approach. Regardless of the approach used the total of the depreciated value of the improvements to land and the "true value" of the land should be the "true value" of the property as a whole, as defined in rule 5703-25-05 of the Administrative Code. While the cost approach will generally be used one of the other approaches should be used as a check on whether the determination of depreciation or obsolescence is correct.

In arriving at the value of the depreciated improvements by the market data approach the value of the entire property is estimated by the use of comparable sales after allowing for variations. The land value determined according to rule 5703-25-11 of the Administrative Code is then subtracted to arrive at the value of the improvements in their present or depreciated condition.

The building residual technique is used to estimate improvement values by the income approach. After land value is arrived at the value of the improvements is estimated by capitalizing the net income remaining after deduction for all expenses including interest on the land value.

In the use of the cost approach to estimate improvement value the replacement cost new is first estimated. From the cost new deductions are made for depreciation including physical deterioration, functional and economic obsolescence to arrive at the value of the improvements in their present condition.

(B) When a general sexennial reappraisal is being made by the county auditor under the provisions of section 5713.01 of the Revised Code, all prices used in determining the replacement cost of buildings, structures, fixtures and improvements to land will be prices prevailing during the year immediately preceding the tax lien date of the year the reappraisal is to be effective for tax purposes.

The county auditor is directed and ordered to prepare, or have prepared under the auditor's supervision, schedules of all building costs that will be used in appraising buildings, structures, fixtures and improvements to land in the county. The auditor will prepare separate schedules for residential, commercial, industrial and farm buildings. Building cost schedules will be based on the prices of labor, materials, architects' or engineers' fees, plus contractors' overhead and profit, and other charges for the class, type or grade of building in the area to be appraised prevailing during the period specified by the preceding paragraph

Residential building cost schedules will include at least six grades of construction. Each grade will be identified by number or letter. Additional grading may be obtained by adding or deducting a percentage for each grade by using a plus or minus sign, followed by the per cent used.

Farm building cost schedules will include all farm buildings (exclusive of the farm dwelling which will be priced according to the residential schedule) including general and special type barns, milk houses, machinery sheds, granaries, corn cribs, silos, hog houses, and other miscellaneous farm buildings.

The various schedules are to be used in estimating the replacement cost of each building, fixture or improvement to land thereto. In the third calendar year following the sexennial reappraisal each value will be updated, either by percentage or otherwise so that it accurately reflects current market value in the county as of January of the current tax year. The selection of the method of updating values will depend on the manner in which the triennial update or equalization of true and taxable values required by rule 5703-25-06 of the Administrative Code is performed. The method selected should be one that will insure that the taxable values of new buildings, etc. will equal thirty-five per cent of the current true value in the same uniform manner as all other real property.

One set of all building schedules of every class, type and grade will be kept on file in the county auditor's office and open for public inspection during the regular office hours

(C) Building inspection - Each building will be measured to determine the number of square or cubic feet it contains, and a sketch will be drawn on the property record card. Major buildings such as dwellings and barns will be sketched on the property record card with other minor buildings to be numbered, the number encircled to appear in the space for the sketch of buildings in its proper relation to the dwelling and barn, etc.

The exterior, and if possible, the interior of each building will be inspected with notations being made on the record card of construction features, physical conditions, and other factors that would affect value. Each building will be graded according to quality of construction.

Each county auditor will describe in detail on the record card or sheet, and will itemize, the precise industrial and commercial property that the auditor is valuing as "real property" as distinguished from "personal property." In questions of the classification of property as real or personal the county auditor will be guided by rule 5703-3-01 of the Administrative Code.

(D) Estimation of depreciation and obsolescence - When the cost approach is used in appraising the buildings an estimate will be made of depreciation including all types of obsolescence that are to be deducted from replacement cost new of the improvements so that the total value of depreciated improvements and the land will be equal to the true value of the entire property as defined in rule 5703-25-05 of the Administrative Code.

(1) In arriving at the true value, among other factors, the utility of the improvements to the land will be considered. In the appraisal of commercial or investment type property the county auditor is directed to consider the terms of all outstanding leases and the amount, quality, and durability of income that the property would produce under normal management and the actual amounts being currently returned on similar investments, and to reflect these factors in the final determination of true value in money in any uniform logical way that the auditor may see fit.

(2) Depreciation and obsolescence will depend upon the following three factors:

(a) Physical depreciation is a loss in value resulting from physical deterioration due to age, wear and tear, disintegration, and the action of the elements. The amount deducted for physical depreciation will reflect loss in value due to general deterioration and the need for rehabilitation.

(b) Functional obsolescence is a loss in value resulting from poor planning, overcapacity or undercapacity, due to age, size, style, technological improvements or other causes within the property. There are two types of functional obsolescence:

(i) Curable functional obsolescence which may be estimated at the amount it would cost to modernize the improvements.

(ii) Incurable functional obsolescence which may be estimated by considering the amount it would cost to replace the improvements with a modern structure suitable for the same purpose, or by the capitalization of the loss of income due to the degree of in-utility or extraordinary operating costs related to the structure.

(c) Economic obsolescence is a loss due to external economic forces, such as changes in the use of land, location, zoning or legislative enactments that might restrict or change property rights and values and other similar factors.

(3) In arriving at the rate of depreciation and obsolescence to be applied to buildings, structures, fixtures, and improvements to land, the auditor will consider, among other things, the following:

(a) The rental income and sale prices in the current market for properties of similar type and condition.

(b) Type of construction.

(d) Type and extent of replacements, restorations, or modernizations.

(e) Age.

(f) Actual use compared to use for which constructed.

(g) Location.

(h) Rapidly changing technological improvements in construction methods.

(i) Rapidly changing technological changes in manufacturing processes.

(j) Changes in consumer demand and other external economic forces.

(k) Any other recognized factor which may have a particular applicability in a given case.

Last updated October 20, 2023 at 1:51 AM

History

Effective: October 20, 2023
Promulgated Under: Other

Ohio Adm.Code 5703-25-13 Review of appraisal.

(A) Following the initial inspection and extension of true values on the property record card, and prior to submitting the returns to the county board of revision as required by section 5715.16 of the Revised Code, each parcel of real property will be reviewed by competent appraisers. The purpose of this review is to insure that each property has been valued uniformly in relation to other properties at true value as defined in rule 5703-25-05 of the Administrative Code, so that when the values of land and improvements are added together, the resulting value indicates the true value in money of the entire property.

(B) In making this review all factors affecting value will be considered including:

(1) Mathematical accuracy.

(2) Land classification and pricing

(3) Listing accuracy:

(a) Building measurements

(b) Construction features

(d) Use of proper price schedule.

(4) Proper application of depreciation and obsolescence.

(5) Sales of comparable property for like use.

(C) If the reviewer finds that a property or properties have not been valued at true value, the reviewer will make the corrections needed to obtain the correct values and will place said corrected values on the property record.

(D) As part of the appraisal review the county auditor will prepare or have prepared an analysis of recent real estate transactions comparing the appraisal value to the prices paid for real property to determine whether all real property in the different subdivisions, neighborhoods and classes have been appraised uniformly at true value.

Last updated October 20, 2023 at 1:51 AM

History

Effective: October 20, 2023
Promulgated Under: Other

Ohio Adm.Code 5703-25-14 Documents to be filed in the county auditor's office.

The following shall be on file in the county auditor's office and open for public inspection during regular office hours after completion of the reappraisal:

(A) One set of all tax maps showing land unit prices.

(B) One set of depth and other land price schedules.

(D) Property record card or sheet for each parcel of real property.

(E) In the event other approaches such as computer assisted appraisals, are used, as provided in rule 5703-25-07 of the Administrative Code documents describing the method and application.

Last updated November 15, 2023 at 2:15 PM

History

Effective: October 3, 2016
Promulgated Under: Other

Ohio Adm.Code 5703-25-16 Procedure after reappraisal or update.

(A) Procedure after sexennial reappraisal:

(1) After the appraisal is completed the county auditor will total the "true value in money" of land, building and total of agricultural, industrial, commercial and residential property in each taxing district, and will prepare and file an abstract of these true values with the department of taxation, which abstract is to be considered as a tentative abstract of appraised values only. Each tentative abstract should be submitted prior to the second Monday in June.

(2) In order to achieve uniformity of assessment among the eighty-eight counties, and keeping in mind that there are variations in cost schedules, depreciation schedules, etc., used by the various appraisal firms, the staff of the department of taxation, upon receipt of the "appraised value" abstract as prepared and filed by a county auditor, will review the appraisal in the light of the information it has collected relative to recent real property sales and other information relating to real property values to determine whether all real property has been uniformly appraised at "true value in money" as defined by rule 5703-25-05 of the Administrative Code. After such review the staff will recommend to the tax commissioner whether the commissioner should accept the reported appraisal value as a reasonable estimate of true value as of tax lien date of the year of reappraisal or reject the values and order the auditor to make the changes needed to insure that the appraisal values are a reasonable estimate of true value in money as of tax lien date of the year of reappraisal. The county auditor will be informed of the staff's recommendation.

(3) The commissioner will then transmit to the auditor a tentative order, which is not a final order of the commissioner, which will contain the recommendations of the commissioner as to any changes in aggregate values, or in any class thereof, in the county or any taxing district thereof. After a review of such tentative order the auditor will submit to the commissioner, on or before the first Monday of August, a final abstract of taxable values and a final abstract of the current year's true value of land valued under section 5713.31 of the Revised Code, as both are required under section 5715.23 of the Revised Code. The commissioner will review the final abstracts and make the determinations required by section 5715.24 of the Revised Code and issue a final order, if necessary, under section 5715.25 of the Revised Code.

(4) Unless such an order is appealed, as provided in section 5715.251 of the Revised Code, the county auditor will then determine the "taxable value" of each and every parcel of real property by multiplying the true value of each and every parcel in each and every class of real property in the county by thirty-five per cent as prescribed by rule 5703-25-06 of the Administrative Code.

(B) Procedure after update:

(1) The county auditor of a county in the third calendar year following a general reappraisal will analyze local real estate sales that have occurred in the last three preceding calendar years together with other related information pertaining to real property values in the county. These studies should be designed to enable the auditor to increase or decrease the taxable valuation of parcels in accordance with actual changes in valuation of real property which occur in different subdivisions, neighborhoods, or among classes of real property in the county.

(2) As early as possible in the third calendar year following a sexennial reappraisal the department of taxation will notify the county auditor of its preliminary estimate of changes in real property tax values needed for that tax year. This estimate will be based on an analysis of real property sales that occurred in the county during the preceding three calendar years and other studies of real property values. These estimates should be compared to information available locally including the auditor's own studies of the local real estate market and other related factors.

(3) After consideration of available information the county auditor will proceed to comply with paragraphs (C) to (F) of rule 5703-25-06 of the Administrative Code to increase or decrease the true and taxable value of each parcel of real property in the county by an amount which will cause all real property on the tax list and duplicate to be valued as required by law.

(1) If a county auditor is not satisfied with the recommendations or preliminary estimates provided by the staff of the department of taxation under paragraph (A) or (B) of this rule a conference with the commissioner may be requested. Such application will be made by the filing of a written application within thirty days after receipt of the recommendation. The application will specify the reasons for requesting such a conference.

(2) After complying with paragraph (A) or (B) of this rule the county auditor will then prepare and file with the department of taxation the statutory abstract of taxable real property value and the abstract of current agricultural use values required by section 5715.23 of the Revised Code, wherein there is to be set out the "taxable value" of the real property in the county.

(3) The county auditor will not lay before the county board of revision the returns of the assessment of real property for the current year in accordance with the provisions of section 5715.16 of the Revised Code, nor the abstract required to be filed with the tax commissioner under the provisions of sections 5715.23 and 5715.24 of the Revised Code, until and unless the property records required by rule 5703-25-09 of the Administrative Code for each and every parcel are in the auditor's possession and open to the inspection of any interested person.

(4) On the general tax list and duplicate of real and public utility property compiled and prepared under the pertinent provisions of section 319.28 of the Revised Code, only the taxable value of the land, building and total of the real property will be listed. The taxable value of land qualified to be taxed at its current agricultural use value, pursuant to section 5713.30 of the Revised Code to be entered on said tax list and duplicate will be thirty-five per cent of its current agricultural use value as determined under rules 5703-25-30 to 5703-25-36 of the Administrative Code. The replacement cost figures, depreciation figures, etc., will be placed on the auditor's property record as provided in rule 5703-25-09 of the Administrative Code. Changes in true and taxable values made in the update year in compliance with paragraphs (C) to (F) of rule 5703-25-06 of the Administrative Code will also be recorded on the property record. Any changes ordered by the board of revision, board of tax appeals or tax commissioner in said taxable values will, together with the date of change, be noted on the tax list and duplicate as provided in section 319.28 of the Revised Code, and the property record as required by rule 5703-25-09 of the Administrative Code.

Last updated October 20, 2023 at 1:51 AM

History

Effective: October 20, 2023
Promulgated Under: Other

Ohio Adm.Code 5703-25-18 Partial exemption from real property tax.

(A) Real property that is not intended primarily for use in a business activity shall qualify for a partial exemption from real property taxation pursuant to section 319.302 of the Revised Code. For purposes of this partial exemption, "business activity" includes all uses of real property, except:

(1) Farming;

(2) Leasing property for farming;

(3) Occupying or holding property improved with single-family, two-family, or three-family dwellings;

(4) Leasing property improved with single-family, two-family, or three-family dwellings; and

(5) Holding vacant land that the county auditor determines will be used for farming or to develop single-family, two-family, or three-family dwellings.

(B) For purposes of this partial exemption, "farming" does not include land used for the commercial production of timber that is receiving the tax benefit under section 5713.23 or 5713.31 of the Revised Code and all improvements connected with such commercial production of timber.

(C) In determining whether real property is qualified for the partial exemption, each separate parcel of real property shall be classified according to its principal and current use, and each vacant parcel of land shall be classified in accordance with its location and its highest and best probable legal use. In the case where a single parcel has multiple uses the principal use shall be the use to which the greatest percentage of the value of the parcel is devoted.

(D) In determining whether real property is qualified for the partial exemption, the county auditor shall be guided by the property record of taxable real property coded in accordance with the code groups provided for in paragraph (C) of rule 5703-25-10 of the Administrative Code.

Last updated November 15, 2023 at 2:15 PM

History

Effective: September 11, 2017
Promulgated Under: Other

Ohio Adm.Code 5703-25-20 Procedure for valuation of federally subsidized residential rental property.

(A) Definitions related to the valuation methodology of federally subsidized residential rental property:

(1) "Adjusted capitalization rate" means the capitalization rate plus the tax additur to account for the millage rate for the specific subject parcel, less a 1% investment risk factor.

The tax additur is calculated by dividing the most recent annual property taxes as of the thirty-first day of December in the year prior to the March first deadline found in division (C) of section of 5713.031 of the Revised Code by the most recent value as of the thirty-first day of December in the year prior to the March first deadline found in division (C) of section 5713.031 of the Revised Code.

(2) "Audited" means examined to check the accuracy of records or financial accounts.

(3) "Capitalization rate" means the rate set by the tax commissioner and based on the most recent published rate applicable to the latest capitalization rate for multifamily apartments published by a reputable commercial source available as of the first business day of January of the year of assessment.

(4) "Construction-only phase" means the phase of property development in which no components of the property are operational.

(5) "Core expenses" means the expenses associated with operating the property, but does not include utility expenses, replacement reserve fund or account contributions, real estate taxes, depreciation, and amortization expenses and replacement of short-term capitalized assets.

(6) "Federally subsidized residential rental property" means property to which one or more of the of the following apply:

(a) It is part of a qualified low-income housing project, through its compliance and extended use period, as those terms are defined in section 42 of the Internal Revenue Code, or any other period during which it is similarly restricted under section 42 of the Internal Revenue Code.

(b) It receives assistance pursuant to section 202 of the "Housing Act of 1959," 12 U.S.C. 1701q, and remains restricted pursuant to that section.

(c) Property that receives assistance pursuant to Section 811 of the "Cranston-Gonzalez National Affordable Housing Act," 42 U.S.C. 8013, and remains restricted pursuant to that section;

(d) Property that receives project-based assistance pursuant to section 8 of the "United States Housing Act of 1937," 42 U.S.C. 1437f, and remains restricted pursuant to that section;

(e) Property that receives assistance pursuant to section 515 of the "Housing Act of 1949," 42 U.S.C. 1485, and remains restricted pursuant to that section;

(f) Property that receives assistance pursuant to section 538 of the "Housing Act of 1949," 42 U.S.C. 1490p-2, and remains restricted pursuant to that section;

(g) Property that receives assistance pursuant to section 521 of the "Housing Act of 1949," 42 U.S.C. 1490a, and remains restricted pursuant to that section.

(7) "Gross potential rent" means the full rent potential for the property for the full fiscal year and is calculated by adding the monthly rent for each unit and multiplying the resulting sum by twelve to determine the maximum rental income that the property would generate if one hundred per cent of the building were fully leased for the entire year.

(8) "Net operating income" means operating income less operating expenses.

(9) "Operating expenses" means cost to operate the building, including the presumptive allowance for expenses plus all utility expenses plus the allowance for replacement reserves. In calculating operating expenses, it is presumed that operating expenses equals forty-eight per cent of the operating income plus utility expenses, plus five per cent allowance for replacement reserves. Non-operating expenses such as depreciation and amortization expenses and replacement of short-term capitalized assets are not included in operating expenses. The presumptive calculation of operating expenses may be exceeded by evidence demonstrating the actual expenses of the property.

(10) "Operating income" means gross potential rent plus other income, less the allowance for vacancy loss and unpaid rent.

(a) Calculated as the gross potential rent, less a four per cent (of gross potential rent) allowance for vacancy loss and a three per cent (of gross potential rent) allowance for unpaid rent losses.

(b) The presumptive amounts may be exceeded by evidence demonstrating the actual income of the property.

(11) "Other income" and "Income derived from other sources" means income other than rental income from residential units, including only rent from commercial tenants, interest income from operating, insurance escrow, real estate tax escrow, tenant security deposit escrow accounts, laundry and vending income, tenant charges, non-sufficient fees, late fees, and application fees so long as the income is attributable to the operations of the property.

(12) "Owner" means the duly authorized representative of the partnership, LLC, or entity that owns the federally subsidized residential rental affordable housing property.

(13) "Replacement reserve" means the required deposits that must be made into a restricted reserve account, intended to address future capital needs of the property.

(a) Replacement reserves may be required by the lender, the regulatory agency, or the investor as a condition of the original investment in the property.

(b) Replacement reserve is presumed to be five per cent of the gross rent potential.

(14) "Stabilized" means the property is no longer under development.

(15) "Total value" means the value of the property as calculated pursuant to the formula in division (A)(4) of section 5715.01 of the Revised Code.

(16) "Unimproved land value" means the land value for each parcel as reflected on the most recent tax list.

(17) "Unpaid rent" means monies that were charged for rent but that were deemed uncollectible, resulting in a bad-debt write-off.

(a) It is presumed that unpaid rent is three per cent of the gross rent potential.

(b) The presumptive amount may be exceeded by evidence demonstrating the actual income of the property.

(18) "Utilities" or "Utility expenses" means the sum of expenses paid by the owner that are attributable to electric, gas, water, and sewer charges, and may also include propane service or alternate energy sources should traditional utility services not be available at the property.

(19) "Vacancy loss" means the allowance of lost revenue attributable to periodic unoccupied or off-line units.

(a) It is presumed that vacancy loss is four per cent of the gross rent potential.

(b) The presumptive amount may be exceeded by evidence demonstrating the actual income of the property.

(B) Procedure for filing information pursuant to section 5713.031 of the Revised Code by the owner of a federally subsidized residential rental property.

(1) Method of filing

(a) An owner of federally subsidized residential rental property may file with the county auditor the information listed in division (B) of section 5713.031 of the Revised Code via mail, email, courier, hand delivery, or any other method agreed to by the county auditor of the county in which the property is located.

(b) The information that is to be filed pursuant to section 5713.031 of the Revised Code will be timely filed:

(i) In the instance it is filed via mail or courier, if it is postmarked or otherwise time-stamped on or before eleven fifty-nine pm eastern standard time on the first day of March;

(ii) In the instance it is filed via email, if the date and time the emailed evidence is received by the county auditor is no later than eleven fifty-nine pm on the first day of March;

(iii) In the instance it is filed via hand delivery, if it is delivered in person to the county auditor by the end of the business day on or before the first day of March; the county auditor will provide the owner or owner's representative with confirmation of having received the information; or

(iv) In the instance it is filed via any other method agreed to by the county auditor of the county in which the property is located, if it is delivered on or before the first day of March in the method and pursuant to the terms agreed to by that county auditor.

(2) Applicability of requirement to file.

(a) In accordance with division (B) of section 5713.031 of the Revised Code, the requirement to file before a property is placed in service begins:

(i) For property described in paragraph (A)(5)(a) of this rule, upon the closing of the partnership;

(ii) For property subject to a regulatory agreement and rental contract or schedule, within thirty days of issuance of the regulatory agreement and rental contract or schedule;

(iii) For all other property, within thirty days of the issuance of the certificate of occupancy.

(b) An owner of federally subsidized residential rental property will submit the information by the first day of March in each year to which section 5715.24 of the Revised Code applies in the county.

(3) Forms. In filing the information, an owner of federally subsidized residential rental property will include:

(a) A transmittal page adopted by the Ohio department of taxation that includes:

(i) The parcel numbers;

(ii) The county in which the property is located;

(iii) The owner's name, mailing address, phone number, and email address;

(iv) The property's address and number of units;

(v) The categories of federally subsidized rental property the property meets; and

(vi) An option for the owner to:

(a) Indicate that the owner desires to challenge the presumptive amounts under division (A)(4)(a) or (A)(4)(b) of section 5715.01 of the Revised Code, should the owner be ready to do at the time of submission; and

(b) Provide the owner's proposed valuation for the property, should the owner be prepared to do so at the time of submission.

(4) Supplemental information. If an owner of federally subsidized residential rental property desires to challenge the presumptive amounts under division (A)(4)(a) or (A)(4)(b) of section 5715.01 of the Revised Code, the owner may include any additional information relevant to the valuation of the subject property.

(5) Audited information

(a) Information submitted to the county auditor will be audited in accordance with section 5713.031 of the Revised Code in either of the following ways:

(i) If such information is included in an audit of the property's finances that is certified by an independent public accountant or auditor or a certified public accountant; or

(ii) If such information is not included in an audit of the property's finances but is certified to have been audited by an independent public accountant or auditor or a certified public accountant.

(b) In the instance where the information filed under division (B) of section 5713.031 of the Revised Code is audited under paragraph (B)(4)(a)(i) of this rule, if the income statement in the audited information does not separate out utility charges, the owner may provide additional information, including workpapers, to demonstrate the actual amount of utility charges paid by the property.

(c) In the instance where a property has not yet generated financial statements, the owner will provide the original property proforma and the initial budget.

(6) Valuation by county auditor.

(a) Upon receipt of the forms under paragraph (B)(3) of this rule, the county auditor will consider the challenge of the property owner to the presumptive amounts as indicated on the transmittal page pursuant to division (A)(4)(a) or (A)(4)(b) of section 5715.01 of the Revised Code, and will calculate the value under this rule consistent with the requirements of section 5715.01 of the Revised Code. The auditor will also take into account any additional information supplied by the property owner by August fifteenth in support of their challenge of the presumptive amounts.

(b) The county auditor will notify the owner of the property's value as calculated under this rule and section 5715.01 of the Revised Code to the owner based on the contact information supplied on the transmittal page.

(c) If the owner disagrees with the valuation as calculated by the auditor under these rules and section 5715.01 of the Revised Code, the owner must notify the county auditor of such disagreement within twenty-one days of the county auditor's notification under paragraph (B)(6)(c) of this rule. The county auditor must provide an opportunity for the owner to meet with the county auditor to review the nature of the calculation within thirty days of receiving notice of the owner's disagreement or September thirtieth, whichever is later.

(7) Overcoming statutory presumptions.

(a) The owner may formally challenge the presumptive amounts under division (A)(4)(a) or (A)(4)(b) of section 5715.01 of the Revised Code by indicating the desire to do so on the transmittal page.

(b) When the owner formally challenges the presumptive amounts under division (A)(4)(a) or (A)(4)(b) of section 5715.01 of the Revised Code, the owner will provide by the fifteenth day of May:

(i) Evidence demonstrating the actual income or expenses of the property, as appropriate, and

(ii) The valuation that is supported by the evidence as supplied.

(c) The county auditor will consider additional information, program requirements, and financial considerations that are presented by the owner.

(d) Nothing in this rule shall be construed as prohibiting a county auditor from filing a tentative abstract pursuant to rule 5703-25-16 of the Administrative Code.

(8) If the county auditor determines that the evidence provided by the owner is insufficient to support a challenge to the presumptive amounts, the county auditor will provide the owner with a reasonable opportunity to meet before the fifteenth day of June.

(9) Pursuant to division (E) of section 5713.031 of the Revised Code, any records filed under this paragraph are not public records under section 149.43 of the Revised Code.

(C) Method for determining the value of federally subsidized residential rental property. The value of federally subsidized residential rental property will be determined using the following formula:

(1) The total value will be the greater of the following:

(a) The appraised value;

(b) Five thousand dollars multiplied by the number of units comprising the property; or

(2) In the instance where a federally subsidized residential rental property is in the construction-only phase, the total value will be the higher of paragraph (C)(1)(b) or (C)(1)(c) of this rule.

(3) In the instance where a federally subsidized residential rental property has begun generating income but is not yet stabilized, operating income minus the operating expenses as evidenced by interim financial statements, the result of which is divided by the adjusted capitalization rate;

(4) In the instance where a federally subsidized residential rental property is stabilized, operating income minus the operating expenses as evidenced by the audited information provided in accordance with paragraph (B)(5) of this rule, the result of which is divided by the adjusted capitalization rate.

(5) Pursuant to division (C)(3) of section 5715.031 of the Revised Code, if a property owner fails to timely submit the information required under division (B) of section 5715.031 of the Revised Code, the county auditor may, at the auditor's discretion, value the property in accordance with these rules and division (A)(4) of section 5715.01 of the Revised Code for any tax year to which that division would have applied. If an auditor chooses not to do so, the auditor shall otherwise proceed under section 5713.01 of the Revised Code to value the property in compliance with Ohio Constitution, Article XII, Section 2 for that tax year.

Last updated January 5, 2026 at 10:27 AM

History

Effective: January 1, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-25-30 Definitions.

As used in rules 5703-25-30 to 5703-25-36 of the Administrative Code, the following definitions shall apply unless the context requires otherwise:

(A) Statutory definitions: The following terms are as defined in section 5713.30 of the Revised Code.

(1) "Land devoted exclusively to agricultural use;

(2) "Conversion of land devoted exclusively to agricultural use";

(3) "Tax savings";

(4) "Owner."

(B) Nonstatutory definitions:

(1) "Cropping and land use pattern" - The typical sequence or distribution of major field crops and uses with the proportion of each crop or use expressed as a decimal fraction of the total acreage being farmed.

(2) "Current agricultural use value of land" - The current agricultural use value of land devoted exclusively to agricultural use of a parcel is the current market value or fair market value of the land considering only those factors that affect the parcel's value from an agricultural standpoint. It is the price at which the property would change hands on the open market between a willing buyer and seller, neither being under any compulsion to buy or sell, and both having knowledge of all relevant facts, if the highest and best use was exclusively agricultural with no other influence being present. Usually this value will be highly dependent on the soil productivity of the parcel.

(3) "Depreciation or appreciation rate" - The total per cent of decrease or increase in value that a prudent investor would expect to receive when the investor disposes of a given investment after a period of years.

(4) "Drainage profile group" - Soils that occur on similar topography and have similar internal drainage.

(5) "Effective tax rate" - The real property tax rate, after the reductions under section 319.301 of the Revised Code, expressed as per cent of actual true, market, or current agricultural use value rather than the statutory rate expressed as mills on tax value.

(6) "Equity yield" - The annual rate of return an investor would expect on the investment above any liens or mortgages.

(7) "Grid" - A cross sectional transparent scale that may be used to measure areas on a map, etc.

(8) "Land capability class" - A system of classifying land according to physical limitations arising from slope, drainage and erosion characteristics of the soil used by the U.S.D.A. soil conservation service. The classes are designated by Roman numerals from I through VIII with progressive greater limitations and narrower choices for practical use as the number increases. Classes I through IV are suitable for general field crops. Classes V through VIII are limited to pasture, forest land or wildlife.

(9) "Land residual technique" - A technique in which the improvements are valued independently of the land and the annual net return on the improvements is deducted from the anticipated net annual income to the total property. The residual net income is attributed to the land and is capitalized to indicate the land value.

(10) "Lots" - See "Tracts, lots or parcels."

(11) "Mortgage equity method of capitalization" - A method of capitalizing income that gives weight to typical mortgage and equity financing terms for similar properties in arriving at an estimate of value.

(12) Moving average" - Average of an item for given period of years that is recalculated each year after dropping the oldest year and adding the latest year.

(13) "Nonland production costs" - Those costs, including management, of producing agricultural products which do not include any expense or charge for the use of the land.

(14) "Parcels" - See "Tracts, lots or parcels."

(15) "Permanent pasture" - Land capability classes V through VII that does not meet the definition of woodland and is greater than five acres in size. In land capability classes I through IV land that due to soil limitations, such as gullied, severe erosion, stony outcropping, etc., is not suitable to open cultivation and does not meet the definition for woodland shall be classified as permanent pasture.

(16) "Planimeter" - A mechanical device used to measure areas on a map.

(17) "Projection period" - The period of years over which an investment is held before being resold or refinanced.

(18) "Soil management group" - A group of soils with similar properties and crop yields.

(19) "Soil mapping symbol" - Letter or numerical symbol used to identify a soil mapping unit on a soil map.

(20) "Soil mapping unit" - Areas of a soil type or types delineated on a soil map.

(21) "Soil region" - A region or area where the soils have formed from similar parent materials under similar conditions.

(22) "Soil series" - Soil on one parent material representing one drainage profile.

(23) "Soil survey" - A written report with a soil map, describing the soils surveyed together with information on the characteristics and capabilities of the soils. Available from the division of lands and soil, Ohio department of natural resources or U.S.D.A. conservation service.

(24) "Soil type" - A soil which throughout its full extent has relative uniform texture.

(25) "Tracts, lots or parcels" - Tracts, lots or parcels shall mean all distinct portions or pieces of land (not necessarily contiguous) where the title is held by one owner, as listed on the tax list and duplicate of the county, which are actively farmed as a unit if together the total acreage meets the requirements of division (A)(1) or (A)(2) section 5713.30 of the Revised Code. The terms "tracts," "lots" or "parcels" may be used interchangeably.

(26) "Woodland" - Land that has at least twenty-five per cent shade cover from forest trees. Land that has previously met this definition but currently does not, due to 'clear cutting,' etc., and that has not been developed for other uses shall continue to be classified as woodland. Forest trees are woody plants that have a well developed stem and usually more than twelve feet in height at maturity. The area must be five acres or more in size. Land that has been planted to forest species shall also be included in this definition.

Last updated November 15, 2023 at 2:15 PM

History

Effective: September 11, 2017
Promulgated Under: Other

Ohio Adm.Code 5703-25-31 General.

(A) Section 5715.01 of the Revised Code requires the tax commissioner to adopt, prescribe and promulgate rules that shall:

"... prescribe the method for determining the current agricultural use value of the land devoted exclusively to agricultural use, which method shall reflect standard and modern appraisal techniques, which shall take into consideration: the productivity of the soil under normal management practices; the average price patterns of the crops and products produced to determine the income potential to be capitalized; market value of the land for agricultural use; and other pertinent factors."

(B) All tracts, lots or parcels of real property in Ohio shall be appraised for tax purposes, at its "true value" in money and assessed at taxable value as provided in rules 5703-25-05 to 5703-25-17 and rules 5703-25-30 to 5703-25-36. Rules 5703-25-30 to 5703-25-36 of the Administrative Code shall apply if an application is made by the owner, as required by sections 5713.31 and 5713.38 of the Revised Code, requesting the county auditor to value the land, of such tracts, etc. for real property purposes at the current value such land has for agricultural use, and the county auditor has determined that such tracts, etc. are devoted exclusively to agricultural use as defined in section 5713.30 of the Revised Code.

(C) The current agricultural use land value can be estimated by the capitalization of the typical net income from agricultural crops on a given parcel of land assuming typical management, cropping patterns, and yields for the type of soil present on the tract. Values estimated by this method will closely approximate actual market values of farm land where the actual highest and best use is exclusively agricultural unaffected by other uses.

(D) In order to achieve uniformity in the appraisal and assessment of land devoted exclusively to agricultural use in the eighty-eight counties of Ohio, the tax commissioner, after consultation with the agricultural advisory committee shall, annually, adopt a proposed entry setting forth the necessary modifications and values to be used in establishing the current agricultural use value of land in counties completing a sexennial reappraisal or that will be in the third calendar year following the year in which a sexennial reappraisal is completed in the ensuing tax year. Said entry shall set forth the counties in which the values prescribed shall be used and the specific tax years in which such values apply. A public hearing shall be held on the proposed entry after reasonable public notice has been given by the commissioner at least thirty days prior to the date set for the hearing in such manner and form as the commissioner determines. After the hearing the commissioner shall adopt the entry for the ensuing tax year for use in said counties for the next ensuing three tax years.

(E) The valuations made by county auditors of said counties in conformance with these rules and said annual entry will be accepted as prima-facie correct valuation for parcels or tracts of land devoted exclusively to agricultural use where the parcel and tract of land has a "true" or "market" value reflecting a higher and better use than agricultural and the owner has qualified under the provisions of sections 5713.30 and 5713.31 of the Revised Code to have the land appraised and assessed by the county auditor at the current agricultural land use value.

(F) Nothing contained in these rules shall be construed as an authorization to value parcels, qualified as provided in sections 5713.30, 5713.31, and 5713.38 of the Revised Code for tax purposes at any other value than an identical parcel where the actual highest and best use is exclusively agricultural unaffected by any other use.

(G) Nothing contained in rules 5703-25-30 to 5703-25-36 of the Administrative Code shall be construed as an authorization for any parcel, in any class, in any county, to be valued for tax purposes at any other value than its "taxable value" as set out in rule 5703-25-06 of the Administrative Code, unless said parcel meets the qualifications of sections 5713.30, 5713.31, and 5713.38 of the Revised Code.

Last updated November 15, 2023 at 2:15 PM

History

Effective: September 11, 2017
Promulgated Under: Other

Ohio Adm.Code 5703-25-32 Agricultural advisory committee.

(A) An agricultural advisory committee shall be created to annually advise the tax commissioner on economic, technological and other current developments that might be considered in the determination of agricultural land values as defined in these rules. The membership of the committee shall be composed of a representative from such farm related organizations and public agencies having knowledge in this field as may be designated by the commissioner by journal entry adopted in January of each year. The appointment to and service on the agricultural advisory committee will be voluntary and there will be no reimbursement, by the commissioner, for any expenses incurred by any member of said committee.

(B) The purpose of the committee will be to review the various factors considered in arriving at agricultural use land values and to evaluate new developments in order to make a recommendation to the commissioner as to the values and application of methods that the commissioner will set forth in the annual entry to be used in valuing agricultural use land for the ensuing tax year. The minutes of the meeting shall be recorded and presented to the commissioner together with the recommendations of the committee, not later than the first Monday in August.

(C) The commissioner may consider such recommendations in making the annual determination. However, the commissioner is not bound by such recommendations and may, at the commissioner's option, either accept the recommendations in full or part, or reject them in total in consideration of the commissioner's responsibility to equalize all real property taxable values as provided by statutes and interpreted by the supreme court of Ohio.

Last updated November 15, 2023 at 2:15 PM

History

Effective: September 11, 2017
Promulgated Under: Other

Ohio Adm.Code 5703-25-33 Current agricultural use value of land table or tables.

(A) The annual "Current Agricultural Use Value Of Land Table Or Tables" to be prescribed by the tax commissioner shall be calculated and prepared by the capitalization of the typical net income before real property and income taxes from agricultural products assuming typical management, cropping and land use patterns and yields for a given type of soil, as provided in this rule.

(B) The use of the income approach to develop annual "Current Agricultural Use Value of Land Table Or Tables" that are accurate, reliable and practical requires that careful attention be given to the many principles and techniques involved. It is essential that the typical or potential net income be based on the land capability under normal or typical management practices, yields, cropping or land use patterns, prices, costs and conditions in the area rather than the management ability or decisions of an individual owner or operator. To avoid erratic fluctuations of value due to spot economic, market or climatic conditions, five year moving averages of price costs, cropping patterns and other factors shall be used where practical. In addition, the effect of changes in agricultural technology and economic relationships must constantly be revaluated. The agricultural advisory committee shall function to keep the commissioner informed of such technological and economic changes.

(C) The most critical determination is the capitalization rate. This rate shall be determined by comparison of net income, calculated as described in this rule, to known prices or market value appraisals of farms that have been sold or appraised under the conditions prescribed by the definition of "Current Agricultural Use Value of Land" in rule 5703-25-30 of the Administrative Code. The synthesis of the capitalization rate by other than market data shall be by a method that gives weight to the factors present in the market for such property.

(D) Information shall be obtained from such agencies as cooperative extension service, college of agriculture, the Ohio state university; Ohio agricultural research and development center; national resources conservation services, U.S.D.A.; forest service, U.S.D.A.; national agricultural statistical service, U.S.D.A.; department of agriculture of Ohio; department of natural resources of Ohio, federal land bank and other reliable sources.

(E) In the absence of crop yield information for any soil mapping unit present in Ohio, the tax commissioner shall, in consultation with the department of natural resources of Ohio, determine the appropriate crop yield and soil productivity information for that mapping unit.

(F) Land capability classes: Consideration shall be given to the land capability class of a soil as determined by the soil conservation service based on the soils suitability to grow various crops and potential hazards considering slope, drainage, erosion and other factors. The typical land capability class for a soil management group shall be determined and this class shall serve as a base for calculation of values when the soils in a group fall in other than typical land capability class. Usually the typical class for which the base value for a soil management group is calculated will be the class with the least hazard for the group.

The major land capability classes are as follows:

(1) Land adapted for crops:

| Class I | No special hazards, very good land from every standpoint. | | --- | --- | | Class II | Some hazards which require good conservation practices. | | Class III | Several intensive hazards which require intensive conservation practices. | | Class IV | Very severe hazards, needs very careful handling and management. |

(2) Land for permanent vegetation only:

| Class V | Very frequent flooding or permanently wet. | | --- | --- | | Class VI | Moderate hazards to be overcome for pasture use. | | Class VII | Severe limitations for grazing or forestry, very steep. | | Class VIII | Not suited for cultivation, pasture or forests. Wildlife and recreation is the best use. |

(G) Cropping pattern by land capability classes: The cropping pattern or proportion of different crops grown will vary with both the soil region and the land capability class. A higher percentage of row crops will be grown on the better soils with land capability class ratings such as I or II. Land in land capability class V through VIII shall be considered as devoted entirely to either pasture or woodland. Annually the commissioner shall calculate the five year moving average of each crop harvested in each of the extension areas of Ohio. A determination shall be made of the percentage of each rotation acre devoted to each crop for land capability classes I through IV. Such determination shall be made separately for:

(1) Soil regions A, B, I, II, III, IV, V, and VIII.

(2) Soil regions VI and VII.

(3) Organic or muck soils.

(H) Crop prices: Five year moving weighted average crop prices for the major field crops are to be calculated by totaling the production and value of each crop, as reported by the statistical reporting service or other reliable source, for the five years preceding the year in which the table is issued and calculating the average price per unit after consideration of price differentials in various parts of the state.

(I) Management: A percentage to be determined annually shall be deducted from the five year moving weighted average crop prices to provide for typical management costs incurred by the land owner.

(J) Non land production costs: Information on typical non-land production costs shall be obtained from the best available sources. Where the available information is for a base year other than the current year such prices shall be adjusted to a five year moving average basis by the use of the U.S.D.A. index of prices paid for production items, interest, taxes, and farm wage rules reported each June in U.S.D.A. agricultural prices, or other reliable sources. In developing these costs consideration shall be given to extra expense incurred by the use of more seed, fertilizer, etc., on the more productive soils.

(K) Estimation of net income for a rotation acre of a given soil management group: The steps to be used in estimating net income shall be as follows:

(1) The midpoint of the range of minimum yields for each major field crop is determined for each soil management group.

(2) The gross income per acre for a given crop is determined by multiplying the midpoint of yield by the five year weighted average price per unit reduced by the percentage for management expense as determined under paragraph (I) of this rule.

(3) The five year average non-land crop expense for the appropriate yield level is deducted from gross income to determine net income per acre.

(4) The typical land capability class is estimated for each soil management group based on information from the soil conservation service and the cropping pattern assigned from paragraph (G) of this rule. This multiplied by the net return per acre gives the contribution from the crop to the rotation acre.

(5) The total of the net return from each crop in the rotation is the total net return to be capitalized into land value.

(L) Adjustment for land capability class other than typical for soil management group: Since the soils in a given soil management group occur in different land capability classes a method must be provided for adjusting from the typical to the non-typical situation. The following is an example of the adjustment factors to be used to adjust from the land capability class for which the net return or value per acre was actually calculated to another class by multiplying such return or value.

Base Land Capability Class

| Adjust To | I | II | III | IV | | --- | --- | --- | --- | --- | | I | 1.00 | 1.26 | 1.79 | 3.10 | | II | .79 | 1.00 | 1.42 | 2.46 | | III | .55 | .70 | 1.00 | 1.73 | | IV | .32 | .41 | .58 | 1.00 | | V | .29 | .36 | .52 | .89 | | VI | .17 | .22 | .31 | .53 | | VII | .06 | .07 | .10 | .18 | | VIII | .03 | .04 | .05 | .09 |

Use of these factors will allow the estimation of net income per acre through the range of land capability classes for soils in a soil management group.

(M) Capitalization rate:

(1) For the purpose of estimating the capitalization rate to be used in determining the base values of agricultural land the use of the mortgage-equity method is prescribed. In making the rate determination the five year running average of each of the following items will be used:

(a) Typical term of years, per cent of mortgage and return on farm mortgages as reported by federal land bank and other sources.

(b) Return on investors equity - This shall be extracted from market data.

(c) Depreciation or appreciation expected in property (agricultural land) over the next five years. The moving average of the preceding five years of percentage increases or decreases in U.S.D.A. farm real estate index for Ohio for March of each year over the previous year shall be considered as the estimate of this term. In the consideration of the weight to be given to this item the effect of speculation should be removed so that the appreciation that accrues in land values over a five-year period from improvement in agricultural technology and practices only is reflected.

(2) After these terms have been determined the over all capitalization rate shall be calculated by reference to compound interest tables.

To the capitalization rate adjusted for land only shall be added the effective real property tax rate. This is to be determined by multiplying the five year average state tax rate as shown in department of taxation records by thirty-five per cent and expressed as a percentage. This rate shall be further reduced to reflect the average effect of the reductions required by section 319.301 of the Revised Code. The total of the two rates is the agricultural land capitalization rate. This should represent the rate of return a prudent investor would expect on an average or typical Ohio farm considering only agricultural factors.

(3) Since capitalization rates will vary with the land capability class due to the difference of risk and operating costs market studies shall be designed to determine such differential in rates.

(4) The per acre value of each soil category will be determined by dividing the net return per acre by the appropriate rate. Values in classes I through IV shall be the values for cropland. If land in these classes is used for other purposes such as forestry or pasture the cost of converting from present use to crop use shall be deducted. Values in classes V through VII shall be the value for pasture and woodland.

Last updated November 15, 2023 at 2:15 PM

History

Effective: September 18, 2003
Promulgated Under: 5703.14

Ohio Adm.Code 5703-25-34 Use of prescribed agricultural use value of land tables by county auditor.

(A) After the county auditor has determined that the application or amended application for the auditor to value land at its agricultural use, filed as provided by sections 5713.31 and 5713.38 of the Revised Code is complete and the information thereon is correct the auditor shall, prior to the first Monday in June, view or cause to be viewed the land described in the application and determine whether the land is devoted exclusively to agricultural use as defined in division (A) of section 5713.30 of the Revised Code. If the auditor, as of the first Monday in June, determines that the land is devoted exclusively to agricultural use the auditor shall appraise it for real property tax purposes as provided in this chapter.

(B) The first step in the appraisal of land used exclusively for agricultural use is to determine from county soil survey maps, soil maps of individual farms prepared by the division of land and soil of the department of natural resources of Ohio and/or the soil conservation service, U.S.D.A., or other sources of information the different soil types, land capability classes and land uses together with the acreage in each category for the tract or parcel. Where detailed soil surveys are not available the county auditor shall consult with the soil conservation service and other knowledgeable sources on the most practical way to utilize the prescribed tables.

(C) Soil scientists, in preparing a detailed soil survey or individual soil conservation maps indicate different soil categories by "mapping units" shown on the map by the "map symbol" with the area included in this unit outlined. As an example, in the soil survey of Fayette County, recently released, "CaB2" is the map symbol for "Cana silt loam" occurring on a two to six per cent slope, moderately eroded and further described as having a "Land Capability Class II" rating. While there might be some variance all soil maps follow a standard system of notation.

(D) After delineation of the boundaries of the farm or tract on the soil map the acreage in each soil type and land capability class can be measured with a grid or planimeter. The standard soil survey map uses a scale of four inches to a mile, thus each square inch is equal to forty acres and a quarter square inch is equal to ten acres. The enlargement of soil maps to a scale of eight inches to a mile will allow for more accurate estimation of soil areas. Isolated areas of five acres or less in a mapping unit may be classified with the mapping unit surrounding it or adjacent. When each soil type and land capability class has been identified and the acreage determined the information is to be listed on the property record card. It should be noted that once this information is initially recorded and verified that a permanent inventory of soil information will have been established for a parcel, with very few exceptions, unless the property boundaries are changed.

(E) If a particular soil type is not included in the "current agricultural use value of land table or tables" prescribed by the tax commissioner for the given year, in said county as described in rule 5703-25-33 of the Administrative Code, then the county auditor shall contact the tax commissioner to secure the per acre unit value for the soil type. The tax commissioner shall then compute a use value as prescribed in rule 5703-25-33 of the Administrative Code for that soil type.

(F) Since land capability classes I through IV are suitable for general field crops the cropland price shall be used for soil areas in these classes unless an investment in capital such as clearing or drainage is needed to convert the land from its present use such as woods to tillable cropland. If by simply plowing, etc. the land can be converted no adjustment is needed. Where such adjustment is needed it shall be made by using the per acre value of cropland for the next highest numbered land capability class for the specific mapping unit until the land is converted to cropland use. Woodland prices for classes I through IV in the prescribing tables allow for clearing and drainage in classes I and II and clearing in classes III and IV. Land capability classes V through VIII are priced as pasture or woodland according to prescribed tables.

In the classification of the various soil types into soil management groups and the calculation of minimum yields under good management the hazards of the various soil types such as drainage, erosion, shallow, droughty or stony soils has been recognized and accounted for.

(G) Farm ponds shall be priced as class V pasture land in the appropriate soil management group. Reclaimed strip mine land often has a better agricultural potential than in its original state depending on the geological origin of the soil. Until better means are devised reclaimed strip mine land used as cropland shall be priced as class IV land or such other classification as may be determined based on the slope of the ground and other soil characteristics or properties. If in wood and pasture classify as class VI in the proper use unless another classification is justified as previously stated. Unreclaimed strip mine land, gravel pits, etc. unsuitable for agricultural use shall be priced as class VIII land.

(H) Where special "agricultural uses" are peculiar to and typical of an area, individual appraisals must be made to determine the agricultural use land value. In some cases, for example, a greenhouse operation in an urban location, the agricultural land value can be determined by the use of the land residual appraisal technique using the present special agricultural use as the highest and best use. The income stream attributed to the land would then be capitalized to determine the agricultural use land value. The land residual technique is extremely sensitive therefore caution must be used to be certain that the net income capitalized is typical for the specific usage.

(I) One acre for each residence on a parcel shall be valued as a homesite in the same manner as similar homesites in the area on a market value basis. Land shall not be valued on a homesite basis unless there is a building or a house trailer used for human habitation located on such parcel. Improvements including residences, agricultural service and other buildings are valued and assessed as provided in rules 5703-25-05 to 5703-25-17 of the Administrative Code.

(J) The county auditor shall deduct from the value of each separate parcel of real property the amount of land occupied and used by a canal or used as a public highway as provided in section 5713.04 of the Revised Code.

(K) The agricultural use land value shall be the total of values extended by application of unit values from the "Current Agricultural Land Use Tables" and the value of the homesites. The total "agricultural use land value" is entered on the real property record required by section 5713.03, of the Revised Code, together with the "true value" of the land as determined in accordance with Section 2, Article XIII of the Ohio Constitution. Any difference in value shall be noted on the real property record.

(L) Where adjustment in values is needed due to hazards, such as floods, weed infestation, etc., peculiar to a specific tract the auditor has the authority to make such adjustment or in the event the land value of a parcel or tract, as calculated from the "current agricultural use value of land tables," exceeds or is less than the value indicated by the sale of the parcel or comparable properties in the area where the consideration was determined under the conditions prescribed by the definition of "Current Agricultural Use Value of Land" in rule 5703-25-30 of the Administrative Code the current agricultural use value of land shall be determined on the basis of such sale or sales.

Last updated July 8, 2025 at 11:51 AM

History

Effective: January 12, 2018
Promulgated Under: Other

Ohio Adm.Code 5703-25-35 Determination of current agricultural use taxable value of land and total taxable value of parcels in counties that completed sexennial reappraisals for tax year 1972 or later.

In counties that have completed a sexennial reappraisal of real property for taxable purposes in 1972 or later the agricultural use land taxable value shall be the same percentage of agricultural use land value as that prescribed by rule 5703-25-06 of the Administrative Code, or any future revision of such rule, currently thirty-five per cent, to determine taxable value of all other taxable real property. The total taxable value of the parcel shall be calculated by adding the current agricultural use land taxable value to the taxable value of the improvements determined as required by rule 5703-25-06 of the Administrative Code.

Last updated July 8, 2025 at 11:51 AM

History

Effective: January 12, 2018
Promulgated Under: Other

Ohio Adm.Code 5703-25-36 Application of rules.

(A) Rules 5703-25-30 to 5703-25-36 of the Administrative Code shall be applied in valuing and assessing land that has qualified to be valued at the current value such land has for agricultural use under the provisions of sections 5713.30 to 5713.38 of the Revised Code for the tax year 1978, and thereafter, with respect to taxes which become a lien January 1, 1978, and thereafter.

(B) Nothing contained in these rules shall be construed as an authorization to value parcels, qualified as provided in sections 5713.30 to 5713.38 of the Revised Code for tax purposes at any other value than an identical parcel where the actual highest and best use is exclusively agricultural unaffected by any other use.

(C) Nothing contained in rules 5703-25-30 to 5703-25-36 of the Administrative Code shall be construed as an authorization for any parcel in any class in any county to be valued for tax purposes at any other value than its "taxable value" as set out in rule 5703-25-06 of the Administrative Code unless said parcel meets the qualification of sections 5713.30 to 5713.38 of the Revised Code.

Last updated July 8, 2025 at 11:51 AM

History

Effective: January 12, 2018
Promulgated Under: Other

Ohio Adm.Code 5703-25-45 Tax reduction factor; computation; minimum for schools.

(A) As used in rules 5703-25-45 to 5703-25-49 of the Administrative Code:

(1) "Tax reduction factor" means the percentage reduction in each real property tax levy of each taxing unit for each class of real property for which a reduction is required and computed under section 319.301 of the Revised Code and this rule.

(2) "Emergency school levy" means a tax authorized under section 5705.194 of the Revised Code.

(3) "Taxes charged and payable" means the amounts for the current year remaining after the reduction required under section 319.301 of the Revised Code but prior to any reduction required under section 319.302 of the Revised Code. It does not include assessments, recoupment charges imposed under section 5713.34 of the Revised Code, taxes charged for a prior year, or penalties and interest on delinquent taxes.

(4) "Carryover property" means all real property on the current year's tax list except:

(a) Land and improvements that were not taxed by the district in both the preceding year and the current year;

(b) Land and improvements that were not taxed in the same class in both the preceding year and the current year;

(c) Land and improvements that were exempt from taxation under a statute granting exemption or abatement from taxation in the preceding year and which are included on the tax list in the current year.

(5) "Real property" means real property as defined in section 5701.02 of the Revised Code and includes real property owned by a railroad or other public utility.

(6) "Taxing unit" means a political subdivision of the state authorized by statute to levy taxes on real property.

(7) "Taxing district" means a municipal corporation or township, or part thereof, in which the aggregate rate of taxation, as expressed in mills, is uniform.

(8) "Net taxes" means the taxes charged and payable for a tax year. In the case of a school district or a joint vocational school district, the net taxes of a prior year equal the taxes charged and payable for that year after the reductions required under section 319.301 of the Revised Code, including any adjustment required for the district under division (E) of that section and paragraph (E) or (F) of this rule. In the case of a tax levy for which an estimated tax reduction factor is used pursuant to division (H) of section 319.301 of the Revised Code and paragraph (A) of rule 5703-25-48 of the Administrative Code, the net taxes of a prior year excludes the amount of taxes attributable to any portion of the tax reduction factors used in that year to adjust for an overpayment or underpayment of taxes in the second preceding year caused by the use of such estimated factors.

(9) "Replacement levy" means a tax levied by a joint vocational school district under section 3311.21 of the Revised Code or a tax levied for emergency medical service under section 5705.191 of the Revised Code and designated as a replacement levy in the ballot language used to submit the levy for voter approval. A replacement levy cannot be submitted for any other purpose.

(B)

(1) A tax reduction factor shall be applied to reduce each voted tax levy on each class of real property except those taxes excluded in paragraph (B)(2) of this rule.

(2) Tax reduction factors shall not be computed for and used to reduce:

(a) Taxes levied within the ten-mill limitation provided by section 5705.02 of the Revised Code;

(b) Taxes authorized to be levied by the provisions of a charter adopted by a municipal corporation;

(d) Taxes levied as an emergency school levy.

(C) Each year the tax commissioner shall make the annual determinations required under section 319.301 of the Revised Code. A separate determination shall be made for each tax levy for each class of property within each taxing unit. Determinations shall be made for a taxing unit regardless whether it contains territory located in a county whose property is subject to an assessment reviewed by the tax commissioner in that year under section 5715.24 of the Revised Code. The two classes of property for which a separate determination is made are:

(1) Lands and improvements thereon used for residential or agricultural purposes which shall be called "residential/agricultural real property"

(2) All other land and improvements thereon and minerals and mineral rights which shall be called "nonresidential/agricultural real property."

(D)

(1) The tax commissioner shall compute a tax reduction factor for each tax levied by each taxing unit on each class of real property for each tax except taxes described in paragraph (B)(2) of this rule. The tax reduction factor shall equal the per cent by which the sums levied by each tax against the carryover property in each class of real property would have to be reduced so that the current year's taxes on carryover property equals the prior year's net taxes.

(2) A tax is levied for the first time in the year for which it is first authorized by the voters to be extended on the tax list and duplicate. In the case of taxes levied for the first time, the tax commissioner shall compute the tax reduction factor as follows:

(a) In the first year of a tax authorized to be levied as a renewal of a tax that has expired, the tax reduction factor for that tax shall equal the per cent by which the sums levied by the renewed tax against the carryover property in each class of real property would have to be reduced so that the current year's net taxes on carryover property equals the prior year's net taxes on that class of property. If a tax is renewed at a rate that is less than the rate at which the tax expired, the tax reduction factor for the first year in which the tax is levied as a renewal shall equal the per cent by which the sums levied by the renewed tax would have to be reduced so that the net taxes on carryover property derived in the current year from the renewed rate equals the net taxes that would have been derived in the prior year from the same rate.

(b) In the first year of a tax authorized to be levied as an additional tax or as a tax designated as a replacement levy, the tax reduction factor shall equal the per cent by which the sums levied by the additional tax or replacement levy against the carryover property in each class of real property would have to be reduced so that the current year's net taxes on carryover property equals the net taxes that would have been levied on that class of property in the preceding year, if such tax had been in effect in that year without any reduction under section 319.301 of the Revised Code.

(c) In the first year of a tax authorized to be levied both as a renewal of a levy that has expired and as an additional tax, the portion of the tax that is a renewal shall have a tax reduction factor computed in accordance with paragraph (D)(2)(a) of this rule, and the portion of the tax that is an additional tax shall have a tax reduction factor computed in accordance with paragraph (D)(2)(b) of this rule.

(3) A tax is a renewal of an existing tax, an additional tax, or a replacement levy according to its designation in the actual ballot language submitted to the voters unless such designation is deceptive or contrary to law.

(4) If a taxing unit has elected not to impose a tax authorized by the voters for one or more years and then elects to impose it in the current year, the tax reduction factor for that year shall be computed as though the tax had been levied and adjusted under section 319.301 of the Revised Code in each year it was authorized at the rate used in the current year.

(E) Each school district is guaranteed an effective tax rate for current expenses equal to two per cent of the taxable value of each class of real property in the district. In the case of a school district whose total tax rate for current expenses as authorized, is less than two per cent, the guarantee equals only the maximum effective rate so authorized by the voters of the district.

Example: A school district is authorized to levy five unvoted mills for current expenses. The voters have approved an additional ten mills. The district's guaranteed effective rate is one and one-half per cent (fifteen mills) because that is the maximum authorized rate.

Annually, for each class of property for each school district, the commissioner shall determine whether adjustments to the tax reduction factors of the district's taxes are necessary to guarantee that the district levies its guaranteed effective tax rate for current expenses. This determination shall be made as follows:

(1) Using the tax reduction factor determined under division (D) of section 319.301 of the Revised Code and paragraph (D) of this rule, the commissioner shall compute the sum of the taxes charged and payable for current expenses by the voted tax levies of that district;

(2) The commissioner shall determine the total taxes charged and payable within the ten-mill limitation for the current expenses of the district;

(3) The commissioner shall determine the difference between the amount in paragraphs (E)(3)(a) and (E)(3)(b) of this rule. However, if the difference obtained by subtracting the amount in paragraph (E)(3)(b) of this rule from the amount in paragraph (E)(3)(a) of this rule is a negative number, then the amount determined under this paragraph is zero.

(a) From the total taxes charged and payable on the tax list against the property of that school district for tax year 1981, after making any reduction required in that year under section 319.301 of the Revised Code, but prior to making any reduction under section 319.302 of the Revised Code, for the current expenses of a joint vocational school district of which the school district is a part in the current year; subtract,

(b) The following percentage of the taxable value of all real property in the appropriate class of real property:

(i) In 1987, five one-hundredths of one per cent (.0005);

(ii) In 1988, one-tenth of one per cent (.001);

(iii) In 1989, fifteen one-hundredths of one per cent (.0015);

(iv) In 1990 and each subsequent year, two-tenths of one per cent (.002).

(4) The sum of the amounts determined in paragraphs (E)(1), (E)(2), and (E)(3) of this rule equals the unadjusted total taxes of the school district for current expenses in the current year. This total should always exclude emergency school levies and debt levies, except as provided in rule 5703-25-49 of the Administrative Code.

(5) The commissioner shall compare the amount shown as the unadjusted total taxes of the school district for current expenses in paragraph (E)(4) of this rule to the amount obtained by multiplying the total taxable value of all real property in the same class of real property by two per cent.

(a) If the unadjusted total taxes for current expenses of the district charged against the class of real property is more than two per cent of the taxable value of real property in that class, the tax reduction factors for that class are the percentage determined in paragraph (D) of this rule. No adjustment is required.

(b) If the unadjusted total taxes for current expenses of the district charged against that class of real property are less than two per cent of the taxable value of real property in that class, the commissioner shall adjust the tax reduction factors for that class determined under paragraph (D) of this rule by a uniform percentage so that the total taxes for current expenses of the district prior to the reduction under section 319.302 of the Revised Code shall equal exactly two per cent of the taxable value of real property in that class.

(c) In the case of a school district whose total authorized tax rate for current expenses is less than two per cent, if the unadjusted total taxes for current expenses of the district charged against that class of real property are less than the total authorized rate for current expenses multiplied by the taxable value of real property in that class, the commissioner shall adjust the tax reduction factors for that class determined under paragraph (D) of this rule by a uniform percentage so that the total taxes charged and payable for current expenses of the district produce an effective tax rate equal to the district's authorized tax rate for current expenses.

(6) If the commissioner is required to make the adjustment specified under paragraph (E)(5)(b) or (E)(5)(c) of this rule, the commissioner shall certify the tax reduction factors computed under the appropriate paragraph to the county auditor, and the factors certified shall replace the tax reduction factors determined under paragraph (D) of this rule, and the adjusted percentages so certified shall be the tax reduction factors for that class of property for all purposes.

(7) When the tax reduction factors for a school district's taxes are factors certified under paragraph (E)(6) of this rule, the taxes charged and payable after making the reductions required by such factors equals the net taxes of the school district for that year.

(F) Each joint vocational school district is guaranteed a minimum amount of taxes. This guaranteed amount of taxes is called the "designated amount."

(1) The designated amount for each class of real property in a joint vocational school district equals the taxable value of all real property in that class subject to taxation by the district multiplied by the lowest of the following:

(a) Two-tenths of one per cent;

(b) The district's effective tax rate plus the following percentage:

| Taxes Charged For | Add The Following Percentage | | --- | --- | | 1987 | 0.025% (0.00025) | | 1988 | 0.050% (0.00050) | | 1989 | 0.075% (0.00075) | | 1990 | 0.100% (0.00100) | | 1991 | 0.125% (0.00125) | | 1992 | 0.150% (0.00150) | | 1993 | 0.175% (0.00175) | | 1994 and thereafter | 0.200% (0.00200) |

(2) Annually, for each class of property for each joint vocational school district, the commissioner shall determine whether adjustments to the tax reduction factors of the district's taxes are necessary to guarantee that the district levies its designated amount of taxes. This determination shall be made for each class of property as follows:

(a) Using the tax reduction factor determined under division (D) of section 319.301 for the Revised Code and paragraph (D) of this rule, the commissioner shall compute the sum of the taxes charged and payable by the levies of that district. This sum equals the district's total unadjusted taxes.

(b) The commissioner shall compare the unadjusted taxes of the district determined in paragraph (F)(2)(a) of this rule to the designated amount for that district for the current year.

(i) If the unadjusted total taxes charged against the real property in that class for the district are more than the designated amount, then the tax reduction factors for that class are the percentage determined under paragraph (D) of this rule. No adjustment is required.

(ii) If the unadjusted total taxes of the district charged against that class of real property are less than the designated amount for that class in the district, the commissioner shall adjust the tax reduction factors for that class determined under paragraph (D) of this rule by a uniform percentage so that the total taxes charged and payable against that class of property shall exactly equal the designated amount for that class in that district.

(3) If the commissioner is required to make the adjustment specified in paragraph (F)(2)(b)(ii) of this rule, the commissioner shall certify the tax reduction factors computed under that paragraph to the county auditor, and the factors certified shall replace the tax reduction factors determined under paragraph (D) of this rule, and the adjusted percentages so certified shall be the tax reduction factors for that class of property for all purposes.

(G) No reduction shall be made under this rule in the rate at which any tax is levied.

(H) No tax reduction factor certified under paragraph (E)(6) of this rule shall cause a tax to be imposed at an effective rate greater than that originally authorized for that tax by the voters of a school district.

Last updated July 10, 2025 at 12:15 PM

History

Effective: January 12, 2018
Promulgated Under: Other

Ohio Adm.Code 5703-25-46 Tax reduction factor; certification; composite factor.

As used in this rule and rule 5703-25-47 of the Administrative Code, "composite tax reduction factor" means the total percentage reduction in the taxes charged against each tract, lot, or parcel in a given class of real property located in a given taxing district provided under section 319.301 of the Revised Code and rule 5703-25-45 of the Administrative Code.

(A) At the time the county auditor submits the abstract of real property as required under section 5715.23 of the Revised Code, the auditor shall furnish the information required by the tax commissioner to compute the tax reduction factors or adjustments under divisions (D) and (E) of section 319.301 of the Revised Code. The auditor shall supplement this information as requested by the commissioner, or by the last day of November if a tax approved at the November election is to be extended on the current year's tax list and duplicate.

(B)

(1) Upon receiving the necessary information from the auditor the commissioner shall determine the tax reduction factor for each tax for each class of real property as required under rule 5703-25-45 of the Administrative Code. The commissioner shall certify the tax reduction factors to the county auditor and the county treasurer as soon as the commissioner determines them.

(2) In addition, for each class of real property, the commissioner shall determine a composite tax reduction factor for each taxing district as provided in paragraph (C) of this rule. The commissioner shall certify the composite tax reduction factors to the county auditor and the county treasurer as soon as he determines them.

(C) The purpose of the composite tax reduction factor computed under this paragraph is to provide a total percentage reduction in taxes to be applied uniformly to the real property in each class of real property in a taxing district for the collection of taxes only.

The commissioner shall compute the composite tax reduction factor for each class of real property in each taxing district as follows:

(1) Multiply each tax reduction factor applied to a tax levied for the current year in the district by a quotient, the numerator of which is the number of tax mills of the levy to which that factor applies and the denominator of which is the total number of mills levied on the district;

(2) Cumulate the products obtained in paragraph (C)(1) of this rule.

The sum obtained in this paragraph is the composite tax reduction factor.

(D) In preparing the tax list and duplicate, the county auditor shall extend on the tax list and duplicate the composite tax reduction factor for all property in each class of real property in a taxing district certified under paragraph (B)(2) of this rule for that class in that taxing district.

(E) In preparing the tax bill required under section 323.131 of the Revised Code, the county treasurer shall use the composite tax reduction factor certified under paragraph (B)(2) of this rule for the appropriate class of real property and taxing district. The treasurer shall certify to the commissioner a list of the composite tax reduction factors actually used on the tax bills sent pursuant to section 323.13 of the Revised Code.

(F) No county auditor shall use a composite tax reduction factor other than the composite tax reduction factor certified to the auditor under paragraph (B)(2) of this rule, and no county treasurer shall prepare a tax bill using a composite tax reduction factor other than the appropriate composite tax reduction factor certified to the treasurer under paragraph (B)(2) of this rule.

(G) If a tax reduction factor or composite tax reduction factor appears to be illegal or erroneous, the county auditor shall notify the tax commissioner, who shall recompute the factor and certify it to the county auditor as provided in paragraph (B)(2) of this rule.

Last updated July 10, 2025 at 12:15 PM

History

Effective: January 12, 2018
Promulgated Under: Other

Ohio Adm.Code 5703-25-47 Tax reduction factor; allocating taxes collected from each tax levy.

For the purpose of ascertaining the net amount of taxes collected for each particular tax levy, pursuant to section 319.451 of the Revised Code, the county auditor shall use the tax reduction factors certified under paragraph (B)(1) of rule 5703-25-46 of the Administrative Code.

The composite tax reduction factors certified under paragraph (B)(2) of that rule shall never be used for this purpose.

Last updated July 8, 2025 at 11:52 AM

History

Effective: April 12, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-25-48 Tax reduction factor; estimated factors; correcting errors.

(A)

(1) If the commissioner is unable to certify a tax reduction factor for either class of real property in a taxing unit located in more than one county by the last day of November because the information required under division (G) of section 319.301 of the Revised Code is unavailable, he shall determine and certify estimated tax reduction factors for taxes levied by that taxing unit. The estimated tax reduction factors shall be based on an estimate of the unavailable information.

(2) The commissioner shall also determine and certify estimated composite tax reduction factors for each taxing district by using the tax reduction factors estimated in paragraph (A)(1) of this rule.

(3) Upon receipt of the actual information for a taxing unit that used estimated tax reduction factors, the commissioner shall compute the actual tax reduction factors and the composite tax reduction factors for those taxing districts in which the taxing unit is located. Using these actual tax reduction factors, the commissioner shall compute the taxes that should have been charged and payable against real property in that class for the year for which the estimated tax reduction factors were used.

(4) For the current tax year following the tax year for which the estimated tax reduction factors were used, the commissioner shall add to or subtract from the amount of taxes due for that current year the amount of underpayment or overpayment that resulted in the preceding tax year from the use of the estimated tax reduction factors.

(B) This paragraph applies to all circumstances other than the use of an estimated tax reduction factor as provided in paragraph (A) of this rule.

If the tax commissioner determines that the tax reduction factors or the composite tax reduction factor for either class of real property used on the tax bills for the first half collection of real property taxes was illegal or erroneous, the commissioner may order a correction at any time prior to the mailing of the tax bill for the second half collection of taxes for the same tax year.

The correction shall adjust the tax reduction factors and the composite tax reduction factor used on the tax bills for the second half collected for such year so that the sum of the taxes charged against each parcel of property in the first half collection and the second half collection equals the total amount of taxes that should have been charged against such property for that tax year if a correct and legal tax reduction factor had been used on the tax bill for both collection periods.

(C) If the tax commissioner determines that the tax reduction factors or the composite tax reduction factor for a class of property was illegal or erroneous after the time for a correction permitted under paragraph (B) of this rule, the commissioner shall determine the correct tax reduction factor that should have been used for that year. In computing tax reduction factors for the following tax year, the commissioner shall use, as the net taxes for the year for which the illegal or erroneous tax reduction factors were used, the amount of net taxes for that year if the correct tax reduction factors had been used. Except as provided in division (H) of section 319.301 of the Revised Code and paragraph (A) of this rule, the commissioner shall not adjust the tax reduction factors for such subsequent tax year in order to add to or subtract from the taxes charged and payable for that year any amount that represents an overpayment or underpayment resulting from the use of the illegal or erroneous tax reduction factor in the preceding year.

Last updated July 10, 2025 at 12:15 PM

History

Effective: April 12, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-25-49 Tax reduction factor; emergency school levy phase-in.

The tax commissioner shall include emergency school levies authorized by the voters prior to January 1, 1985, as current expenses of a school district in making the computations required under paragraph (E) of rule 5703-25-45 of the Administrative Code for tax years 1986, 1987, and 1988. The exclusion of such levies from that computation as provided in paragraph (E)(4) of that rule shall apply to all emergency school levies authorized by the voters on or after January 1, 1985.

Last updated July 8, 2025 at 11:52 AM

History

Effective: April 12, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-25-55 Real estate assessment fund; expenditures; allowable; disallowable; procedures.

(A) Allowable expenditures from the real estate assessment fund include the costs incurred by the county auditor described in paragraph (B) of this rule and, at the discretion of the county auditor, the costs incurred by the county auditor described in paragraph (C) of this rule, and the costs incurred by the county board of revision under Chapter 5715. of the Revised Code.

(B) Allowable expenditures by the county auditor from the real estate assessment fund consist of all costs incurred by the auditor related to the assessment of real property for taxation purposes, whether for the determination of "true value in money" or "true value" of all real property as defined in paragraph (A) of rule 5703-25-05 of the Administrative Code, or for the determination of "current agricultural use value of land" as defined in paragraph (B)(2) of rule 5703-25-30 of the Administrative Code, and for the assessment of manufactured or mobile homes taxed like real property under division (D)(2) of section 4503.06 of the Revised Code. Allowable expenditures may be made for the following:

(1) Contracts for the professional services of an appraiser, which includes contracts for a complete or partial appraisal, either for a sexennial reappraisal, triennial update, annual maintenance, or for any other special appraisal contract, for the appraisal of manufactured or mobile homes taxed like real property, and for any appraisal consulting contracts.

(2) Contracts for the preparation of tax maps, which includes, but is not limited to, pilot projects, aerial photography, and the complete computerized appraisal mapping program with digital map files.

(3) Contracts, in whole or in part, for the purchase or lease of computer hardware and software, and the maintenance thereof, including consulting contracts related to the same, used in the real property assessment process.

(a) Computers purchased or leased pursuant to this paragraph can be used to store property record card data, to update property values statistically, to print various abstracts of real property values, to type and print various valuation notices and taxpayer letters, and to perform other assessment-related functions.

(b) In the case where the computer contract is for both assessment-related and nonassessment-related goods or services, the portion of computer hardware, software, maintenance, and consulting costs related to assessment purposes may be determined based on the percentage of time used for assessment-related purposes, on the percentage of disc space utilized for assessment-related activities, or a combination of both items, or on any other reasonable method. The applicable apportionment method is subject to the approval of the tax commissioner, which shall be final.

(4) In-house assessment-related expenses of the county auditor, in whole or in part, for real property, machinery, equipment, supplies, vehicles, utilities, and employee salaries and benefits. Costs for property, utilities, and personnel used for both assessment and nonassessment purposes may be paid out of the real estate assessment fund to the extent that they are allocable to the assessment-related use. Costs for property, utilities, and personnel can only be considered as assessment-related, if the property, utility, or person is used directly in the real estate assessment process, or used directly in the assessment of manufactured or mobile homes taxed like real property.

(5) The cost to implement a permanent parcel numbering system.

(6) The cost to attend assessment-related seminars, continuing education courses, and conferences.

(7) The cost to update plat books and property record cards.

(8) Appraisal costs incurred by the county auditor to support values for real property and manufactured or mobile homes taxed like real property in administrative or judicial proceedings.

(9) The cost to prepare and print the real property tax list, the exempt real property list, the agricultural land tax list, and the portion of the manufactured home tax list that relates to the manufactured or mobile homes taxed like real property.

(10) Costs related to real property and manufactured or mobile home transfers.

(11) Costs incurred by the county auditor for the in-house preparation of tax maps.

(12) Costs related to the imaging or sketching of real property, and manufactured or mobile homes taxed like real property, on any medium.

(13) Costs to prepare and print various abstracts of real property values, valuation notices, and taxpayer letters.

(14) Costs related to the application and determination process for the current agricultural use valuation program described in sections 5713.31 to 5713.38 of the Revised Code.

(C) Other expenses allowable from the real estate assessment fund, at the discretion of the county auditor, may be divided into two categories: costs associated with activities of the county auditor related to real estate, but not to the assessment thereof by the county auditor; and costs associated with activities of the county auditor not related to real estate at all.

(1) Costs associated with activities related to real estate, but not to the assessment thereof by the county auditor, include costs incurred by the auditor for the following activities:

(a) Costs in preparing the tax list of real and public utility property.

(b) Costs in administering laws related to the taxation of real property, which include, but are not limited to, calculation of tax rates and taxes, preparation and printing of the tax duplicate and the delinquent tax lists and reports, tax settlement between county auditor and county treasurer, and distributions of tax settlements.

(d) Costs in administering the tax reduction factors and the ten per cent rollback under Chapter 319. of the Revised Code.

(e) Costs in administering the homestead exemption on real property and the two and one-half percent rollback on real property and manufactured or mobile homes taxed like real property under Chapter 323. of the Revised Code.

(f) Costs in administering the homestead exemption on manufactured or mobile homes under section 4503.065 of the Revised Code.

(g) Nonappraisal costs to support values of real property in any administrative or judicial proceeding

(h) Costs for geographic information systems, mapping programs, and technological advances in those or similar systems or programs.

(2) Costs associated with activities not related to real estate, occurring in the county auditor's office, include costs incurred by the auditor for the following activities:

(a) Costs in compiling the general tax list of tangible personal property and administering tangible personal property taxes under Chapters 5711. and 5719. of the Revised Code, which include, but are not limited to, processing tangible personal property tax returns, assessing tangible personal property, and compiling the tangible personal property tax duplicates.

(b) Costs, expenses, and fees in the administration of estate taxes under Chapter 5731. of the Revised Code.

(D) Expenditures not allowable from the real estate assessment fund may be divided into two categories: costs associated with activities of the county auditor related to real estate, but not to the assessment thereof by the county auditor; and costs associated with activities of the county auditor not related to real estate at all.

(1) Costs associated with activities related to real estate, but not to the assessment thereof by the county auditor, include, but are not limited to, costs for the following activities:

(a) Preparation and printing of the tax bills and the daily payment journal;

(b) The appraisal of real property for purposes other than the determination of current, true market value; for example, to determine the historical value or insurance value of county buildings;

(d) Administrative expenses of the county budget commission; and

(e) Expenses of the county engineer incurred in the drafting of tax maps, pursuant to section 5713.10 of the Revised Code.

(2) Costs associated with activities not related to real estate, occurring in the county auditor's office, include, but are not limited to, costs for the following activities:

(a) Payroll;

(b) Disbursement cycle:

(d) Manufactured home tax, except as provided in paragraphs (B) and (C) of this rule;

(e) General relief;

(f) Budgetary and fiscal process;

(g) Weights and measures; and

(h) Building maintenance.

(E) If the county auditor intends to spend money from the real estate assessment fund for any costs not specifically allowed under paragraph (A), (B), or (C) of this rule or specifically disallowed under paragraph (D) of this rule, the auditor must first seek approval from the tax commissioner upon the filing of a form prescribed by the tax commissioner for that purpose.

(F) Under the general authority of section 5713.01 of the Revised Code, if the board of county commissioners fails to appropriate sufficient money for the county auditor's assessment activities, the auditor may apply to the tax commissioner for an additional allowance for the type of expenditures listed in paragraph (B) of this rule. However, under division (B) of section 325.20 of the Revised Code this right to apply to the tax commissioner is not available for certain travel outside this state. Under this latter section, the county auditor must apply to the board of county commissioners in writing showing the necessity of the travel and the probable costs to the county from the real estate assessment fund for any out-of-state travel, if those travel expenses will or may exceed one hundred dollars. The board shall approve or disapprove the auditor's request. The board's decision is final.

(G) Under division (B) of section 325.31 of the Revised Code, a copy of any appraisal plans, progress of work reports, contracts, or other documents required to be filed with the tax commissioner shall be filed also with the board of county commissioners. This requirement includes the DTE form 108, the DTE form 92, any contracts listed on the form 92, any applications for additional allowances filed pursuant to section 5713.01 of the Revised Code, any forms filed pursuant to paragraph (E) of this rule, and any other documents requested by the tax commissioner relating to the real estate assessment fund. This requirement applies to any person filing the document with the tax commissioner: whether that person is, for example, the county auditor, an individual appraiser, an appraisal firm, a consultant, or a computer firm.

Last updated July 8, 2025 at 11:52 AM

History

Effective: April 12, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-25-56 Real estate assessment fund; competitive bidding requirement.

(A) Under division (F) of section 5713.01 of the Revised Code, any contract for goods or services related to the auditor's duties as assessor, except those for the professional services of an appraiser, shall be awarded pursuant to the competitive bidding procedures set forth in sections 307.86 to 307.92 of the Revised Code. Examples of contracts that require competitive bidding include, but are not limited to, contracts for mapping, computers, and reproduction on any medium of any documents, records, photographs, microfiche, or magnetic tapes. The only assessment-related contracts of the county auditor that are not subject to the competitive bidding procedures are the contracts for the professional services of an appraiser.

(B) Contracts that contain both the professional services of an appraiser and computer, mapping, reproduction, or any other services that are not the professional services of an appraiser are subject to the competitive bidding procedures mentioned above.

(C) A contract to purchase computer software is not a contract for the professional services of an appraiser and is subject to the competitive bidding procedures. A contract to purchase computer software includes a contract for computer programming services to create or modify computer software.

(D) If an appraiser uses computer hardware or software, either the appraiser's own or the county's equipment, in the performance of the appraisal services, all the services are deemed to be appraisal services, and a contract for such services is not subject to the competitive bidding procedures.

(E) Any contract, whether in whole or in part, for the preparation of tax maps as defined in paragraph (B)(2) of rule 5703-25-55 of the Administrative Code is subject to the competitive bidding procedures mentioned above, even if the services contained therein might otherwise be considered to be the professional services of an appraiser, and even if the services are performed by engineers, surveyors, consultants, or others who would otherwise be exempted from competitive bidding by section 307.86 of the Revised Code.

(F) Any contract for the assessment-related services of a person who is not an appraiser is subject to the competitive bidding procedures, even if that person would otherwise be exempted from the competitive bidding procedures by section 307.86 of the Revised Code; for example, contracts with accountants, attorneys at law, and consultants.

(G) For purposes of this rule and division (F) of section 5713.01 of the Revised Code, the professional services of an appraiser are any assessment-related services performed by persons who are professional appraisers and who are on the tax commissioner's list of appraisal firms and individual appraisers that have created a file pursuant to paragraphs (J) and (K) of rule 5703-25-08 of the Administrative Code, and which include:

(1) The direct appraisal of real property either for a sexennial reappraisal, a triennial update, annual maintenance, or for any other special appraisal contract for the determination of "true value in money" or "true value" of all real property as defined in paragraph (A) of rule 5703-25-05 of the Administrative Code, or for the determination of "current agricultural use value of land" as defined in paragraph (B)(2) of rule 5703-25-30 of the Administrative Code;

(2) The direct appraisal of manufactured or mobile homes taxed like real property under division (D)(2) of section 4503.06 of the Revised Code;

(3) Preparation and updating of property record cards, including parcel sketching on any medium;

(4) The use of computer hardware and software to perform the services listed in paragraphs (G)(1), (G)(2), and (G)(3) of this rule;

(5) Appraisal consulting services relating to the services described in paragraphs (G)(1), (G)(2), and (G)(3) of this rule; and

(6) The support of values in administrative or judicial proceedings.

(H) For purposes of this rule and division (F) of section 5713.01 of the Revised Code, the professional services of an appraiser do not include:

(1) The sale of computer hardware and software;

(2) Any mapping projects;

(3) The reproduction of documents, including videodisc imaging;

(4) Any assessment-related services performed by persons who are not professional appraisers and who are not on the tax commissioner's list of appraisal firms and individual appraisers that have created a file pursuant to paragraphs (J) and (K) of rule 5703-25-08 of the Administrative Code; and

(5) Any other services not listed in paragraph (G) of this rule.

(I) Notwithstanding any other paragraph of this rule, no assessment-related contract is required to be competitively bid if its cost is not in excess of the dollar limitation contained in section 307.86 of the Revised Code. This dollar limitation should apply separately to each purchase or lease only if it may reasonably and in good faith constitute a separate contract or purchase order. The purchase or lease may not be split into separate contracts or orders for the purpose of avoiding the competitive bidding procedures. What constitutes a "purchase" for purposes of section 307.86 of the Revised Code is a question of fact to be determined on a case-by-case basis.

Last updated July 8, 2025 at 11:52 AM

History

Effective: April 12, 2019
Promulgated Under: Other

Chapter 5703-27 Providing Municipal Income Tax Information

Ohio Adm.Code 5703-27-01 Providing municipal income tax information.

As used in this rule:

(A) "Taxpayer information" includes the following information regarding a taxpayer for each taxable year:

(1) The taxpayer's name, address, and federal employer identification number;

(2) The taxpayer-reported Ohio net income pursuant to section 5745.02 of the Revised Code;

(3) The taxpayer-reported Ohio apportionment ratio and the taxpayer-reported municipal apportionment ratio pursuant to section 5745.02 of the Revised Code; and

(4) The taxpayer-reported income apportioned to the municipal corporation for purposes of the tax imposed under Chapter 5745. of the Revised Code.

(B) "Tax administrator" means the individual charged with direct responsibility for administration of a tax on income levied by a municipal corporation.

(C) On or about the fifteenth day of March each year, the tax commissioner will provide each tax administrator the taxpayer information for each taxpayer who apportioned Ohio net income to that municipal corporation with respect to any report filed with the tax commissioner in the previous calendar year.

(D) Not later than thirty days following each quarterly distribution of estimated tax payments to municipal corporations pursuant to division (A) of section 5745.05 of the Revised Code, the tax commissioner will provide to each tax administrator a report setting forth the name of the taxpayer that made the estimated tax payment and the amount of the estimated tax payment with respect to the municipal corporation for which the tax administrator is responsible for administering the tax.

(E) The information provided pursuant to this rule will be provided in a format prescribed by the tax commissioner.

(F) Notwithstanding this rule, a municipality may obtain any information directly from any taxpayer as authorized by division (E) of section 5745.03 of the Revised Code.

(G) Except as otherwise authorized by law, any tax information received by a tax administrator from the tax commissioner is confidential and may only be disclosed to a properly authorized officer, employee, or agent of a municipal corporation for use in the performance of that officer's, employee's, or agent's official duties.

(H) Not later than the last day of January each year, each municipal corporation will provide to the tax commissioner, in a format prescribed by the tax commissioner, the name and mailing address of the person or persons to whom the municipal corporation requests that the tax commissioner provide the information described in this rule. The tax commissioner shall not provide such information to any person other than a person employed by the municipal corporation or a person employed by an agency that administers tax on behalf of the municipal corporation.

Last updated May 17, 2024 at 7:40 AM

History

Effective: May 17, 2024
Promulgated Under: Other

Chapter 5703-29 Commercial Activity Tax

Ohio Adm.Code 5703-29-02 Application of common owners and joint ventures.

(A) Consolidated elected and combined taxpayer groups under sections 5751.011 and 5751.012 of the Revised Code are required to file as one taxpayer if persons in the group meet certain requirements. One of those requirements is that the persons have a specified portion of the value of their ownership interest owned and controlled by "common owners" included in the group. In addition to an ownership interest, the higher-tiered entity must have the ability through its voting rights to control the operations of the lower-tiered entities at each level of the vertical chain. There is a different "control test" for combined groups than for consolidated elected groups. For combined groups, the "control test" is that the higher-tiered entity must own more than fifty per cent of the lower-tiered entity at each level of the vertical chain and effectively, through its ownership, possess the voting rights to be able to control the lower-tiered entity. For consolidated elected groups, the "control test" is that the higher-tiered entity must own at least fifty per cent or at least eighty per cent of the lower-tiered entity at each level of the vertical chain and effectively, through its ownership, possess the voting rights to be able to control the lower-tiered entity. For purposes of this paragraph, "effectively" means that the entity has the ability to actually control the operations of the lower-tiered entity and is not required to be part of another combined or consolidated group.

(B)

(1) Subject to paragraphs (B)(2), (C), and (D) of this rule, if a person owns and controls, directly or constructively through related interests, more than fifty per cent of the value of the ownership interest of another person, the first person is a common owner of the second person, and those persons must be members of a combined taxpayer group unless they elect to be members of a consolidated elected taxpayer group. Consolidated elected taxpayers may choose to consolidate based on a fifty per cent or more ownership test or an eighty per cent or more ownership test, and choose to either include or exclude all foreign entities. Common owners are not limited to business organizations but also include individuals, trusts, and estates. Further, "common owner" includes an entity that is not a "person" as that termed is defined in division (A) of section 5751.01 of the Revised Code. Not being a "person" will not prevent such an entity from making an election to be in a consolidated elected group. If a person is a common owner of persons who report as a consolidated elected taxpayer group as well as persons who are in a combined taxpayer group, the common owner is to register as part of both groups but must report its taxable gross receipts as part of the consolidated elected taxpayer group.

(2) A de minimis test applies in determining whether an individual, a trust, or an estate must be included as a common owner in a combined or consolidated elected taxpayer group. If the individual, trust, or estate has less than four thousand five hundred dollars in taxable gross receipts for the calendar year, the individual, trust, or estate will not be required to be registered as part of a combined or consolidated elected taxpayer group for that year. However, the individual, trust, or estate is still a common owner for all purposes of the commercial activity tax.

(C) There are general rules that are to be applied when determining the common ownership of any person. These are applicable to all persons defined in division (A) of section 5751.01 of the Revised Code.

(1) The determination of whether a person owns and controls another person constructively through related interests shall be made using a vertical ownership test, based on voting rights, pursuant to paragraph (D) of this rule. Attribution rules under the Internal Revenue Code, such as attribution between a husband and wife, do not apply. The vertical chain shall continue as long as the ownership test is satisfied, separately or in the aggregate, by any one or more members of the group.

(2) In the event a person or a group of persons believes that the uniqueness of its organizational structure justifies that "common ownership" exists despite the strict application of this rule, the person may file in writing with the tax commissioner a request for a finding that common ownership exists. Such request must be made prior to the end of the reporting period for which the request is to become effective. The person making this request has the burden of proof to show that common ownership exists and must provide the commissioner with detailed probative evidence in support of its position.

(3) If the ownership test is met for any part of the calendar quarter or calendar year, as applicable, the group must include the taxable gross receipts of that person for the portion of the tax period in which the ownership test was met. A person who no longer meets the ownership test of the group shall report taxable gross receipts only through the date it qualifies as a member of that group. The person shall report all taxable gross receipts during the remaining portion of the tax period either as a separate taxpayer, as a member of a combined taxpayer, or as a member of another consolidated elected group if it satisfies the requirements with respect to such group.

(4)

(a) When an election under section 5751.011 of the Revised Code is made, the election remains in place for at least eight calendar quarters. During that time the composition of the consolidated elected taxpayer group is only changed when a person falls within or without the elected ownership threshold. At the end of the eight calendar quarters, the consolidated elected group must notify the commissioner in writing if it does not wish to renew its election. In the absence of such notification, the election to consolidate automatically renews for another eight calendar quarters.

(b) A separate taxpayer or a combined taxpayer may make an election under section 5751.011 of the Revised Code at any time after it has registered. However, once the election is made, it remains in place for at least eight calendar quarters. Such election is effective prospectively unless a retroactive application has been requested in writing by the taxpayer and approved by the tax commissioner in accordance with paragraph (C)(5) of this rule.

(5) The tax commissioner may approve a request for a retroactive election to file as a consolidated elected taxpayer group under section 5751.011 of the Revised Code if the taxpayer made a registration error or made the request through the voluntary disclosure program.

(a) Registration error. With respect to the tax periods affected by the election, the taxpayer's original commercial activity tax returns reflect that the taxpayer filed as a consolidated elected taxpayer group and reported the taxable gross receipts of all members required to be included in the group in accordance with section 5751.011 of the Revised Code, but the taxpayer failed to make a proper election on a form prescribed by the commissioner for the purpose of making the election. The taxpayer's commercial activity tax returns as originally filed, from the date the taxpayer requests the election be effective up to and including the most recent tax period for which a return is due, must demonstrate that the taxpayer excluded intermember receipts and filed as a consolidated elected taxpayer group such that the application of a retroactive election will have no impact on the taxpayer's tax liability as shown on its originally filed returns. To the extent the taxpayer included on its initial registration any entities that were not incorporated or formed under the laws of a state or of the United States and, subject to the same limitations as described in this paragraph, the taxpayer may include additional similar entities. A request for a retroactive election to file as a consolidated elected taxpayer group will be denied for a taxpayer that was not registered for the commercial activity tax prior to contact from the department of taxation through a commercial activity tax audit, compliance, or criminal investigation program.

(b) Voluntary disclosure program. The taxpayer requests retroactive consolidation through the commercial activity tax voluntary disclosure program and qualifies for the program. A taxpayer qualifies for the commercial activity tax voluntary disclosure program if the taxpayer enters into and executes the commercial activity tax voluntary disclosure agreement prior to any contact from the department of taxation through any commercial activity tax audit, compliance, or criminal investigation program.

(D)

(1) In the case of a corporation, the valuation is calculated with respect to only those classes of stock having voting rights. Interests held in a corporation are attributable to any shareholder in the corporation based on the percentage of total value of the voting equity interests in the corporation owned and controlled by that shareholder.

(2) In the cases of partnerships and entities with membership interests (e.g., a limited liability company) or beneficial interests (e.g., business trusts, or other unincorporated business interests), the value is calculated with respect to the fair market value of the voting interest in those entities.

(3) In the case of a limited partnership, only the value of general partnership interests will be considered.

(4)

(a) In the case of a trust to which section 677 of the Internal Revenue Code applies, commonly referred to as a "grantor trust," the grantor is the common owner of the trust described in that section.

(b) In the case of a trust to which section 678 of the Internal Revenue Code applies, the person, other than the trust, described in section 678 of the Internal Revenue Code is the common owner of the trust.

(c) In the case of a trust treated as a corporation for federal income tax purposes, including but not limited to real estate investment trusts and business trusts, the beneficiaries are treated as shareholders and the common ownership rules for corporations apply.

(d) In the case of any other trust, there is no common owner unless paragraph (C)(2) of this rule applies.

(5) In the case of two or more persons having an interest in an unincorporated business, including but not limited to rental property, where there is no formal partnership agreement between the persons, an implied partnership is deemed to exist. One implied partnership exists for all such commonly owned and controlled interests of the unincorporated business. The implied partnership is a separate entity for purposes of the commercial activity tax and the ownership interests are determined as follows:

(a) In the case where the owners file a federal income tax form 1065, paragraphs (D)(5)(b) and (D)(5)(c) of this rule do not apply and the ownership and control is based on the capital account contribution as reported at the end of the tax filing occurring in the previous calendar year.

(b) If, for some reason, the owners are not required to file a federal income tax form 1065, in the case of rental property, the common ownership is based on the deed to the property. If two persons are listed on the deed, the property is considered to be owned and controlled fifty per cent by each of those persons. The burden is on those persons to prove an alternate ownership structure.

(c) If paragraph (D)(5)(b) of this rule does not apply, the common ownership of the implied partnership is based on the number of persons in the group. The burden is on those persons to prove an alternate ownership structure.

(E) If, pursuant to paragraph (A) of this rule, a person elects to consolidate with all others in which it has at least fifty per cent common ownership and control, that person must include all taxable gross receipts of a joint venture so owned and controlled unless there is another fifty per cent owner of the joint venture that makes the fifty per cent election to consolidate. For example, if a fifty per cent owner of a joint venture, A, makes an eighty per cent election to consolidate with others or decides to be part of a combined taxpayer group or be a single taxpayer, and the other fifty per cent owner, B, makes the fifty per cent election, B is required to include all the taxable gross receipts of the joint venture except for any receipts the joint venture has from B. If both A and B make the fifty per cent election, the taxable gross receipts of the joint venture, after subtracting any receipts the joint venture received from its owners, are split evenly between the two consolidated elected taxpayer groups. However, each of the joint venture owners making a fifty per cent election are only able to exclude those receipts each received from the joint venture entity and should refrain from dividing or apportioning such receipts from the joint venture with the other owner. In addition, each owner cannot exclude receipts the joint venture has from the other owner since the other owner is not in the same consolidated elected taxpayer group.

(F) For purposes of a combined taxpayer group, a person who does not have nexus with the state of Ohio may nevertheless be a "common owner," but is not required to include its taxable gross receipts on the group's return for purposes of calculating the group's commercial activity tax. Such combined taxpayer groups only need to include persons with substantial nexus with the state of Ohio, as defined in divisions (H) and (I) of section 5751.01 of the Revised Code and those persons' taxable gross receipts.

(G) The commissioner may publish and make available on the department of taxation's website, examples of the application of this rule.

Last updated July 10, 2025 at 12:15 PM

History

Effective: January 21, 2021
Promulgated Under: Other

Ohio Adm.Code 5703-29-03 Sampling.

(A) As authorized pursuant to division (G) of section 5751.09 of the Revised Code, the tax commissioner hereby prescribes sampling methods for the commercial activity tax that the commissioner may use in lieu of a complete examination of records. The sampling methods include, but are not limited to, the following:

(1) Statistical sampling. Statistical methods of sampling are those procedures that utilize random selection and are capable of projecting population values with a known reliability; and

(2) Non-statistical sampling. Non-statistical sampling includes methods such as block sampling.

(B) The commissioner shall make a good faith effort to reach agreement with the taxpayer to select the most appropriate sampling methodology.

(1) The failure of the commissioner to reach an agreement with the taxpayer does not preclude the commissioner from sampling.

(2) In accordance with section 5751.12 of the Revised Code, a taxpayer that keeps records electronically is required to provide those records electronically to the department of taxation upon the commissioner's request.

Last updated August 4, 2026 at 11:09 AM

History

Effective: January 2, 2021
Promulgated Under: Other

Ohio Adm.Code 5703-29-04 Excluded person -- consolidated elected and combined taxpayer groups.

(A) As used in this rule, "exclusion amount" has the same meaning as in section 5751.01 of the Revised Code .

(B)

(1) A consolidated elected taxpayer group is formed by an election pursuant to section 5751.011 of the Revised Code. To make the election, the group needs to register as such a taxpayer. For tax periods beginning before January 1, 2024, even if the group's total taxable receipts are below one hundred fifty thousand dollars, with or without taking into account gross receipts excluded because they are from other members of the group, the group still needs to pay the flat (minimum) tax.

(2) For tax periods beginning on or after January 1, 2024:

(a) Notwithstanding the binding eight-calendar quarters for which a consolidated election applies under section 5751.011 of the Revised Code, if a registered consolidated elected taxpayer's taxable gross receipts will not exceed the exclusion amount in the calendar year, such taxpayer may cancel its account.

(b) If a group of persons who would be subject to the commercial activity tax if the group registered as a combined taxpayer, but whose aggregate taxable gross receipts would not exceed the exclusion amount in the calendar year if the group were to make a valid consolidated election under section 5751.011 of the Revised Code and exclude intermember receipts, the group of persons does not need to register for the commercial activity tax.

(C)

(1) A combined taxpayer group exists pursuant to the provisions of section 5751.012 of the Revised Code. This group is not formed by an election. For tax periods beginning before January 1, 2024, if the group's total taxable receipts are below one hundred fifty thousand dollars in a calendar year, such group does not need to register or pay the flat (minimum) tax. For tax periods beginning on or after January 1, 2024, if the group's taxable gross receipts do not exceed the exclusion amount in a calendar year, such group does not need to register or pay the tax in that calendar year

(2) For tax periods beginning before January 1, 2024, within thirty days of having taxable gross receipts of one hundred fifty thousand dollars or more, such combined taxpayer group needs to register for, and is subject to, the commercial activity tax.

(3) For calendar year 2024 and thereafter, within thirty days of having taxable gross receipts of more than the exclusion amount, such combined taxpayer group should register for and is subject to, the commercial activity tax.

Last updated February 16, 2024 at 8:13 AM

History

Effective: February 16, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-29-05 Commercial activity tax taxpayers must file and pay electronically.

(A) Except as provided in paragraph (B) of this rule, each person required to file a commercial activity tax return shall file such return and remit payment of the tax liability as follows:

(1) The returns shall be filed electronically by using the Ohio business gateway as defined in section 718.01 of the Revised Code. Alternatively, a calendar year taxpayer may utilize the Ohio telefile system;

(2) The payment shall be made electronically by using the Ohio business gateway , or in the manner prescribed by rules adopted by the treasurer of state under section 113.061 of the Revised Code. Alternatively, a calendar year taxpayer may utilize the Ohio telefile system.

(B)

(C) Nothing in this rule affects any person's obligation to timely file all returns and timely pay all amounts required by Chapter 5751. of the Revised Code.

Last updated August 26, 2026 at 11:50 AM

History

Effective: March 26, 2021
Promulgated Under: Other

Ohio Adm.Code 5703-29-06 Transfers of property into the state.

(A) This rule provides the circumstances when a taxpayer/purchaser will be required to include the value of property that is transferred into this state within one year from the receipt of the property outside of this state pursuant to section 5751.013 of the Revised Code.

(B)

(1) Subject to paragraph (B)(2) of this rule, the value of property brought into this state within one year after it is received outside this state does not have to be included as a taxable gross receipt by the purchaser. However, upon audit, the tax commissioner may require the value of such property to be included as a taxable gross receipt if the commissioner finds that such transfer within one year was intended in whole or in part to avoid the commercial activity tax.

(2) The commissioner may identify and post on the department of taxation's website one or more descriptions of transfers that the commissioner deems are intended to avoid the commercial activity tax. If a transfer is one so described, the taxpayer must include the value of the property transferred as a gross receipt for that tax period in which the transfer is made. The property shall be valued at its fair market value at the time of transfer. The taxpayer may file a refund claim if the taxpayer believes that it can show that the acquisition and subsequent transfer was not intended in whole or in part to avoid the commercial activity tax.

(C) No penalty shall be imposed by the commissioner under paragraph (B)(1) of this rule. A penalty may be imposed by the commissioner under paragraph (B)(2) of this rule.

Last updated September 30, 2026 at 12:28 PM

History

Effective: December 25, 2016
Promulgated Under: Other

Ohio Adm.Code 5703-29-08 Request for member of a combined taxpayer group to file separately.

(A) This rule provides the procedure that a member of a combined taxpayer group under section 5751.012 of the Revised Code needs to follow to file as a separate taxpayer and not as part of the combined group.

(B)

(1) A member that is not the reporting person of a combined taxpayer group, together with the reporting person of the group, may contact the tax commissioner and request approval that the member be allowed to file separately from the group. For the member to file separately, the member and the reporting person need to agree to all of the following:

(a) The member will not claim any of the group's annual exclusion amount, and is not entitled to claim its own annual exclusion amount. For calendar years prior to 2024, the exclusion amount is one million dollars. For calendar year 2024, the exclusion amount is three million dollars. For calendar year 2025 and thereafter, the exclusion amount is six million dollars.

(b) The member will file as a separate taxpayer and will be subject to the applicable tax rate on all of the member's taxable gross receipts. For example, for the period July 1, 2015 through September 30, 2015, if a member had thirty thousand dollars of taxable gross receipts, the tax would be seventy-eight dollars, the rate of twenty-six one hundredths percent times the entire thirty thousand dollars of taxable gross receipts.

(c) The member is financially sound and currently able to pay the commercial activity tax and other obligations as determined by the commissioner.

(d) The member remains jointly and severally liable for the group's tax liability.

(2) The commissioner will provide a copy of the commissioner's written denial or approval to both the member requesting to file separately and to the reporting person of the combined taxpayer group. If approved, the separate filing will start at the beginning of the next tax period for the combined taxpayer. The commissioner, upon request, may grant special approval for the separate filing to begin with the current tax period.

(3) The commissioner may prescribe a form to apply to file separately from the group as provided by this rule.

Last updated August 4, 2026 at 1:30 PM

History

Effective: December 21, 2023
Promulgated Under: Other

Ohio Adm.Code 5703-29-09 Option for quarterly taxpayers to make estimated payments.

(A) Division (B) of section 5751.05 of the Revised Code allows the tax commissioner to grant written approval for a calendar quarter taxpayer to use an alternative reporting schedule or estimate the amount of tax due for the calendar quarter if the taxpayer demonstrates the need for such deviation. In addition, this section also grants the commissioner the authority to adopt a rule to allow a group of taxpayers such deviation without prior written approval. Pursuant to this authority, the commissioner hereby grants authority for all calendar quarter taxpayers to make estimated payments of their tax if done pursuant to the procedures prescribed in the following paragraphs.

(B) A calendar quarter taxpayer is allowed to file its commercial activity tax return and make an estimated payment of tax due thereon by the tenth day of the second month after the end of the calendar quarter if all the procedures set forth in this rule are followed.

(1) A calendar quarter taxpayer electing to make an estimated payment shall do all of the following for this rule to apply:

(a) File the "rule estimation" return, report the appropriate estimate of taxable gross receipts, and pay the appropriate amount of estimated tax. Taxpayers seeking to use the "statutory estimation" provided for under division (B) of section 5751.051 of the Revised Code shall file that return and shall not use this rule for any calendar quarter in that entire calendar year.

(b) Make an estimated payment of the tax using the tax rate in effect for the calendar quarter for which the estimated payment is being made. Any minimum annual tax amount that is owed is in addition to the estimated tax determined pursuant to this rule.

(c) On or before the due date of the return for the following calendar quarter, the taxpayer must reconcile its actual tax for the calendar quarter for which the estimate was made, using either a form prescribed by the commissioner for such purpose or the actual return. The taxpayer must calculate its actual tax using the tax rate in effect for that quarter for which the estimated payment is made, file its reconciliation report reconciling its actual tax with its estimated tax for that quarter, and, if applicable, pay any underpayment of the actual tax owed for that quarter. If the taxpayer's estimate results in an overpayment of tax, such overpayment will be applied to the next tax return/report. If, after applying the overpayment to such next tax return/report an overpayment remains, such remaining overpayment may be refunded or carried forward to the subsequent return/report filed by the taxpayer. A taxpayer making an election under this rule must file the return for the following calendar quarter. The return for that calendar quarter may again be estimated in accordance with this rule.

(d) In order for this rule to apply, both the estimated payment return/report and the reconciliation report/return, along with all applicable payments for those tax periods, must be made timely, and the taxpayer must not have any outstanding commercial activity tax liability.

(2) A taxpayer electing to make an estimated payment, as prescribed by paragraph (B)(1) of this rule, must estimate its taxable gross receipts as at least ninety-five per cent of the taxable gross receipts from the previous quarter. However, in no event shall a taxpayer's estimated payment for a given calendar quarter be less than seventy per cent of its actual tax liability for that calendar quarter. In the event a taxpayer's previous calendar quarter's taxable gross receipts exceed its current quarter's taxable gross receipts, such taxpayer's estimated tax liability for the quarter is only required to equal or exceed one-hundred per cent of its tax liability for that period.

(C) Any taxpayer who elects to estimate its tax using this rule shall not estimate its tax using the statutory estimation procedure contained in division (B)(2) of section 5751.051 of the Revised Code for any calendar quarter in that entire calendar year.

(D) Interest and penalties will not be imposed on payments made pursuant to this rule provided the taxpayer fully complies with this rule. In other words, such payments will be considered to be made timely. A taxpayer who elects to estimate its tax under this rule agrees to have any overpayment automatically be applied to the taxpayer's next commercial activity tax report filed.

(E) For example, assume a taxpayer for the second calendar quarter of 2020 elects to make an estimated payment pursuant to this rule. For this example, the taxpayer's actual taxable gross receipts for the first calendar quarter were $8,000,000. By August 10, 2020, the taxpayer files its second calendar quarter return and selects the "rule estimation" return. In making the estimated payment, the taxpayer calculates an estimated liability of $19,760 (.0026*$7,600,000). In order to be covered by the safe harbor, the taxpayer makes an electronic payment of $19,760. Such taxpayer meets the ninety-five per cent threshold required to avoid the imposition of interest and penalties when it reconciles its report at the beginning of the third calendar quarter.

When reconciling the second calendar quarter return by filing its third quarter return, the taxpayer determines its actual taxable gross receipts for the second quarter were $8,500,000. The taxpayer applies the effective tax rate for the second quarter to its actual taxable gross receipts, resulting in a tax liability of $22,100 (.0026*$8,500,000).

By November 10, 2020, the taxpayer will be required to electronically file its reconciliation report, reflecting an additional $2,340 tax due ($22,100 actual tax liability for the second calendar quarter, less the $19,760 estimated payment). At the same time, the taxpayer must timely file its third calendar quarter return/report and may elect to make an estimated payment for the third quarter (based on the taxpayer's second calendar quarter actual taxable gross receipts).

Last updated January 13, 2026 at 12:02 PM

History

Effective: January 13, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-29-10 Nonprofit organizations and contributions.

(A) Division (A) of section 5751.01 of the Revised Code defines "person" for purposes of the commercial activity tax. The definition excludes nonprofit organizations. This rule defines a "nonprofit organization."

(B) Solely for purposes of the commercial activity tax, "nonprofit organization" means an entity that meets both of the following:

(1) The entity is organized other than for the pecuniary gain or profit of, and the entity's net earnings or any part of them are not distributable to, the entity's members, directors, officers, or other private persons, unless otherwise permitted by law. The payment of reasonable compensation for services rendered and the distribution of assets on dissolution as permitted by the laws under which the entity is organized is not pecuniary gain or profit or distribution of net earnings. If all of the entity's members are nonprofit organizations, distribution to its members does not deprive the entity of the status of a nonprofit organization.

(2) The entity is operating consistent with its organization.

(C) Nonprofit organizations include, by way of example, but are not limited to, those entities organized under the nonprofit provisions in Chapter 1702., 1707., 1711., 1713., 1715., 1716., 1717., 1719., 1721., 1724., 1725., 1727., 1729., or 1733. of the Revised Code or similar nonprofit provisions of other jurisdictions.

(1) Rural electric companies and telephone cooperatives are deemed to be nonprofit organizations under Chapter 1702. or 1729. of the Revised Code for purposes of the commercial activity tax.

(2) Organizations formed for the purpose of funding political campaigns are deemed to be nonprofit organizations for purposes of the commercial activity tax. These organizations include those authorized under federal law, and certain entities receiving contributions that are defined in Chapter 3517. of the Revised Code or under comparable laws of other states. These entities would include a campaign committee, a continuing association, a political action committee, a legislative campaign fund, and a political committee.

(3) A charitable lead trust is deemed to be a nonprofit organization during the lifetime of the grantor. Upon the death of the grantor, the charitable lead trust will no longer be deemed to be a nonprofit organization.

(4) A limited liability company ("LLC") meeting the conditions of paragraph (B) of this rule is deemed to be a nonprofit organization. For purposes of the commercial activity tax, a single member LLC is separate and distinct from its owner. Therefore, in order for it to be considered a nonprofit organization, it does need to meet the conditions of paragraph (B) of this rule separate and apart from its owner. For example, if a nonprofit organization is the owner of a single member LLC and that LLC does not meet the conditions of paragraph (B) of this rule, the LLC does not qualify as a nonprofit organization.

(D) Receipts of certain contributions and fees are excluded under divisions (F)(2)(f) and (F)(2)(j) of section 5751.01 of the Revised Code regardless of whether the person is a nonprofit organization. To exclude contributions under division (F)(2)(f) of section 5751.01 of the Revised Code, the contributions need to be received by persons described in section 501(c), 501(d), or 401(a) of the "Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended. For example, certain pension plans do not qualify as nonprofit organizations. While the contributions and fees made to those pension plans would be exempt from the commercial activity tax, gross receipts from the business operations of those pension plans may be taxable gross receipts.

Last updated February 1, 2024 at 9:02 AM

History

Effective: February 1, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-29-13 Commercial activity tax definition of "agent".

(A) An "agent" is defined in division (N) of section 5751.01 of the Revised Code to include a person authorized by another to act on its behalf to undertake a transaction for the other. In certain circumstances, portions of the amounts received by a person defined as an "agent" are excluded from the definition of "gross receipts" under division (F) of section 5751.01 of the Revised Code. The agent is only required to report as a "gross receipt" the portion of the amount received that it retains as a commission or fee rather than the entire amount.

(B)

(1) The party asserting the existence of an agency relationship bears the burden of proof in that regard. See "Gardner Plumbing, Inc. v. Cottrill (1975), 44 Ohio St.2d 111, 115, citing Union Mutual Life Ins. Co. v. McMillen (1873), 24 Ohio St. 67." Thus, in determining whether an agency relationship exists, the facts must be determined under a strict, narrow reading of the definition. Absent proof of an agency relationship, the entire gross receipt must be reported by the person receiving the gross receipt for purposes of the commercial activity tax.

(2) The commissioner will look beyond the wording of the contract to the actual facts and circumstances of the situation to determine whether an agency relationship actually exists. See "H.R. Options, Inc. v. Zaino (2004), 100 Ohio St.3d 373."

(C) Division (N) of section 5751.01 of the Revised Code defines "agent" to include certain individuals acting on behalf of another. Each of the following individuals is included in the list in that division and qualifies as an "agent" for purposes of this rule:

(1)

(a) In the case of a person enumerated in division (N)(1) of section 5751.01 of the Revised Code who receives a fee to sell financial instruments, only the fee received to perform this service shall be a gross receipt of the agent pursuant to division (F)(2)(l) of section 5751.01 of the Revised Code.

(b) For example, an out-of-state dealer (i.e., a person without an office or other place of business in Ohio) orchestrates the sale of a bond on behalf of Franklin county, Ohio. The dealer contracts with the county to purchase bonds at a discount to sell them on the county's behalf. The cost of the bond is one thousand dollars; the dealer sells the bond to the client for one thousand fifty dollars. The dealer remits the full purchase price of one thousand dollars to Franklin county, Ohio and retains fifty dollars as an administrative fee. Even though the dealer actually received one thousand fifty dollars from the client, the dealer would be required to include only the client's fifty dollar fee in calculating the dealer's total taxable gross receipts for purposes of the commercial activity tax.

(2)

(a) In the case of a person enumerated in division (N)(2) of section 5751.01 of the Revised Code who retains a commission or fee from a transaction performed on behalf of another person, only the fee retained by the agent shall be a gross receipt of the agent pursuant to division (F)(2)(l) of section 5751.01 of the Revised Code. For purposes of this paragraph and paragraph (B) of this rule, the agency relationship should be explicitly stated in a contract that is available to the tax commissioner to inspect. Absent such proof, it will be presumed that no agency relationship exists and the person claiming the agency relationship will include the total amount received in its gross receipts.

(b) For example, a general contractor enters into a lump sum contract with a property owner for the general contractor to construct an office building. The general contractor agrees to provide specified services for a fixed price of five hundred thousand dollars, and the general contractor bears all risk involved in completing the project in a cost-effective manner. The general contractor may perform the necessary services itself, or it may bid out some or all of the work to subcontractors. Because the general contractor is not required to act in the owner's best interests with respect to cost issues, and because the general contractor does not have to disclose cost details with the owner, the general contractor does not qualify as an agent for purposes of the agency exclusion. For this reason, the entire contract price is includable in the general contractor's gross receipts.

(c) Alternatively, for example, a general contractor enters into a costs-plus contract with a property owner for the general contractor to construct an office building. Under the terms of the contract, the owner agrees to pay the general contractor for work completed by the subcontractors at cost plus a five per cent fee. The general contractor is required to act in the owner's best interests with respect to cost issues. The general contractor, when bidding out the work to subcontractors, has an agreement in writing with the subcontractors that states that the general contractor is acting as the owner's agent and not as an agent of the subcontractor. The general contractor acts as a conduit with regard to any payments made to the subcontractors, in that the general contractor remits monies received from the owner to the subcontractors, provided that certain conditions are met. Accordingly, the general contractor may exclude the money that the general contractor receives from the owner to pay the subcontractors from its gross receipts. However, the five per cent fee retained by the general contractor would be included in its calculation of gross receipts for purposes of the commercial activity tax.

(3)

(a) In the case of a person enumerated in division (N)(3) of section 5751.01 of the Revised Code who issues licenses and permits under section 1533.13 of the Revised Code, only the portion of a fee retained by the issuer shall be included in the gross receipts of the agent pursuant to division (F)(2)(l) of section 5751.01 of the Revised Code.

(b) For example, an independent agent at a bait and tackle shop is authorized under section 1533.13 of the Revised Code to issue hunting and fishing licenses to Hocking county residents. The agent collects a fee of twenty-five dollars for issuing a license and later remits this amount to the chief of the wildlife division of the Ohio department of natural resources. The independent agent will not be subject to the commercial activity tax. If, however, the agent retained a five dollar fee for administering the license, this amount would be included in the agent's calculation of its gross receipts for purposes of the commercial activity tax.

(4)

(a) In the case of a lottery sales agent enumerated in division (N)(4) of section 5751.01 of the Revised Code who holds a valid license issued under section 3770.05 of the Revised Code, only the portion of the fee retained by the lottery sales agent shall be included in the gross receipts of the agent pursuant to division (F)(2)(l) of section 5751.01 of the Revised Code.

(b) For example, a convenience store clerk is licensed under section 3770.05 of the Revised Code to sell lottery tickets as part of its store operations. As part of an agreement with the director of the state lottery commission, the convenience store may retain one per cent of the gross receipts received from the sale of lottery tickets as an administrative fee. The convenience store clerk sells a ticket to a customer for two dollars and remits one dollar and ninety-eight cents (or ninety-nine per cent) to the director of the state lottery commission. The convenience store will include the two cent (or one per cent) administrative fee it retains in its gross receipts, in addition to its other receipts from store operations to the extent required by Chapter 5751. of the Revised Code.

(5)

(a) In the case of a person enumerated in division (N)(5) of section 5751.01 of the Revised Code who acts as an agent of the division of liquor control under section 4301.17 of the Revised Code, only the portion of the fee retained by the agent shall be included in the gross receipts of the agent pursuant to division (F)(2)(l) of section 5751.01 of the Revised Code.

(b) For example, the owner of a state liquor agency in Sandusky, Ohio is a statutory agent of the division of liquor control and is granted the authority to sell spirituous liquor to its customers. In the contract and as compensation for this relationship, the division agrees that the agent may keep five per cent of its annual sales of these beverages as its commission. The state liquor agency sells five hundred thousand dollars worth of spirituous liquor in one year and remits a payment of four hundred seventy-five thousand dollars to the division of liquor control. The market owner is only required to include the remaining twenty-five thousand dollars (or five per cent of the market owner's total sales of spirituous liquor) in calculating its gross receipts with regard to the agent relationship. The provisions of division (N)(5) of section 5751.01 of the Revised Code only apply to state liquor stores or agencies and do not apply to local markets selling beer, wine, or other types of alcoholic beverages.

(D)

(1) In the case of a restaurant or other establishment that collects gratuity on behalf of another, the portion of the amount received that is considered "tips" or "gratuity" is not included in the establishment's gross receipts pursuant to division (F)(2)(l) of section 5751.01 of the Revised Code. This portion of the gross receipts may be a gross receipt of the person ultimately receiving the tip if the other requisite requirements under section 5751.01 of the Revised Code are met.

(2) For example, a restaurant in Columbus, Ohio employs a server to assist in serving its customers. The restaurant collects a total of one thousand two hundred dollars, including a twenty per cent gratuity of two hundred dollars. The restaurant only passes one hundred eighty dollars of the gratuity on to the server and retains the remaining twenty dollars. The restaurant is considered an agent for the one hundred eighty dollar portion of the gratuity that it passes on to the server. The twenty dollar portion retained is a gross receipt of the restaurant. (The server does not have any gross receipts for the one hundred eighty dollar portion of the gratuity it receives from the restaurant, as such amount is considered compensation and is specifically excluded under division (F)(2)(g) of section 5751.01 of the Revised Code.)

(E)

(1) In the case of a person who advances fees on behalf of a client, the person may exclude the reimbursement of these fees from the person's gross receipts when the reimbursement is received from the client.

(2) For example, an individual retains an attorney to represent the individual in a personal injury suit against a company. The attorney advances a filing fee to the court in order to allow the client to file a complaint against the company. In addition to the attorney's hourly rate, the attorney charges the client the filing fee, as well as copying charges for copies made and telephone charges for calls made all on the client's behalf. When calculating the attorney's commercial activity tax liability, the attorney may exclude the court fees that were advanced on the client's behalf from the attorney's gross receipts pursuant to division (F)(2)(l) of section 5751.01 of the Revised Code but may not exclude the copying fees or the telephone charges for calls made on the client's case.

(F)

(1) In the case of a property owner who charges common area maintenance fees to its tenants or another third party or bases the fees on the square footage contained within a particular portion of the building, an agency relationship does not typically exist. Therefore, when the property owner collects these fees, they are considered gross receipts for purposes of the commercial activity tax. These fees reimburse the property owner for expenses to the property owner and expenses may not be deducted from the taxpayer's gross receipts.

(2) For example, a property owner leases a commercial building to a tenant for one thousand dollars and charges the lessee an additional one hundred dollars per month for common area maintenance, including snow plowing, landscaping, trash removal, and heating and cooling services. The property owner collects one thousand dollars in rent and one hundred dollars for the tenant's common area maintenance fee. The property owner is required to report the entire one thousand one hundred dollars as a gross receipt for purposes of the commercial activity tax.

(G)

(1) In the case of a person who enters into a contract with a client where the person is reimbursed for its own expenses incurred in the performance of the contract, an agency relationship generally does not exist. Therefore, the amounts received from the client to reimburse the person for its own expenses are considered gross receipts and cannot be deducted from the person's gross receipts.

(2) For example, a company that provides food services for a client in Ohio enters into a management-fee contract. Under the management-fee contract, the client reimburses the company for its purchase of food, labor, and miscellaneous materials from third-party vendors and pays the company a management fee. Because the company retains the amounts paid as reimbursements and does not pass the amounts on to third-party vendors, the company is not an agent for purposes of the commercial activity tax. The reimbursements it receives for the purchase of food, labor, and miscellaneous materials and the management fee are gross receipts and are not excludable for purposes of the commercial activity tax.

Last updated May 4, 2026 at 7:38 AM

History

Effective: May 4, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-29-14 Commercial activity tax definition of "cash discounts".

(A) For purposes of the commercial activity tax, "cash discounts" (i.e., reductions in gross revenue) are excluded from a taxpayer's "gross receipts" pursuant to division (F)(2)(bb) of section 5751.01 of the Revised Code.

(B) For purposes of this rule, "cash discounts" include the following:

(1) "X per cent, y-day" discounts, where the purchaser may take a percentage cash discount on the invoice price if payment is made within a specified period of time of the invoice date; otherwise the entire invoice price is due by the net date;

(2) Provided they are only based on making timely payments or volume purchases;

(a) Incentive-based rebates received by a purchaser, but not the purchaser's customer; and

(b) Discounts allowed and taken by a purchaser, but not the purchaser's customer.

(3) Unilateral or negotiated price adjustments that are not based on, or do not require, the provision of anything of material value on the part of the purchaser as consideration for the price adjustment.

(C)

(1) For example, an Ohio retailer purchases its products from the manufacturer and receives an invoice with a two-ten, net-thirty cash discount option. If the retailer pays the invoice within ten days of the invoice date, the retailer may deduct from its payment to the manufacturer two per cent of the invoice price. In such case, the manufacturer would be entitled to exclude such amount for such reduction in the invoice and could report the ninety-eight per cent of the invoiced price that it received from the retailer as a gross receipt. If the retailer fails to pay the invoice within ten days, the entire invoice amount is due within thirty days of the invoice date and the manufacturer would report the one hundred per cent of the invoiced price that it received from the retailer as taxable gross receipts.

(2)

(a) As another example, for promotional purposes and in order to boost its sales, a car manufacturer announces that it will provide an incentive-based rebate of one thousand dollars per "Model A" car to all dealers that sell at least one hundred "Model A" cars in a given quarter. A car dealer located in Columbus, Ohio sells two hundred "Model A" cars in the first quarter. In accordance with its incentive program, the manufacturer sends the dealer a check for two hundred thousand dollars. The two hundred thousand dollar incentive-based rebate does not have to be included in the dealer's gross receipts for purposes of the commercial activity tax and the manufacturer can exclude the rebate amount from its gross receipts.

(b) In contrast, assume a manufacturer provides an incentive-based rebate to the car dealer's customers and that the customer, whether obligated to or not, signs the rebate over to the car dealer. This incentive-based rebate cannot be excluded by the manufacturer or the car dealer as a cash discount, as such rebate was paid to the purchaser's customer and not to the purchaser.

(3)

(a) As another example, a hardware store accepts a manufacturer's coupon for a one dollar discount of two boxes of "X Brand" nails. The hardware store remits the coupon to "X Brand" manufacturer and "X Brand" manufacturer reimburses the hardware store the one dollar discount taken, plus the eight-cent handling fee. When the hardware store receives the one dollar and eight cent rebate from the manufacturer, it needs to include that amount in its gross receipts for purposes of the commercial activity tax. "X Brand" manufacturer cannot claim any exclusion from its gross receipts for such reimbursement because the reimbursement goes to the retailer that accepted a coupon from its customer and not a reimbursement directly to the retailer. It is also not a reimbursement to the purchaser based on timely payment or volume purchases.

(b) Assume, however, that the Ohio hardware store advertises a one dollar discount on two boxes of "X Brand" nails, and provides a store coupon for a one dollar discount on purchase of the two boxes of "X Brand" nails. The store is not reimbursed by "X Brand" manufacturer for any such coupons tendered. When the customer purchases the nails and is given a one dollar discount, the hardware store does not need to include that one dollar in its calculation of gross receipts for purposes of the commercial activity tax.

(4) As another example, for services rendered, assume a discount store receives a monthly shelving allowance/fee from certain manufacturers for displaying the manufacturer's products in a prime location in the discount store. The discount store will need to include this allowance/fee in its calculation of gross receipts for purposes of the commercial activity tax. In addition, the manufacturer cannot exclude such allowance/fee from its calculation of gross receipts for purposes of the commercial activity tax.

(5) As another example, a fast food franchise receives a flat fee or a variable fee based on the number of products sold (e.g., hamburgers sold) for providing local advertising. The franchise cannot exclude this type of fee from its calculation of gross receipts because such reimbursement is for an expense and is not based on making timely payments or on volume purchases.

(6) As another example, an unseasonably early winter causes a manufacturer to produce inventory in excess of the manufacturer's normal cold-weather demand. To unload the excess product, the manufacturer offers a twenty-five per cent off-invoice discount on all purchases for a limited time. The purchaser is not obligated by the manufacturer to offer a discount to its wholesale or retail customers, promote the manufacturer's product through advertisements, circulars, prominent placement, or otherwise, or provide any reciprocal promise or service to the manufacturer in order to receive the discount. The manufacturer may exclude the twenty-five per cent off-invoice discount from its calculation of gross receipts for purposes of the commercial activity tax.

(7) As another example, a large bakery sells its artisan breads to businesses from the largest chain grocery stores to small, family-owned diners. To show its appreciation for its small-business customers, the bakery offers special pricing to any customer that does not operate as a franchise and has only one business location. The special price is reflected on each invoice as a discount from the regular list price and is tracked in a general ledger expense account titled "Small business preferred pricing discount." The bakery may exclude from its calculation of gross receipts the difference between the list price and special price as reflected in the expense account.

Last updated October 7, 2024 at 8:24 AM

History

Effective: October 7, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-29-15 Highway transportation services - bright-line presence and situsing.

(A) Pursuant to division (I) of section 5751.01 of the Revised Code, a person is deemed to have "bright-line presence" in Ohio for purposes of the commercial activity tax if the person meets one of the five tests listed in that section, one being that the person has property in Ohio with an aggregate value of at least fifty thousand dollars at any time during the calendar year. This rule is to address the application of the property test to highway transportation services.

(B) For purposes of paragraph (A) of this rule, a person providing highway transportation services will be presumed to have at least fifty thousand dollars of property in the aggregate during the calendar year if the person has property of such value in Ohio for more than thirteen days, which need not be consecutive.

(C) For purposes of paragraph (B) of this rule, "day" means a calendar day or any portion thereof. Multiple trips during the same day do not constitute more than one day.

(D)

(1) Persons providing highway transportation services must situs gross receipts from such services pursuant to division (G) of section 5751.033 of the Revised Code in proportion to the miles traveled by the carrier during the tax period within the state compared with the miles traveled by the carrier during the tax period everywhere. Even if a person or group of persons has bright-line presence, however, that person or group of persons needs to exceed the applicable taxable gross receipts threshold in order to be a taxpayer for purposes of the commercial activity tax. That threshold applies to a person who would otherwise be a separate taxpayer or to a group of persons who are members of a combined taxpayer group or, a consolidated elected taxpayer group. Please see rules 5703-29-02 and 5703-29-04 of the Administrative Code for further clarification on this issue.

(2) For example, assume a widget manufacturer located in Kansas contacts ABC trucking company (ABC), a Kansas transportation company, to arrange the transportation of one hundred thousand dollars worth of the manufacturer's widgets to XYZ retailer (XYZ), located in Pennsylvania. The total trip is nine hundred miles, of which two hundred fifteen miles are traveled in Ohio, and ABC charges the manufacturer ten thousand dollars. ABC loads the widgets onto its trucks in Kansas and drives them through Ohio to XYZ's Pennsylvania location. ABC's truck is worth eighty thousand dollars, and this is the only trip ABC makes through Ohio during the calendar year. ABC would not be deemed to have bright-line presence for purposes of the commercial activity tax because ABC is not in Ohio for more than thirteen days during a calendar year.

If, however, ABC contracted with the widget manufacturer to make bi-weekly trips to XYZ in Pennsylvania for purposes of transporting the widgets, and ABC drove through Ohio each trip, ABC would be deemed to have bright-line presence in Ohio for purposes of the commercial activity tax. It is important to remember, however, that ABC would not be considered a taxpayer subject to the commercial activity tax until ABC exceeds the applicable taxable gross receipts (those gross receipts sitused to Ohio) threshold during the calendar year. If ABC is a combined taxpayer or a consolidated elected taxpayer, the entire group adds its taxable gross receipts together to determine if the group exceeds the threshold amount. In this example, assuming ABC meets the bright-line standard, ABC's ten thousand dollars of gross receipts would be sitused to Ohio based on the proportion of miles driven within Ohio compared with miles driven everywhere.

Last updated October 7, 2024 at 8:24 AM

History

Effective: October 7, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-29-16 Qualified distribution center.

(A) Pursuant to division (F)(2)(z) of section 5751.01 of the Revised Code, "gross receipts" excludes "qualifying distribution center receipts." Section 5751.40 of the Revised Code defines "qualifying distribution center receipts" and other terms used in that definition. While all the conditions of section 5751.40 of the Revised Code must be met, it essentially provides that certain receipts of a supplier from qualified property delivered to a qualified distribution center are excluded from that supplier's calculation of gross receipts for purposes of the commercial activity tax. The extent of this exclusion is based on the Ohio delivery percentage as determined by the qualified distribution center, and such percentage applies to all suppliers shipping to that location regardless of the percentage of that supplier's actual property that will be shipped outside the state.

(B) In order to be certified as a qualified distribution center, a warehouse, a facility similar to a warehouse, or a refining facility in addition to meeting all other conditions specified in section 5751.40 of the Revised Code, must meet both of the following conditions for the qualifying period:

(1) The operator of the warehouse, a facility similar to a warehouse, or the refining facility and members of the operator's consolidated elected taxpayer group as described in section 5751.011 of the Revised Code had at least five hundred million dollars in cumulative costs from qualified property delivered to the distribution center by its suppliers during the qualifying period. Such costs only include costs of qualified property, which is tangible personal property delivered to a distribution center that is shipped there solely for further shipping by the distribution center to another location either within or without Ohio or in the case of gold, silver, platinum or palladium, delivered to a refining facility solely for refining to a grade and fitness acceptable for delivery to a registered commodity exchange. Only the cost of the qualified property, less any reductions in price (e.g., cash discounts) is considered for purposes of this calculation. Any costs or reimbursements for providing a service to the seller, such as management consulting services, are excluded from the calculation. Further, only purchases made by members of the same consolidated elected taxpayer group and received at the distribution center are included in the calculation of the five hundred million dollars. All purchases from members of the same consolidated elected taxpayer group will be excluded from the calculation and cannot be included in the five hundred million dollar threshold.

(a) For example, corporation A is the operator of a distribution center. Corporation A, corporation B, and corporation Z purchase qualified property that is shipped to the distribution center by independent, third-party suppliers during the qualifying period. Corporation A and corporation B are part of the same consolidated elected taxpayer group; corporation Z is not part of corporation A's consolidated elected taxpayer group. The purchases of qualified property made by corporation A and corporation B that are shipped to the distribution center are aggregated in the calculation of the five hundred million dollar threshold. However, purchases made by corporation Z are not included in that calculation because corporation Z is not part of corporation A's consolidated elected taxpayer group.

(b) In contrast, assume the same facts as in the previous example. The intercompany sales between corporation A and corporation B or between or among any other members of the operator's consolidated elected taxpayer group are not aggregated with other purchases from outside suppliers to meet the five hundred million dollar threshold.

(2) The operator of such warehouse, a facility similar to a warehouse, or a refining facility had more than fifty per cent of the cost of the qualified property shipped to a situs outside Ohio under the provisions of division (E) of section 5751.033 of the Revised Code during the qualifying period. Any qualified property shipped from a qualified distribution center to a destination within Ohio is received in Ohio, even if the qualified property is subsequently shipped outside Ohio.

(C) If the warehouse, facility similar to a warehouse, or refining facility meets both conditions, the operator of such location may make an application to the tax commissioner and provide its Ohio delivery percentage. The Ohio delivery percentage equals the percentage of the cost of qualified property that is shipped to purchasers located within Ohio. The computation will be carried out to six decimal places (e.g., 0.445678 or 44.5678 per cent), and rounded up whenever the seventh decimal place is greater than four. "Purchasers" of this property may be either members of the same consolidated elected taxpayer group or non-members of the group. The cost basis used for calculating the Ohio delivery percentage must be consistently applied in both the numerator and denominator and be supported by the taxpayer's records as they existed during the qualifying period.

(D) On the operator's application, the calculations provided to establish compliance with the conditions identified in this paragraph and paragraph (B) of this rule will be certified by a certified public accountant in a format approved by the commissioner. Such certification will be attached to the operator's application.

With the application, the operator must provide both: (1) the cost of the qualified property shipped to the distribution center by suppliers during the qualifying period; and (2) the Ohio delivery percentage cost attributable to each location, which is the proportion of the cost of the qualified property shipped to locations in Ohio compared with the cost of qualified property shipped everywhere. Only those suppliers that actually sell to such qualified distribution center qualify for the partial exclusion from their gross receipts.

(E) In the event an agency relationship exists such that a broker, for example, works with a supplier to sell to a distribution center, only the principal (the supplier) is entitled to take the partial exclusion from its gross receipts pursuant to division (F)(2)(z) of section 5751.01 of the Revised Code. The broker may be entitled to exclude the portion of the gross receipts it passes on to the principal/supplier as an agent under division (F)(2)(l) of section 5751.01 of the Revised Code. However, the person receiving the commission or fee could not apply the Ohio delivery percentage to its commission or fee in order to further reduce its commercial activity tax liability because such person is providing a service and the amount retained is not attributable to qualified property.

Last updated November 22, 2024 at 7:46 AM

History

Effective: November 22, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-29-17 Situsing of certain services for purposes of the commercial activity tax.

(A) In general, gross receipts from services are sitused to Ohio in the proportion that the purchaser's benefit in Ohio with respect to what was purchased bears to the purchaser's benefit everywhere with respect to what was purchased. Except as otherwise set forth in this rule, the physical location where the purchaser ultimately uses or receives the benefit of what was purchased is paramount in determining the proportion of the benefit received in Ohio. The tax commissioner will not require taxpayers to upgrade their systems in order to comply with the general provisions of this rule as long as the taxpayer makes a good faith effort to situs receipts from services in a reasonable, consistent, and uniform method that is supported by the taxpayer's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(B)

(1) For purposes of this proposed rule, "a purchaser only located in Ohio" for an individual means a resident of Ohio having no business locations outside Ohio. "A purchaser only located in Ohio" for any other entity means that both of the following apply:

(a) The entity's headquarters/commercial domicile (which may be different from the state of incorporation or state of organization) is in Ohio; and

(b) The entity has no physical locations outside Ohio.

(2)

(a) For those enumerated services that allow for the situsing of gross receipts using a reasonable, consistent, and uniform method supportable by the service provider's business records, the primary focus must be on the location where the purchaser ultimately uses or receives the benefit.

(b) In the event the commissioner disagrees with a taxpayer's reasonable, consistent, and uniform method of situsing its gross receipts, a penalty will not be imposed if the situsing was found to be made in good faith. While different methods may be used for different types of services, the same method must be consistently used for all types of similar services.

(C) The following is a list of various services and the situsing method to be used for commercial activity tax purposes. This list is not meant to be comprehensive, but provides guidance on how to source each service listed. If a service is not specifically listed in this rule, the situsing provisions for a similar service may provide guidance. Situations which arise that do not match the examples provided may need to be handled on a case by case basis. The department of taxation reserves the right to review and adjust any apportionment of gross receipts made by a taxpayer.

(1) Accounting services

(a) If accounting services are performed for a purchaser only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

For example, a Kentucky sole proprietor with only one retail store in Kentucky engages the services of an Ohio accountant to prepare its financial statements. The gross receipts from this service are sitused to Kentucky.

(b) If accounting services are performed for a purchaser with operations within and without Ohio, the gross receipts are sitused to Ohio if the services performed are of benefit to specific operations located in Ohio.

For example, a national retailer hires an Ohio accounting firm to address an inventory problem that exists at its Ohio stores. The gross receipts from this service are sitused to Ohio

(c) At the election of the service provider, and as long as it is applied in a reasonable, consistent, and uniform manner, accounting services may be sitused according to the purchaser's "principal place of business" or, if the purchaser is an individual and such individual has no business locations outside of Ohio, at the individual's residence. The term "principal place of business" for those other than individuals refers to the location where the business unit being provided the service primarily maintains its operations. In determining the "principal place of business" of a purchaser, the following measures, if known, shall be considered in sequential order:

(i) The branch, division, or other unit where the client primarily receives the benefit of the accounting service;

For example, the New York division of a large, multi-national corporation with operations in Ohio pays an Ohio accountant accounting fees associated with the division's product liability suit. Receipts from this service are sitused to New York, because the accounting services were primarily received by the New York division.

(ii) The primary location of the management operations of the purchaser's business unit; and

For example, an accounting firm provides valuation services for the sale of one product line of a large, multi-state manufacturer. The product line being sold has locations in several states, but the management of the product line is located in Ohio. The gross receipts would be sitused to Ohio since the first default, i.e., the location where the purchaser primarily receives the services, would not be applicable, and the business unit's management operations are in Ohio.

(iii) The billing address, acceptable if provided in good faith. The billing address must be the site where the purchaser has some actual operations, and not just a post office box.

For example, an accounting firm provides valuation services for the sale of one product line of a large, multi-state manufacturer. The product line being sold has locations in several states, with management of the product line located in most of the locations. The billing address may be used to situs the gross receipts as long as the address is associated with an operation of the manufacturer.

(d) If accounting services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(2) Advertising services

This provision only applies to those providing advertising services and not those actually receiving advertising revenue for allowing an advertisement to be placed in a newspaper, magazine, radio, television or similar media.

(a) If advertising services are performed for a purchaser only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

(b) If advertising services are performed for a purchaser with operations within and without Ohio, the gross receipts are sitused to Ohio if the services performed are related to specific operations located in Ohio.

(c) At the election of the service provider, and as long as it is applied in a reasonable, consistent, and uniform manner, advertising services may be sitused according to the purchaser's "principal place of business" or, if the purchaser is an individual not engaged in a business, at the individual's residence. The term "principal place of business" refers to the location where the business unit being provided the service primarily maintains its operations. In determining the location of the purchaser's principal place of business, the following, if known, apply in sequential order:

(i) The branch, division, or other unit where the purchaser (client) primarily receives the benefit of the advertising service;

(ii) The primary location of the management operations of the purchaser's business unit; and

(iii) The purchaser's (client's) billing address is acceptable if provided in good faith. The billing address must be the site where the purchaser has some actual operations, and not just a post office box.

(d) If advertising services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(3) Agents/managers of athletes/entertainers

(a) If an agent/manager represents an athlete in negotiating a contract to play for an Ohio-based team, or for an individual to appear at an Ohio-based sporting event, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the negotiations occur.

For example, an agent negotiates a contract for an athlete (regardless of athlete's residence) to play on a sports team in Cincinnati, Ohio. One hundred per cent of the agent's fee is a taxable gross receipt.

As another example, an agent negotiates a contract for an athlete who resides in Ohio, but will play for a team based outside Ohio. None of the agent's fee is sitused to Ohio.

(b) If an agent/manager represents an entertainer in negotiating a contract to perform at an Ohio-based event, one hundred per cent of the gross receipts related to that event are sitused to Ohio regardless of where the negotiations occur.

For example, an agent books a performer for a three-day concert in Marietta, Ohio. The agent's fee for that work is one hundred per cent sitused to Ohio.

(c) If an agent/manager represents an entertainer in negotiating a contract to perform at an Ohio location and locations outside of Ohio, the gross receipts are sitused to Ohio based on the number of known Ohio events compared to all known events.

For example, an agent books ten performances, two of which are at Ohio locations and eight of which are at non-Ohio locations. The agent's fee is twenty per cent sitused to Ohio.

(d) If the agent's/manager's services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(e) If an agent/manager represents an athlete or entertainer in negotiating a contract to endorse some thing or some one in Ohio, the gross receipts are sitused to Ohio based on the number of known Ohio events compared to all known events. If no event locations are known, the gross receipts are sitused to where the athlete or entertainer resides.

For example, an agent receives a fee for a national endorsement for a golfer who is contracted to appear at a total of twenty known events, two of which are known to be in Ohio events. The agent's fee is ten per cent sitused to Ohio.

(4) Agency Other

(a) If agency services are performed for a purchaser only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

For example, a Kentucky sole proprietor with only one retail store in Kentucky engages the services of an Ohio agent to facilitate the purchase of merchandise from an Ohio manufacturer. The gross receipts from this service are sitused to Kentucky.

(b) If agency services are performed for a purchaser with operations within and without Ohio, the gross receipts are sitused to Ohio if the services performed are of benefit to specific operations located in Ohio.

For example, a national retailer hires an Ohio agency to develop an advertising campaign targeting its Ohio stores. The gross receipts from this service are sitused to Ohio.

(c) At the election of the service provider, and as long as it is applied in a reasonable, consistent, and uniform manner, agency services may be sitused according to the purchaser's "principal place of business" or, if the purchaser is an individual not engaged in a business, at the individual's residence. The term "principal place of business" refers to the location where the business unit being provided the service primarily maintains its operations. In determining the "principal place of business" of a purchaser, the following measures, if known, shall be considered in sequential order:

(i) The branch, division, or other unit where the purchaser (customer) primarily receives the benefit of the agency service;

For example, the New York division of a large, multi-national corporation with operations in Ohio pays an Ohio agent fees associated with the division's life insurance policy. Receipts from this service are sitused to New York, because the agency services were primarily received by the New York division.

(ii) The primary location of the management operations of the purchaser's business unit; and

For example, an advertising agency works with a multi-state manufacturer to develop an advertising campaign for its customers. The company has locations in several states, but the management of the company is located in Ohio. The gross receipts would be sitused to Ohio since the first default, i.e., the location where the purchaser primarily receives the services would not be applicable, and the business unit's management operations are in Ohio.

(iii) The purchaser's (customer's) billing address is acceptable if provided in good faith. The billing address must be the site where the purchaser has some actual operations, and not just a post office box.

For example, an advertising agency provides magazine advertising services for one product line of a large, multi-state manufacturer. The product line being sold is located in several states, and the management of the product line is located in most of the locations. The billing address may be used to situs the gross receipts as long as the address is associated with an operation of the manufacturer.

(d) If agency services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(5) Appraisal services

(a) If the appraised property is located wholly in Ohio (regardless of where the purchaser is located), one hundred per cent of the gross receipts are sitused to Ohio.

For example, a local appraisal firm values three Ohio business properties and no properties outside of Ohio. The gross receipts from the appraisal services are sitused one hundred per cent to Ohio.

(b) If the appraised property is within and without Ohio, the gross receipts are sitused using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided. As a default, the value of the appraised property in Ohio compared to the total value of the appraised property everywhere will be accepted.

For example, if forty per cent of the valuation is for Ohio properties and sixty per cent is for non-Ohio properties, only forty per cent of the gross receipts received for that service are sitused to Ohio.

(6) Architecture services (including drafting services)

(a) If architectural services are performed for a purchaser and the property being designed is to be located wholly in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

For example, architectural services are performed for a property to be built in Youngstown, Ohio; one hundred per cent of the gross receipts for that service are sitused to Ohio.

(b) If architectural services are performed for property that will be located within and without Ohio, the gross receipts are sitused using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided. As a default, the number of properties anticipated to be built in Ohio compared to everywhere will be accepted. If the services are not for standardized buildings, square footage may be used as a method of apportionment unless it creates a distortion.

For example, architectural services are performed for ten properties, three of which are in Ohio and seven of which are at non-Ohio locations. The architect's fee is thirty per cent sitused to Ohio.

(7) Athletes (including owners of animals used in sporting events)

(a) If an athlete receives remuneration for participating in or obtaining prize monies from an Ohio based event, one hundred per cent of the gross receipts are sitused to Ohio. Remuneration includes, but is not limited to, money, fair market value of property, or fair market value of services.

For example, an owner receives ten thousand dollars for a horse that shows (places third) at a race conducted in Ohio. That receipt is one hundred per cent sitused to Ohio.

(b) If an athlete is paid for appearing at an Ohio-based event, one hundred per cent of the gross receipts are sitused to Ohio.

For example, a person is paid to attend a home and garden show in Ohio, one hundred per cent of that gross receipt is sitused to Ohio.

(c) If an athlete is paid for endorsing a thing or a person in Ohio, the gross receipts are sitused to Ohio based on the number of known Ohio events compared to all known events. If no event locations are known, the gross receipts are sitused where the athlete resides. In dealing with national endorsements, in general, four and one-tenth per cent will be accepted in accordance with Ohio's population.

For example, a basketball player receives a fee from a soft drink company and is contracted to appear at a total of eighty known events, forty of which are in Ohio. The basketball player's fee is fifty per cent sitused to Ohio.

(d) If the athlete's services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(8) Barbershop/beauty salon/spa services

If barbershop, beauty salon, or spa services are performed in Ohio, one hundred per cent of the gross receipts are sitused to Ohio.

For example, a resident of Indiana receives a hair cut in Dayton, Ohio. One hundred per cent of that service is sitused to Ohio.

(9) Cable/satellite services

(a) Gross receipts from cable/satellite services are sitused to Ohio, in general, if the purchaser's (subscriber's) place of primary use is in Ohio, regardless of where the cable and satellite services originate. In general, the purchaser's (subscriber's) billing address will be accepted as the primary use location unless the seller of the service knows the purchaser (subscriber) is using the service in multiple locations.

For example, a satellite radio service has one million dollars in gross receipts from addresses billed to Ohio customers. The one million dollars in receipts are one hundred per cent sitused to Ohio.

(b) If the cable/satellite service provider knows that the purchaser (subscriber) is using the service in multiple locations inside and outside Ohio, the gross receipts are sitused to Ohio based on the number of properties in Ohio where the purchaser (subscriber) receives these cable/satellite services compared to everywhere.

(c) If cable/satellite services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(d) Gross receipts from providing billing and other ancillary services for cable/satellite service providers shall be sitused to Ohio based on the location of the purchaser's (cable/satellite service provider's) customers. If not known, the location(s) of the purchaser may be used.

(10) Call center services

(a) Gross receipts from providing call center services on a fixed cost basis shall be sitused based on the location of the purchaser. Gross receipts from providing call center services on a variable (or per call) cost basis shall be sitused to Ohio based on the location of the purchaser's customers. In determining the location of the purchaser and/or the purchaser's customers, the following, if known, apply in sequential order:

(i) The location (e.g. home, branch, division, or other business unit) where the purchaser and/or purchaser's customer primarily receives the benefit of the service;

(ii) The primary location of the management operations of the purchaser's and/or purchaser's customers business units; and

(iii) The purchaser's and/or purchaser's customers' billing address is acceptable if provided in good faith. To determine the purchaser's and/or purchaser's customer's billing address, a provider of call center services may rely on the area code and/or zip code of the purchaser and/or purchaser's customer.

(b) If call center services relate to various operations both within and within Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(11) Child care (day care or education) services

If child care services are performed in Ohio, one hundred per cent of the gross receipts are sitused to Ohio.

For example, a West Virginia resident obtains day care services in Gallipolis, Ohio. One hundred per cent of the gross receipts are sitused to Ohio.

(12) Collection agency services (including repossession services)

(a) If collection services are performed for a purchaser only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

For example, a Pennsylvania repossession agency that receives one hundred per cent of its gross receipts from an automobile finance company whose business location is in Ohio, will situs all of its gross receipts to Ohio.

(b) If collection services are performed for a purchaser with operations within and without Ohio, the gross receipts are sitused to Ohio if the services performed are related to specific operations located in Ohio.

(c) At the election of the service provider, and as long as it is applied in a reasonable, consistent, and uniform manner, collection services may be sitused according to the purchaser's "principal place of business" or, if the purchaser is an individual not engaged in a business, at the individual's residence. The term "principal place of business" refers to the location where the business unit being provided the service primarily maintains its operations. In determining the location of the purchaser's principal place of business, the following, if known, apply in sequential order:

(i) The branch, division, or other unit where the client primarily receives the benefit of the collection service;

(ii) The primary location of the management operations of the client's business unit; and

(iii) The client's billing address is acceptable if provided in good faith. The billing address must be the site where the client has some actual operations, and not just a post office box.

(d) If collection services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(13) Computer programming services

(a) If computer programming services are performed for a purchaser only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio, regardless of where the service provider is located.

(b) If computer programming services are performed for a purchaser that will use the computer programming within and without Ohio, the gross receipts are sitused to Ohio if either of the following apply:

(i) The services performed are related to a purchaser's specific operations located in Ohio; or

(ii) The services are performed that do not relate to a purchaser's specific operation. The services are sitused to Ohio based on the purchaser's number of users in Ohio compared with the number of users everywhere.

(c) If computer programming services relate to various locations both within and without Ohio, the gross receipts may be sitused using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(14) Construction contractors

(a) If construction contracting services are performed for a purchaser and the property being constructed is located wholly in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

For example, if construction contracting services are performed for property to be built in Youngstown, Ohio, one hundred per cent of the gross receipts for that service is sitused to Ohio.

(b) If construction contracting services are performed for property that will be located within and without Ohio and there is no separation of costs per location, the gross receipts are sitused using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided. As a default, the number of properties anticipated to be built in Ohio compared to everywhere will be accepted. If the services are not for standardized buildings, square footage may be used as a method of apportionment unless it creates a distortion.

For example, construction contracting services are performed for ten properties, three of which are in Ohio and seven of which are at non-Ohio locations. The contractor's fee is thirty per cent sitused to Ohio.

(15) Contract manufacturing services

(a) For purposes of this rule, contract manufacturing includes a person who provides manufacturing services on a piece of property that the contract manufacturer does not own. Contract manufacturing should be sitused the same as the sale or delivery of tangible personal property under division (E) of section 5751.033 of the Revised Code.

(b) If the purchaser does not provide the location outside of this state (i.e. a minimum of city and state) where the product is to be shipped, the gross receipts in this situation are sitused to the location where the contract manufacturing is performed.

For example, a New York company ships metal tools both inside and outside Ohio. Gross receipts from contract manufacturing performed on tools shipped inside Ohio are sitused to Ohio as a taxable gross receipt. Gross receipts from contract manufacturing performed on tools shipped outside of Ohio are not Ohio taxable gross receipts.

As another example, a New York contract manufacturer makes an item that a seller located in Pennsylvania purchases from the contract manufacturer to sell to an Ohio customer. Upon completion of the contract manufacturing, the Pennsylvania seller instructs the contract manufacturer to ship the product directly to its customer in Ohio. Both the New York contract manufacturer's gross receipts and the Pennsylvania seller's gross receipts are sitused to Ohio and, accordingly, are Ohio taxable gross receipts.

(16) Data processing services

(a) If data processing services are performed for a purchaser only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

For example, an Indiana vendor provides data processing services for a business that is located only in Ohio. The gross receipts received from that Ohio business are sitused to Ohio.

(b) If data processing services are performed for a purchaser with operations within and without Ohio, the gross receipts are sitused to Ohio if the services performed are related to specific operations located in Ohio.

For example, an Indiana vendor converts the sales invoices of an Ohio business into an electronic format. The Ohio business has a manufacturing plant in Indiana and has its sales operation in Ohio. The gross receipts received from that Ohio business are sitused to Ohio.

(c) At the election of the service provider, and as long as it is applied in a reasonable, consistent, and uniform manner, data processing services may be sitused according to the purchaser's "principal place of business" or, if the purchaser is an individual not engaged in a business, at the individual's residence. The term "principal place of business" refers to the location where the business unit being provided the service primarily maintains its operations. In determining the location of the purchaser's principal place of business, the following, if known, apply in sequential order:

(i) The branch, division, or other unit where the purchaser (client) primarily receives the benefit of the data processing service;

(ii) The primary location of the management operations of the purchaser's business unit; and

(d) If data processing services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(17) Directors' fees

Fees received by a director of a corporation for the performance of his/her duties are sitused to the headquarters of the corporation. Remuneration includes, but is not limited to, money, stock, fair market value of property, or fair market value of services.

(18) Electricity (including electric transmission and distribution services)

Electricity (including electric transmission and distribution services) must be sitused according to section 5733.059 of the Revised Code.

(19) Employment services

Employment services are sitused to Ohio if the employee is assigned to a post of duty (i.e., where employee primarily works) located in Ohio.

For example, if an employment services company based in Kentucky provides employment services for a company with a post of duty in Cincinnati, Ohio, the gross receipts are one hundred per cent sitused to Ohio.

(20) Engineering services

(a) If engineering services are performed for a purchaser and the property is located wholly in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

For example, engineering services are performed for a property to be built in Youngstown, Ohio; one hundred per cent of the gross receipts for that service are sitused to Ohio.

(b) If engineering services are performed for property that is located within and without Ohio, the gross receipts are sitused using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided. As a default, the number of properties located in Ohio compared to everywhere will be accepted.

For example, engineering services are performed for ten properties, three of which are in Ohio and seven of which are at non-Ohio locations. The engineer's fee is thirty per cent sitused to Ohio.

(21) Entertainer services

(a) If an entertainer receives remuneration for participating at an Ohio based event, one hundred per cent of the gross receipts are sitused to Ohio. Remuneration includes, but is not limited to, money, fair market value of property, or fair market value of services.

(b) If an entertainer receives an appearance fee for appearing at an Ohio based event, one hundred per cent of the gross receipts are sitused to Ohio.

(c) If an entertainer is paid for endorsing a thing or a person in Ohio, the gross receipts are sitused to Ohio based on the number of known Ohio events compared to all known events. If no event locations are known, the gross receipts are sitused where the athlete resides. In dealing with national endorsements, in general, four and one-tenth per cent will be accepted in accordance with Ohio's population.

For example, an entertainer receives national advertisement for participating in an event. Four and one-tenth per cent of the gross receipts from the endorsement are sitused to Ohio based on Ohio's census population in 2006.

(d) If the entertainer's services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(22) Entertainment/amusement services

(a) If the entertainment services being purchased are to be performed wholly in Ohio, one hundred per cent of the gross receipts are sitused to Ohio, regardless of where the services are purchased.

(b) If the entertainment services being purchased are to be performed within and without Ohio and originate and terminate from a location in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the purchaser makes the purchase of the services.

For example, an evening riverboat cruise leaves from Cincinnati, Ohio and returns to Cincinnati, Ohio. One hundred per cent of the gross receipts are sitused to Ohio.

(c) In the case of gross receipts from the selling of admission passes that can be used at locations within and without Ohio, gross receipts are sitused to Ohio if the admission is to be primarily used at locations in Ohio.

For example, if an admission pass can be used at several locations inside and outside Ohio, the presumption is that the receipt is an Ohio taxable gross receipt if the purchaser will primarily use the pass at an Ohio location. In general, the primary use of the admission pass is the closest facility to the purchaser's location at time of purchase.

(d) If entertainment services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(23) Exterminating services

(a) If exterminating services are performed in Ohio, one hundred per cent of the gross receipts are sitused to Ohio.

(b) If exterminating services are performed outside of Ohio, one hundred per cent of the gross receipts are sitused outside of Ohio.

(c) If exterminating services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time of the performance of the service or within a reasonable time thereafter.

(24) Facilities management services (including landscaping services)

(a) If the facility being managed is located wholly in Ohio, one hundred per cent of the gross receipts are sitused to Ohio.

(b) If the fee is not per location and the service is provided in Ohio and outside Ohio, the gross receipts are sitused using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(c) As a default, the number of properties located in Ohio compared to everywhere will be accepted. If the services are not for standardized buildings, square footage may be used as a method of apportionment unless it creates a distortion.

(25) Financial planning services

(a) If financial planning services are performed for a purchaser only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

For example, financial planning services are performed for an individual living in Youngstown, Ohio. One hundred per cent of the gross receipts for that service are sitused to Ohio.

(b) If financial planning services are performed for a business that is located within and without Ohio, the gross receipts are sitused using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter. As a default, the number of locations in Ohio compared to everywhere will be accepted.

For example, financial planning services are performed for a business having ten locations, three of which are in Ohio and seven of which are outside of Ohio. The financial planner's fee is thirty per cent sitused to Ohio.

(26) Funeral services

(a) Funeral services includes, but is not limited to, making arrangements for viewings, embalming, burying, interring, cremating, arranging transportation of the deceased, and all other services associated with providing funeral services.

(b) If all of the funeral services are performed in Ohio, one hundred per cent of the gross receipts are sitused to Ohio.

(c) In general, if portions of the funeral services are performed within and without Ohio, gross receipts from the funeral services are sitused to Ohio if the burial or cremation takes place in Ohio.

(27) Gambling services

Winnings received from a wager placed at an Ohio location are sitused to Ohio.

For example, a Kentucky resident places a wager at an Ohio horse racing simulcast facility for a race outside of Ohio and that person wins one hundred sixty thousand dollars. The winnings are gross receipts sitused to Ohio.

(28) Healthcare provider services

If healthcare services are performed in Ohio, one hundred per cent of the gross receipts are sitused to Ohio. If a healthcare service is provided partly in this state and outside this state, a reasonable allocation for the services performed in Ohio must be made.

For example, a German resident comes to have a surgery performed at a hospital in Ohio. One hundred per cent of that gross receipt is an Ohio taxable gross receipt.

(29) Independent writers/artists services

(a) If the writer/artist delivers the item to the purchaser in tangible or electronic format, the gross receipts are sitused to Ohio if the purchaser receives the item in Ohio.

(b) If the writer/artist does not know the location of the purchaser receiving the item, then gross receipts are sitused to Ohio if the purchaser's address to which the writer/artist sends the invoice is located in Ohio.

(c) If the writer's/artist's services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(30) Internet/web hosting services

(a) If Internet or web hosting services are performed for a purchaser only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the web host is located.

(b) If Internet or web hosting services are performed for a purchaser only located outside Ohio, one hundred per cent of the gross receipts are sitused outside Ohio regardless of where the web host is located.

(c) At the election of the service provider, and as long as it is applied in a reasonable, consistent, and uniform manner, Internet or web hosting services may be sitused according to the purchaser's "principal place of business" or, if the purchaser is an individual not engaged in a business, at the individual's residence. The term "principal place of business" refers to the location where the business unit being provided the service primarily maintains its operations. In determining the location of the purchaser's principal place of business, the following, if known, apply in sequential order:

(i) The branch, division, or other unit where the purchaser (client) primarily receives the benefit of the Internet or web hosting service;

(ii) The primary location of the management operations of the purchaser's business unit; and

(d) If Internet or web hosting services are performed for a purchaser located both within and without Ohio, the gross receipts are sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(31) Investigation services

(a) If investigation services are performed for a purchaser only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

(b) If investigation services are performed for a purchaser with operations within and without Ohio, the gross receipts are sitused to Ohio if the services performed are related to specific operations located in Ohio.

(c) If investigation services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(32) Legal services

(a) If legal services are performed that relate to Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

For example, an attorney drafts a will in Ohio for a client residing in Kentucky. The gross receipts from the will are sitused to Kentucky since the services relate to a Kentucky estate. Similarly, if an attorney drafts a will in Kentucky for a client who resides in Ohio, the gross receipts from this service will be sitused to Ohio since the services relate to an Ohio estate.

As another example, a company located solely in Michigan sends its treasurer to Ohio for a meeting. The treasurer is involved in an accident on a highway in Ohio, and the company hires an Ohio law firm to represent the treasurer and the company in a proceeding in federal district court in Ohio. The gross receipts from this service will be sitused to Ohio since the services relate to an Ohio tort.

As another example, an attorney prepares a corporation's (client's) case at the Ohio board of tax appeals. As part of the preparation, the attorney travels to the corporation's (client's) Tennessee location to interview the client's employees. The gross receipts received by the attorney for all services, including those services related to interviewing the client's employees in Tennessee, are sitused to Ohio.

(b) Except as provided in paragraph (C)(32)(a) of this rule, if legal services are performed for a purchaser only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

For example, an attorney drafts a contract in Ohio for a purchaser (client) residing in Kentucky to settle the client's dispute with the federal government over an employment contract. The gross receipts are sitused to Kentucky. If the client resided in Ohio, the receipts would be sitused to Ohio even if the contract was drafted in Kentucky.

As another example, an attorney makes an appearance in the federal sixth circuit court of appeals in Cincinnati, Ohio for a client located solely in Tennessee concerning the client's federal income taxes. Receipts from this service are sitused to Tennessee.

(c) If legal services are performed for a purchaser with operations in both Ohio and in another state or jurisdiction, the gross receipts are sitused to Ohio if the services performed are related to specific operations located in Ohio.

For example, an international retailer with stores in Ohio hires an Ohio law firm with New York-licensed attorneys to address a New York workers compensation claim. The gross receipts from this service are sitused to New York. If the retailer hires a New York law firm with Ohio-licensed attorneys to address an Ohio workers compensation claim, the gross receipts from this service are sitused to Ohio.

(d) At the election of the service provider, and as long as it is applied in a reasonable, consistent, and uniform manner, legal services may be sitused according to the purchaser's "principal place of business" or, if the purchaser is an individual not engaged in a business, at the individual's residence. The term "principal place of business" refers to the location where the business unit being provided the service primarily maintains its operations. In determining the location of the purchaser's principal place of business, the following, if known, apply in sequential order:

(i) The branch, division, or other unit where the purchaser (client) primarily receives the benefit of the legal service;

For example, the Ohio division of a large, multi-national company incorporated in New York pays an attorney legal fees associated with the division's product liability suit. Receipts from this service can be sitused to Ohio, because the legal services were primarily received by the Ohio division.

(ii) The primary location of the management operations of the purchaser's business unit;

For example, a large, multi-national Ohio corporation hires an attorney to defend its federal income tax return. Because the service benefits the entire corporation, rather than a specific division or business location, receipts from this service can be sitused to Ohio based on its management's operations.

(e) If legal services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(33) Linen/uniform supply/dry cleaning services

If linen/uniform supply/dry cleaning services are delivered to or picked up at a location in Ohio, one hundred per cent of the gross receipts are sitused to Ohio. If the property is delivered to or picked up at a location outside of Ohio, one hundred per cent of the gross receipts are sitused outside Ohio.

(34) Magazines/newspapers

Subscription and advertising gross receipts are to be sitused to Ohio based upon the proportion of the purchaser's (publication's) circulation located in Ohio over the total of the purchaser's (publication's) circulation located everywhere.

(35) Management consulting services

(a) If management consulting services are performed for a purchaser only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

(b) If management consulting services are performed for a purchaser with operations within and without Ohio, the gross receipts are sitused to Ohio if the services performed are related to specific operations located in Ohio.

(c) At the election of the management consulting service provider, and as long as it is applied in a reasonable, consistent, and uniform manner, such services may be sitused according to the purchaser's "principal place of business" or, if the purchaser is an individual not engaged in a business, at the individual's residence. The term "principal place of business" refers to the location where the business unit being provided the service primarily maintains its operations. In determining the location of the purchaser's principal place of business, the following, if known, apply in sequential order:

(i) The branch, division, or other unit where the purchaser (client) primarily receives the benefit of the management consulting service;

(ii) The primary location of the management operations of the purchaser's business unit; and

(iii) The purchaser's billing address is acceptable if provided in good faith. The billing address must be the site where the purchaser has some actual operations, and not just a post office box.

(d) If management consulting services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(36) Market research services

(a) If market research services are performed for a purchaser only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

(b) If market research services are performed for a purchaser with operations within and without Ohio, the gross receipts are sitused to Ohio if the services performed are related to specific operations located in Ohio.

(c) At the election of the service provider, and as long as it is applied in a reasonable, consistent, and uniform manner, market research services may be sitused according to the purchaser's "principal place of business" or, if the purchaser is an individual not engaged in a business, at the individual's residence. The term "principal place of business" refers to the location where the business unit being provided the service primarily maintains its operations. In determining the location of the purchaser's principal place of business, the following, if known, apply in sequential order:

(i) The branch, division, or other unit where the purchaser (client) primarily receives the benefit of the market research service;

(ii) The primary location of the management operations of the purchaser's business unit; and

(iii) The purchaser's billing address is acceptable if provided in good faith. The billing address must be the site where the purchaser has some actual operations, and not just a post office box.

(d) If market research services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(37) Membership fees

(a) If the membership fees being paid are for the right to participate in events at a specific location or specific locations only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio, regardless of where the fees are paid.

For example, a golf course in Cincinnati, Ohio receives membership dues from an individual who resides in Kentucky. Since the membership to that Cincinnati course allows the Kentucky individual to golf at that resort, the gross receipts shall be sitused to Ohio, even though the individual resides outside of Ohio.

(b) In the case of gross receipts from the selling of admission passes that can be used at locations within and without Ohio, gross receipts are sitused to Ohio if the admission is to be primarily used at locations in Ohio.

(c) At the election of the service provider, and as long as it is applied in a reasonable, consistent, and uniform manner, membership fees may be sitused according to the purchaser's "principal place of business" or, if the purchaser is an individual, at the individual's residence. The term "principal place of business" refers to the location where the business unit being provided the service primarily maintains its operations. In determining the "principal place of business" of a purchaser, the following measures, if known, shall be considered in sequential order:

(i) The branch, division, or other unit where the purchaser (client) primarily uses the membership for which the fee was paid;

(ii) The purchaser's (client's) primary location of the management operations of the purchaser's (client's) business unit; and

(d) If the membership fees relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the fees were paid or within a reasonable time thereafter.

(38) Money order/wire transfer services

If money order/wire transfer services are delivered to or picked up at a location in Ohio, one hundred per cent of the fee for such services are sitused to Ohio, regardless of where the money order/wire transfer service originates.

(39) Moving/Storage Services

(a) If the moving service destination is to a location in Ohio, one hundred per cent of the gross receipts are sitused to Ohio. Fees for incidental storage during a moving service are not sitused to Ohio if both of the following apply:

(i) The storage does not occur in Ohio; and

(ii) The storage fee is separately billed from the moving service.

(b) Fees for packing and/or unpacking services shall be sitused based upon where such services are provided.

(d) If moving, packing or unpacking, or storage services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(40) Payroll services

(a) If payroll services are performed for a purchaser with its employees only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio, regardless of where the services are performed.

(b) If payroll services are performed for a purchaser with employees within and without Ohio and the payroll services are provided for more than one state including Ohio, the gross receipts are sitused to Ohio based on the purchaser's number of employees (covered by the services) located in Ohio to the number of employees everywhere.

(41) Promoters of arts/sports/similar event services

(a) If a promoter promotes an Ohio-based event, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the promoting services are performed.

(b) If a promoter promotes an event that will be held within and without Ohio, the gross receipts are sitused to Ohio based on the number of known events in Ohio compared to all known events. If no event locations are known, the gross receipts are sitused using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(42) Radio/television broadcasting/internet advertising services

Broadcasting and Internet advertising gross receipts (including receipts from commercials and pay-per-click advertisements) are to be sitused to Ohio based upon the proportion of the television or radio station's audience or Internet provider's subscribers located in Ohio over the total of the television or radio station's audience or Internet provider's subscribers located everywhere.

(43) Real estate broker services

If real estate sold by a real estate broker is located in Ohio, the gross receipts earned by the real estate broker are sitused to Ohio, regardless of where the broker's services were performed. See division (F)(3) of section 5751.01 of the Revised Code to see which gross receipts of a real estate broker can be excluded.

(44) Repair/maintenance/installation services

(a) If the property to be repaired, maintained, or installed is dropped off and picked up at the service provider's location in Ohio, the gross receipts are sitused to Ohio.

(b) If the property is shipped to the service provider's location in Ohio from outside of Ohio but is then picked up at the location in Ohio, the gross receipts are sitused to Ohio.

(c) If the property is dropped off or shipped to the service provider's location in Ohio and then shipped outside of Ohio, the gross receipts are sitused outside of Ohio.

(45) Security services

(a) If security services are performed in Ohio, one hundred per cent of the gross receipts are sitused to Ohio.

(b) If security services are performed outside of Ohio, one hundred per cent of the gross receipts are sitused outside of Ohio.

(c) If security services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time of the performance of the service or within a reasonable time thereafter.

(46) Tax preparation services

(a) If tax preparation services are performed for a purchaser only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

For example, the gross receipts from the preparation in Kentucky of a federal income tax return for a client residing in Ohio will are sitused to Ohio. Similarly, the gross receipts from the preparation in Ohio of a federal income tax return for a client residing in Kentucky will be sitused to Kentucky.

(b) If tax preparation services are performed for a purchaser with operations within and without Ohio, the gross receipts are sitused to Ohio if the services performed are related to specific operations located in Ohio.

(c) At the election of the service provider, and as long as it is applied in a reasonable, consistent, and uniform manner, tax preparation services may be sitused according to the purchaser's "principal place of business" or, if the purchaser is an individual not engaged in a business, at the individual's residence. The term "principal place of business" refers to the location where the business unit being provided the service primarily maintains its operations. In determining the location of the purchaser's principal place of business, the following, if known, apply in sequential order:

(i) The branch, division, or other unit where the purchaser (client) primarily receives the benefit of the tax preparation service; the branch, division, or other unit where the purchaser (client) primarily receives the benefit of the tax preparation service;

(ii) The primary location of the management operations of the purchaser's business unit; and

(d) If tax preparation services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(47) Technical assistance services

(a) If technical assistance services are performed for a purchaser only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of where the services are performed.

(b) If technical assistance services are performed for a purchaser with operations within and without Ohio, the gross receipts are sitused to Ohio if the services performed are related to specific operations located in Ohio.

(c) At the election of the service provider, and as long as it is applied in a reasonable, consistent, and uniform manner, technical assistance fees may be sitused according to the purchaser's "principal place of business" or, if the purchaser is an individual not engaged in a business, at the individual's residence. The term "principal place of business" refers to the location where the business unit being provided the service primarily maintains its operations. In determining the location of the purchaser's principal place of business, the following, if known, apply in sequential order:

(i) The branch, division, or other unit where the purchaser (client) primarily receives the benefit of the technical assistance service;

(ii) The primary location of the management operations of the purchaser's business unit; and

(d) If technical assistance services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time the service was provided or within a reasonable time thereafter.

(48) Telecommunications services (including ancillary telecommunications services)

(a) Except as provided in paragraphs (C)(48)(b) to (C)(48)(g) of this rule, gross receipts from the sale of telecommunications service or mobile telecommunications service shall be sitused to Ohio if the customer's place of primary use of the service is in this state. In general, the customer's "place of primary use" means the street address representing where the customer's use of the telecommunications service primarily occurs, which must be the residential street address or the primary business street address of the customer. In the case of mobile telecommunications service, such address is the place of primary use only if it is within the licensed service area of the customer's home service provider.

(b) Gross receipts from the sale of telecommunications service sold on an individual call-by-call basis shall be sitused to Ohio if either of the following applies:

(i) The call both originates and terminates in this state;

(ii) The call either originates or terminates in this state and the service address also is located in this state.

(c) Gross receipts from the sale of post-paid telecommunications service shall be sitused to Ohio if the origination point of the telecommunication signal, as first identified by the service provider's telecommunication system, or as identified by information received by the seller from its service provider where the system used to transport such signals is not that of the seller, is located in this state.

(d) Gross receipts from the sale of prepaid telecommunications service or prepaid mobile telecommunications service shall be sitused to Ohio if the purchaser obtains the prepaid card or similar means of conveyance at a location in Ohio. Gross receipts from recharging a prepaid telecommunications service or mobile telecommunications service shall be sitused to Ohio if the purchaser's billing information indicates an Ohio location.

(e) Gross receipts from the sale of private communication services shall be sitused to Ohio as follows:

(i) One hundred per cent of the gross receipts from the sale of each channel termination point within this state;

(ii) One hundred per cent of the gross receipts from the sale of the total channel mileage between each termination point within this state;

(iii) The gross receipts from the sale of service segments for a channel between two customer channel termination points, one of which is located in this state and the other outside this state, and which segments are separately charged, shall be sitused fifty per cent to Ohio and fifty per cent to the other state or jurisdiction in which the customer channel termination points are located; or

(iv) The gross receipts from the sale of service for segments of a channel located in this state and in more than one other states or equivalent jurisdictions, and which segments are not separately billed, shall be sitused to Ohio based on the percentage determined by dividing the number of customer channel termination points in the state or equivalent jurisdiction by the total number of customer channel termination points.

(f) Gross receipts from the sale of billing services and ancillary services for telecommunications service shall be sitused to Ohio based on the location of the purchaser's customers. If not known, the location(s) of the purchaser may be used.

(g) Gross receipts from the sale of access fees, such as the carrier access charge paid by an interexchange carrier to connect to a local exchange network in Ohio, shall be sitused to Ohio as follows:

(i) Gross receipts from access fees attributable to intrastate telecommunications service that both originates and terminates in Ohio are sitused one hundred per cent to Ohio.

(ii) Gross receipts from access fees attributable to interstate telecommunications service are sourced fifty per cent to Ohio if the interstate call either originates or terminates in Ohio.

(iii) Gross receipts from interstate end user access line charges, such as the surcharge approved by the federal communications commission and levied pursuant to the Code of Federal Regulations, Title 47, Part 69, shall also be sourced one hundred per cent to Ohio if the customer's service address is in Ohio.

(h) All terms in this section are as defined in divisions (AA) and (VV) of section 5739.01 of the Revised Code.

(49) Testing laboratories

(a) If testing services are performed in Ohio, one hundred per cent of the gross receipts are sitused to Ohio.

(b) If testing services are performed outside of Ohio, one hundred per cent of the gross receipts are sitused outside of Ohio.

(c) If testing services relate to various locations both within and without Ohio, the gross receipts may be sitused to Ohio using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time of the performance of the service or within a reasonable time thereafter.

(50) Towing services

If the towing services originate from a location in Ohio, one hundred per cent of the gross receipts are sitused to Ohio regardless of the destination.

For example, a Pennsylvania resident's car breaks down in Ohio and is towed back to Pennsylvania. The receipts for the towing services are sitused to Ohio, since the towing service originated in Ohio.

(51) Transportation services/brokers/logistics

(a) Gross receipts from transportation services are sitused to Ohio based on division (G) of section 5751.033 of the Revised Code. The provisions of paragraph (C)(51)(a) of this rule only apply to providers of transportation services. Sellers of tangible personal property itemizing transportations charges must situs such charges in the same manner as the tangible personal property.

(b)

(i) For purposes of this rule, "broker" means a person who, for compensation, arranges or offers to arrange the transportation of property by an authorized motor carrier; and "brokerage" or "brokerage services" means the arranging of transportation or the physical movement of a motor vehicle or of property. If consulting services are provided for logistics, please refer to management consulting services in paragraph (C)(35) of this rule.

(ii) Gross receipts received by a broker not providing any transportation services for the tangible personal property in question but arranging solely for the provision of transportation services shall be sitused to the location where the property is shipped.

(c) Logistics includes all the processes required to go from raw materials to end customer delivery, including purchasing, inventory management, warehousing, shipping, and customer returns, but does not include transportation or brokerage services.

(i) If the logistics services relate to shipping operations, the gross receipts shall be sitused based on the location where the product is shipped.

(ii) If the logistics services relate to inventory management and/or warehousing operations, the gross receipts shall be sitused based on the location of the inventory and/or warehouse.

(iii) If the logistics services relate to purchasing operations, the gross receipts shall be sitused to the location where the purchaser benefits from such service. In determining the location of the purchaser, the following, if known, apply in sequential order:

(a) The branch, division, or other unit where the purchaser primarily receives the benefit of the service;

(b) The primary location of the management operations of the purchaser's business unit; and

(d) For purposes of paragraph (C)(51)(c) of this rule, gross receipts from logistics services that relate to multiple types of logistics operations may be sitused using any reasonable, consistent, and uniform method of apportionment that is supported by the service provider's business records as they existed at the time of the performance of the service or within a reasonable time thereafter.

For example, a Wisconsin branch of a multi-national manufacturer contracts with an Ohio logistics company to both provide for improvements in its inventory management and for providing the shipment of its goods to the purchaser's customers. The logistic company's gross receipts are sitused in two different ways: the portion relating to inventory management is sitused according to the logistic services situsing provisions, in this case to the Wisconsin branch location; and the portion relating to the transportation services is sitused based on the company's miles traveled within Ohio to its miles traveled everywhere.

(52) Travel arrangement services

(a) If travel arrangement services are performed for a purchaser only located in Ohio, one hundred per cent of the gross receipts are sitused to Ohio, regardless of where the services are performed or the location of the travel destination.

(b) If travel arrangement services are performed for a purchaser with operations within and without Ohio, the gross receipts are sitused to Ohio if the services performed are related to a specific employee whose post of duty is in Ohio.

For example, a multi-national corporation has employees both within and without Ohio. The corporation uses one travel agent to arrange the travel plans for all of its nationwide employees. If the services are performed for an employee located in Ohio, the gross receipts from that service will be sitused to this state.

(53) Veterinarian services

If veterinarian services are performed in Ohio, one hundred per cent of the gross receipts are sitused to Ohio.

(54) Waste management services

If waste management services are performed in Ohio, one hundred per cent of the gross receipts are sitused to Ohio.

For example, a waste hauler in New York ships refuse to an Ohio landfill. The gross receipts received by the Ohio landfill are sitused to Ohio, because the benefit of the purchaser (i.e. the waste hauler) is having the refuse delivered to this state.

Last updated July 10, 2025 at 12:15 PM

History

Effective: June 20, 2019
Promulgated Under: Other

Ohio Adm.Code 5703-29-18 Records retention requirements.

(A) Pursuant to the authority granted under section 5751.12 of the Revised Code, the tax commissioner hereby promulgates a rule that establishes a record retention policy for purposes of the commercial activity tax. Under that section, the commissioner may identify certain records that are necessary for a person to maintain in order to show whether, and the extent to which, that person is subject to the tax imposed by Chapter 5751. of the Revised Code.

(B) For purposes of determining gross receipts under division (F) of section 5751.01 of the Revised Code, all persons subject to the tax imposed under section 5751.02 of the Revised Code will keep and maintain primary and supporting records including but not limited to the following: sales journals, financial statements, charts of accounts, cash journals, annual reports, general ledgers, income statements and tax returns, and invoices. In addition, all persons will maintain organizational structures that reflect ownership and control percentages as they exist in each filing period.

(C) With regard to records concerning tax credits claimed by a taxpayer, persons will maintain records relating to such credits for a period of four years from the later of the filing of or the due date of the return covering the period in which the credit is claimed unless the commissioner either consents in writing to their earlier destruction or, by written order, extends the time period needed for retention.

(D) All persons making purchases will maintain the purchase records and make them available to the commissioner for inspection in accordance with the provisions in section 5751.12 of the Revised Code. Such records will be maintained for at least four years from the later of the filing of or the due date of the return covering the period in which the purchases were made.

(E) For purposes of divisions (E) and (I) of section 5751.033 of the Revised Code, any invoices or documents relating to the situsing of receipts from the sale of tangible personal property or from the sale of services will be maintained for at least four years from the later of the filing of or the due date of the return covering the period in which the sales were made.

(F) This rule also applies to all records discussed in information releases and/or administrative rules relating to the commercial activity tax. Pursuant to section 5751.12 of the Revised Code, all records will be maintained for a period of four years from the later of the filing of or the due date of the return covering the period to which the records relate unless the commissioner either consents in writing to their earlier destruction or, by written order, extends the time period needed for retention.

Last updated December 16, 2024 at 7:49 AM

History

Effective: December 16, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-29-19 Changes in ownership.

(A) Consolidated elections, generally.

(1) For purposes of the commercial activity tax, a group of two or more persons may elect under section 5751.011 of the Revised Code to be in a consolidated elected taxpayer group that includes all persons that are at least fifty per cent owned and controlled or at least eighty per cent owned and controlled by common owners. The group also may elect to include or exclude all non-United States entities that otherwise meet the requirements to be in the group.

(2) The percentage chosen by the members of a consolidated elected taxpayer group applies to all persons meeting the requisite common ownership requirements. For example, person A, a corporation, elects to consolidate at eighty per cent with its wholly owned subsidiary, B. Person B owns two of its own subsidiaries (C and D) at sixty per cent. Because A, the common owner, elected to consolidate at eighty per cent with B, entities C and D are not included in the consolidated elected taxpayer group of their common owners (A and B). Instead, C and D are part of a combined taxpayer group that is commonly owned by A and B. In addition, C and D may not make a separate election to consolidate at fifty per cent in order to exclude their receipts. Since A and B are members of both taxpayer groups, A's and B's taxable gross receipts are reported with the consolidated elected taxpayer group.

(B) Change of ownership and control.

(1) Any time the ownership structure changes such that a common owner no longer owns and controls a person by the requisite percentage chosen, that person shall be removed from the group. The group shall notify the commissioner of this change at the time it files its next return or in writing prior to the due date of that return. Taxpayers wishing to notify the commissioner of such change prior to filing the next return may obtain a form on the department of taxation's website or notify the commissioner electronically through the Ohio business gateway. As applicable, the person no longer meeting the requirements shall register for the commercial activity tax as a stand-alone taxpayer or be added as a member of another group.

(2) It is important to note that a change in the ownership structure may impact the tax liability of a taxpayer group. For example, assume that a calendar year taxpayer acquires a person at some point during the tax period that has taxable gross receipts in excess of one million dollars. Since the calendar year taxpayer previously had only a minimum tax liability, by acquiring an additional person, the calendar year taxpayer's tax liability will surpass its previous liability. If the calendar year taxpayer does not timely notify the commissioner of this change, there will be an underpayment, which is subject to statutory interest and may be subject to penalties. Therefore, when it is reasonably certain that a calendar year taxpayer will have taxable gross receipts in excess of one million dollars during the calendar year, that taxpayer shall switch to a quarterly taxpayer. In this situation, it is advised that the taxpayer notify the commissioner of the acquisition and/or change in filing frequency within a reasonable period of time. A form to make such notice may be obtained on the department of taxation's website.

(1) If a consolidated elected taxpayer group acquires a person, such person will be included in the consolidated elected taxpayer group if that person meets the requisite ownership and control threshold requirements. It is important to note that if the group elected to consolidate at eighty per cent and the new person is owned and controlled by less than eighty per cent but more than fifty per cent, that person would become part of a combined taxpayer group along with any other potential members having less than eighty per cent but more than fifty per cent common ownership. For example, A elects to consolidate at eighty per cent with B, its wholly-owned subsidiary. A later acquires C at sixty per cent. Since A made an eighty per cent election, C is not included in the group; instead, C will be in a combined taxpayer group with its common owner, A.

(2) The rules in paragraph (C)(1) of this rule apply to a consolidated elected taxpayer group that acquires either a combined taxpayer group or another consolidated elected taxpayer group. In such case, the ownership threshold of the acquiring group controls. For example, consolidated elected taxpayer group A elects to consolidate at fifty per cent. Group A later acquires consolidated elected taxpayer group B, which, at the time of registration, elected to consolidate at eighty per cent. Since two separate consolidated elected taxpayer groups cannot coexist under a single common owner, A's fifty per cent threshold controls and group B is included in its entirety. In contrast, if A had elected to consolidate at eighty per cent and became B's common owner at sixty per cent, B would be required to file as a combined taxpayer group with A as the common owner.

(3) Alternatively, if a combined taxpayer group acquires a pre-existing consolidated elected taxpayer group, the common ownership of the acquiring group, i.e. the combined taxpayer group, controls. For example, group A did not elect to consolidate; instead, A owned and controlled enough of its lower-tiered persons such that A filed as a combined taxpayer group. When group A acquires group B, a consolidated elected taxpayer group, the new taxpayer is a combined taxpayer group in accordance with A's status. Please note that as a combined taxpayer group, such group may elect to consolidate at any time pursuant to division (D) of section 5751.011 of the Revised Code.

(D) Canceling an election to consolidate.

Pursuant to division (A)(3)(b) of section 5751.011 of the Revised Code, a taxpayer group must notify the commissioner if it elects to cancel its election to consolidate before the final day in the eighth calendar quarter after the election is made, not the due date of the return filed for the period including that quarter. The cancellation will be effective beginning the first day of the quarter following the eighth quarter after the election is made. A form to notify the commissioner of the desire to cancel an election may be obtained on the department of taxation's website.

Last updated August 26, 2026 at 11:50 AM

History

Effective: January 21, 2021
Promulgated Under: Other

Ohio Adm.Code 5703-29-20 Situsing receipts from periodic payments for mobile property.

(A)

(1) Gross receipts from the sale or other exchange of tangible personal property are sitused based on the location where the purchaser receives the property in accordance with division (E) of section 5751.033 of the Revised Code. When dealing with receipts from mobile property upon which lease payments are made, the location to situs such receipts may be unclear and paragraphs (B) and (C) of this rule shall be used in those situations.

(2) As used in this rule, the term "lease payments" also includes rental payments or other similar periodic payments.

(B) As a general rule, when lease payments are made regarding a piece of mobile property, such receipts shall be sitused based on the following:

(1) In the case of airplanes or other aircraft, receipts from the lease shall be sitused to the location where the aircraft is primarily hangared.

(2)

(a) In the case of motor vehicles used in business for the transportation of passengers or property in interstate commerce and railcars, receipts from the lease shall be sitused in accordance with division (G) of section 5751.033 of the Revised Code if that information is known. If such information is not known, receipts shall be sitused in accordance with paragraph (B)(2)(b) of this rule.

(b) In the case of all other motor vehicles, receipts from the lease shall be sitused based on the primary property location for the period in which the charges are incurred.

(3) In the case of all other lease payments, including those for construction equipment, receipts from the initial lease payment shall be sitused to the location where the lessee takes possession of the property. Receipts from all subsequent lease payments shall be sitused to the primary property location for the period in which the charges are incurred.

(C)

(1) In the event a taxpayer believes that a strict application of the standards set forth in this rule do not fairly represent the operations of the taxpayer, receipts may be sitused to this state using any reasonable, consistent, and uniform method of apportionment that is supported by the lessor's business records as they existed at the time the lease payments were made. In the event the tax commissioner disagrees with a taxpayer's reasonable, consistent, and uniform method of situsing its gross receipts, the commissioner will not impose a penalty if the situsing was found to be made in good faith. While different methods may be used for different types of leases, the same method must be consistently used for all types of similar leases.

(2) A taxpayer may file in writing with the commissioner a request to use an alternative means of situsing gross receipts from the sale or other exchange of mobile property that is reasonable, consistent, and uniform under paragraph (C)(1) of this rule. Such request must be made prior to the end of the reporting period for which the request is to become effective.

(D) For purposes of this rule, "primary property location" means an address for tangible personal property provided by the lessee that is available to the lessor from its records maintained in the ordinary course of business, when use of that address does not constitute bad faith.

Last updated November 19, 2025 at 11:56 AM

History

Effective: June 9, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-29-21 Pre-income tax trusts, explained with revocation procedures.

(A)

(1) Subject to paragraph (D) of this rule, each pre-income tax trust that made a qualifying pre-income tax trust election pursuant to section 5747.01 of the Revised Code had to have registered for the commercial activity tax imposed under section 5751.02 of the Revised Code by April 17, 2007. For tax periods beginning prior to January 1, 2024, all such trusts had to file tax returns and pay at least a minimum tax of one hundred fifty dollars for each year, regardless of the trust's taxable gross receipts under division (E)(7) of section 5751.01 of the Revised Code.

(2) For tax periods beginning January 1, 2024, and thereafter, the annual minimum tax has been eliminated. For tax periods beginning January 1, 2024, any qualified pre-income tax trust or combined or consolidated elected taxpayer that includes such trust whose taxable gross receipts do not exceed the exclusion amount in a calendar year may cancel its commercial activity tax registration. The cancellation for this reason does not revoke the trust's election to be subject to the commercial activity tax. If at any time after cancellation of the registration, the trust's or the combined or consolidated elected taxpayer's taxable gross receipts exceed the exclusion amount in a calendar year, the trust or combined or consolidated elected taxpayer needs to reactivate its registration and resume filing and paying the commercial activity tax. For calendar year 2024, the exclusion amount is three million dollars. For calendar year 2025 and thereafter, the exclusion amount is six million dollars.

(B) As used in this rule, a "pre-income tax trust" has the same meaning as in section 5747.01 of the Revised Code.

(C) A "qualified pre-income tax trust" is a "pre-income tax trust" that made an election pursuant to section 5747.01 of the Revised Code prior to April 17, 2006. The deadline of April 15, 2006 specified in section 5747.01 of the Revised Code was extended pursuant to section 1.14 of the Revised Code that addresses due dates of certain documents filed with the state that fall on a weekend or legal holiday.

(D)

(1) If the trustee of a qualified pre-income tax trust wishes to revoke the trust's election, the trustee needs to do so prior to the tenth of May of the current calendar year. Such revocation is irrevocable and applies to the full taxable year for which the revocation is timely made.

(2) The trustee of a trust revoking its election needs to file a fiduciary income tax return for the trust for the taxable year for which the revocation is timely made and all applicable future taxable years and make all corresponding payments by the due date for such return in order to avoid the imposition of penalties.

(3) The trustee of a trust revoking an election may receive a letter acknowledging the revocation. Such letter does not signify that the trust meets the definition of a pre-income tax trust for purposes of the commercial activity tax. Therefore, even though a trust revoked its election, it may remain subject to both the fiduciary income tax and the commercial activity tax if it is later found not to be a pre-income tax trust.

(E) If a qualified pre-income tax trust would otherwise be the common owner of either a combined taxpayer group or a consolidated elected taxpayer group, and the trust has less than four thousand five hundred dollars in taxable gross receipts, such trust does not need to register for the commercial activity tax pursuant to paragraph (B)(2) of rule 5703-29-02 of the Administrative Code.

Last updated December 21, 2023 at 7:48 AM

History

Effective: December 21, 2023
Promulgated Under: Other

Ohio Adm.Code 5703-29-22 Explanation of the commercial activity tax credits.

(A)

(1) For purposes of the commercial activity tax, the law provides different credits taxpayers may apply against their tax liability: (a) a nonrefundable jobs retention credit; (b) a nonrefundable credit for qualified research expenses; (c) a nonrefundable credit for a borrower's qualified research and development loan payments; (d) a credit for unused franchise tax net operating loss deductions, which operates as both a nonrefundable credit or a refundable credit, depending on the year in which the taxpayer claims the credit; (e) a refundable motion picture and broadway theatrical production credit; and (f) a refundable jobs creation or jobs retention credit. A taxpayer may not claim as a credit against the commercial activity tax any credit amount that such taxpayer previously (or simultaneously) claimed as a credit and received the benefit of such credit against any other tax, including but not limited to the individual income tax, financial institutions tax, insurance premiums tax, or, if applicable, any credit amount that a pass-through entity passed through to its owners to the extent the owners received the benefit of such credit. If authorized by statute, the recipient of a credit that is a pass-through entity may elect to pass through the credit to such entity's owners. A recipient that makes that election may not claim as a credit against its commercial activity tax liability any portion of the credit passed through to the pass-through entity's owners. Unless otherwise authorized by statute, credits are nontransferable. In addition, in no event may a taxpayer claim a nonrefundable credit against its commercial activity tax annual minimum tax liability.

(2) In the event a taxpayer is entitled to claim more than one credit against its commercial activity tax liability, section 5751.98 of the Revised Code dictates the order in which such taxpayer must claim each credit. If authorized by statute, a taxpayer may carry forward to future years any nonrefundable credits not used in the year generated; however, the carryforward period is often limited and varies from credit to credit. After the carryforward period for a particular credit expires, any credit amount that remains unused is lost. The unused amount of a particular credit carried forward to a later year must be used after any preceding credit listed in section 5751.98 of the Revised Code but prior to the same credit generated in the later year and prior to any credit subsequently listed in that section.

(3) Pursuant to section 5703.0510 of the Revised Code, a taxpayer claiming a credit against the commercial activity tax must do all of the following:

(a) Complete a schedule promulgated by the tax commissioner for the purpose of tracking the credits claimed. The schedule shall include identifying information that links the primary/reporting entity to the member claiming the credit, including the primary/reporting entity's name and address, commercial activity tax account number, and federal identification number, as well as the name(s) and account number(s) of those entities claiming the credit, if applicable. On the schedule, the taxpayer must indicate the amount of each credit the taxpayer claims for that period and include any other information requested by the commissioner to verify the credits claimed.

(b) Provide to the commissioner a copy of the certificate issued by the director of development for any tax credit for which a certificate is issued, including the jobs creation and retention credits, the motion picture and broadway theatrical production credit, and the credit for research and development loan payments. If the director of development provides an amended credit certificate, the taxpayer shall provide both the original and the amended certificate to the commissioner.

(c) If the taxpayer fails to provide a copy of the certificate(s), if applicable, and schedule with its return, the commissioner shall deny the credit until the taxpayer provides a copy of the certificate(s) and schedule.

(B)

(1) Pursuant to section 5751.51 of the Revised Code, the nonrefundable credit for qualified research expenses is available to taxpayers to apply against their commercial activity tax liability . The term "qualified research expenses" is defined in section 41 of the Internal Revenue Code. For purposes of this paragraph, "Internal Revenue Code" has the same meaning as in division (K) of section 5751.01 of the Revised Code.

(2) Regardless of a taxpayer's commercial activity tax filing frequency, a taxpayer must compute the credit for qualified research expenses based on expenses incurred during the calendar year (not the taxpayer's federal taxable year). Thus, a taxpayer must first claim the credit for qualified research expenses on its annual return due in May following the calendar year for which the credit is claimed, or, for calendar quarter taxpayers, on the fourth quarter return due in February of the year following the calendar year for which the credit is claimed. Any portion of the nonrefundable credit that remains unused after the taxpayer applies the credit against the commercial activity tax liability on a return in which the credit is properly first claimed may be carried forward to the subsequent return for no more than seven years.

(3) Eligible taxpayers may calculate the available nonrefundable credit under section 5751.51 of the Revised Code by multiplying seven per cent by the difference between the taxpayer's qualified research expenses incurred in Ohio during the calendar year and the taxpayer's average annual qualified research expenses incurred in Ohio during the three preceding calendar years.

Last updated May 31, 2022 at 7:58 AM

History

Effective: May 28, 2022
Promulgated Under: Other

Chapter 5703-30 Sports Gaming Proprietor as a Taxpayer

Ohio Adm.Code 5703-30-01 Definition of a taxpayer.

(A) Unless stated otherwise, terms not defined or clarified in this rule have the same meaning as in Chapter 3775., 5747., or 5753. of the Revised Code.

(B) For purposes of the sports gaming receipts tax, "taxpayer" is defined in section 5753.01 as "a sports gaming proprietor subject to the tax levied under section 5753.021 of the Revised Code." However, division (E)(1) of sections 3775.05 and 3775.051 of the Revised Code indicate that unless the context requires otherwise, references in the Revised Code to a sports gaming proprietor apply to a mobile management services provider and management services provider to the extent that the mobile management services provider or management services provider is acting on behalf of a type A or type B sports gaming proprietor, respectively, pursuant to the contract acknowledged in the same sections.

(C) For purposes of Title LVII of the Revised Code, due to the nature and responsibilities for tax liabilities, the statement in division (E)(1) of sections 3775.05 and 3775.051 of the Revised Code is not applicable, except as authorized by paragraphs (D) and (E) of this rule. A sports gaming proprietor is the taxpayer with respect to the tax levied in section 5753.021 of the Revised Code and the requirements imposed under section 5747.063 of the Revised Code. Nothing in this rule prevents a sports gaming proprietor from authorizing a management services provider, mobile management services provider, or other representative from filing on its behalf.

(D) If a sports gaming proprietor is a professional sports organization and is a member of a league, association, or organization that prevents the sports gaming proprietor from being subject to the regulatory control of the Ohio casino control commission or from otherwise operating under the license issued by the Ohio casino control commission, the professional sports organization that has contractually appointed a designee operator may also identify the designee operator as the taxpayer for purposes of the tax levied in section 5753.021 of the Revised Code and the requirements imposed under section 5747.063 of the Revised Code. Because of the relationship between these two parties, if a designee operator is named the taxpayer, any correspondence, billings, assessments, or refunds will be issued in the name of the designee operator.

(E) A sports gaming proprietor may designate, on a form prescribed by the commissioner, mobile management services providers or a management services provider that will register as the taxpayer for purposes of the requirements imposed under section 5747.063 of the Revised Code. If designated by both parties, a mobile management services provider or a management services provider is the taxpayer and any correspondence, billings, assessments, or refunds will be issued in the name of the mobile management services provider or management services provider.

(F) Except as identified in section 3775.14 of the Revised Code, section 5753.04 of the Revised Code allows the tax commissioner to disclose any information in a return of a sports gaming proprietor concerning sports gaming receipts. This will be true regardless of whether the sports gaming proprietor or the designee operator is listed as the taxpayer.

Last updated May 25, 2023 at 8:13 AM

History

Effective: May 25, 2023
Promulgated Under: Other

Chapter 5703-31 Accessing Confidential Personal Information

Ohio Adm.Code 5703-31-01 Definitions.

For the purposes of administrative rules promulgated in accordance with sections 1347.15 and 5703.211 of the Revised Code, the following definitions apply:

(A) "Access" as a noun means an instance of copying, viewing, or otherwise perceiving whereas "access as a verb means to copy, view, or otherwise perceive.

(B) "Acquisition of a new computer system" means the purchase of a "computer system," as defined in this rule, that is not a computer system currently in place nor one for which the acquisition process has been initiated as of the effective date of the agency rule addressing requirements in section 1347.15 of the Revised Code.

(C) "Computer system" means a "system," as defined by section 1347.01 of the Revised Code, that stores, maintains, or retrieves personal information using electronic data processing equipment.

(D) "Confidential personal information" (CPI) has the meaning as defined by division (A)(1) of section 1347.15 of the Revised Code and identified by rules promulgated by the agency in accordance with division (B)(3) of section 1347.15 of the Revised Code that reference the federal or state statutes or administrative rules that make personal information maintained by the agency confidential.

(E) "Employee of the state agency" means each employee of a state agency regardless of whether he/she holds an elected or appointed office or position within the state agency. "Employee of the state agency" is limited to the specific employing state agency.

(F) "Incidental contact" means contact with the information that is secondary or tangential to the primary purpose of the activity that resulted in the contact.

(G) "Individual" means a natural person or the natural person's authorized representative, legal counsel, legal custodian, or legal guardian.

(H) "Information owner" means the individual appointed in accordance with division (A) of section 1347.05 of the Revised Code to be directly responsible for a system.

(I) "Person" means a natural person.

(J) "Personal information" has the same meaning as defined in division (E) of section 1347.01 of the Revised Code.

(K) "Personal information system" means a "system" that "maintains" "personal information" as those terms are defined in section 1347.01 of the Revised Code. "System" includes manual and computer systems.

(L) "Research" means a methodical investigation into a subject.

(M) "Routine" means commonplace, regular, habitual, or ordinary.

(N) "Routine information that is maintained for the purpose of internal office administration, the use of which would not adversely affect a person" as that phrase is used in division (F) of section 1347.01 of the Revised Code means personal information relating to employees and maintained by the agency for internal administrative and human resource purposes.

(O) "System" has the same meaning as defined by division (F) of section 1347.01 of the Revised Code.

(P) "Upgrade" means a substantial redesign of an existing computer system for the purpose of providing a substantial amount of new application functionality, or application modifications that would involve substantial administrative or fiscal resources to implement, but would not include maintenance, minor updates and patches, or modifications that entail a limited addition of functionality due to changes in business or legal requirements.

(Q) "Database," as used in section 5703.211 of the Revised Code, means a "system" that contains "personal information" as those terms are defined in section 1347.01 of the Revised Code.

Last updated September 28, 2026 at 10:53 AM

History

Effective: February 1, 2011
Promulgated Under: 119.03

Ohio Adm.Code 5703-31-02 Procedures for accessing confidential personal information.

For personal information systems, whether manual or computer systems, that contain confidential personal information, the agency shall do the following:

(A) Criteria for accessing confidential personal information. Personal information systems of the agency are managed on a "need-to-know" basis whereby the information owner determines the level of access required for an employee of the agency to fulfill his/her job duties. The determination of access to confidential personal information shall be approved by the employee's supervisor and the information owner prior to providing the employee with access to confidential personal information within a personal information system. The agency shall establish procedures for determining a revision to an employee's access to confidential personal information upon a change to that employee's job duties including, but not limited to, transfer or termination. Whenever an employee's job duties no longer require access to confidential personal information in a personal information system, the employee's access to confidential personal information shall be removed.

(B) Individual's request for a list of confidential personal information. Upon the signed written request of any individual for a list of confidential personal information about the individual maintained by the agency, the agency shall do all of the following:

(1) Verify the identity of the individual by a method that provides safeguards commensurate with the risk associated with the confidential personal information;

(2) Provide to the individual the list of confidential personal information that does not relate to an investigation about the individual or is otherwise not excluded from the scope of Chapter 1347. of the Revised Code; and

(3) If all information relates to an investigation about that individual, inform the individual that the agency has no confidential personal information about the individual that is responsive to the individual's request.

(1) Upon discovery or notification that confidential personal information of a person has been accessed by an employee for an invalid reason, the agency shall notify the person whose information was invalidly accessed as soon as practical and to the extent known at the time. However, the agency shall delay notification for a period of time necessary to ensure that the notification would not delay or impede an investigation or jeopardize homeland or national security. Additionally, the agency may delay the notification consistent with any measures necessary to determine the scope of the invalid access, including which individuals" confidential personal information invalidly was accessed, and to restore the reasonable integrity of the system.

"Investigation" as used in this paragraph means the investigation of the circumstances and involvement of an employee surrounding the invalid access of the confidential personal information. Once the agency determines that notification would not delay or impede an investigation, the agency shall disclose the access to confidential personal information made for an invalid reason to the person.

(2) Notification provided by the agency shall inform the person of the type of confidential personal information accessed and the date(s) of the invalid access.

(3) Notification may be made by any method reasonably designed to accurately inform the person of the invalid access, including written, electronic, or telephone notice.

(D) Appointment of a data privacy point of contact. The agency director shall designate an employee of the agency to serve as the data privacy point of contact. The data privacy point of contact shall work with the chief privacy officer within the office of information technology to assist the agency with both the implementation of privacy protections for the confidential personal information that the agency maintains and compliance with section 1347.15 of the Revised Code and the rules adopted pursuant to the authority provided by that chapter.

(E) Completion of a privacy impact assessment. The agency director shall designate an employee of the agency to serve as the data privacy point of contact who shall timely complete the privacy impact assessment form developed by the office of information technology.

Last updated September 28, 2026 at 10:53 AM

History

Effective: February 1, 2011
Promulgated Under: 119.03

Ohio Adm.Code 5703-31-03 Restricting and logging access to confidential personal information in computerized personal information systems.

For personal information systems that are computer systems and contain confidential personal information, the agency shall do the following:

(A) Access restrictions. Access to confidential personal information that is kept electronically shall require a password or other authentication measure.

(B) Acquisition of a new computer system. When the agency acquires a new computer system that stores, manages or contains confidential personal information, the agency shall include a mechanism for recording specific access by employees of the agency to confidential personal information in the system.

(C) Upgrading existing computer systems. When the agency modifies an existing computer system that stores, manages or contains confidential personal information, the agency shall make a determination whether the modification constitutes an upgrade. Any upgrades to a computer system shall include a mechanism for recording specific access by employees of the agency to confidential personal information in the system.

(D) Logging requirements regarding confidential personal information in existing computer systems.

(1) The agency shall require employees of the agency who access confidential personal information within computer systems to maintain a log that records that access.

(2) Access to confidential information is not required to be entered into the log under the following circumstances:

(a) The employee of the agency is accessing confidential personal information for official agency purposes, including research, and the access is not specifically directed toward a specifically named individual or a group of specifically named individuals.

(b) The employee of the agency is accessing confidential personal information for routine office procedures and the access is not specifically directed toward a specifically named individual or a group of specifically named individuals.

(c) The employee of the agency comes into incidental contact with confidential personal information and the access of the information is not specifically directed toward a specifically named individual or a group of specifically named individuals.

(d) The employee of the agency accesses confidential personal information about an individual based upon a request made under either of the following circumstances:

(i) The individual requests confidential personal information about himself/herself.

(ii) The individual makes a request that the agency takes some action on that individual's behalf and accessing the confidential personal information is required in order to consider or process that request.

(3) For purposes of this paragraph, the agency may choose the form or forms of logging, whether in electronic or paper formats.

(E) Log management. The agency shall issue a policy that specifies the following:

(1) Who shall maintain the log;

(2) What information shall be captured in the log;

(3) How the log is to be stored; and

(4) How long information kept in the log is to be retained.

Nothing in this rule limits the agency from requiring logging in any circumstance that it deems necessary.

(F) Compliance with the logging requirements set forth in this rule shall constitute compliance with the provisions for tracking searches of databases set forth in section 5703.211 of the Revised Code.

Last updated September 28, 2026 at 10:53 AM

History

Effective: February 1, 2011
Promulgated Under: 119.03

Ohio Adm.Code 5703-31-04 Confidentiality statutes.

The following federal statutes or state statutes make personal information maintained by the agency confidential and identify the confidential personal information within the scope of rules promulgated by this agency in accordance with section 1347.15 of the Revised Code:

(A) Social security numbers: 5 U.S.C. 552a., unless the individual was told that the number would be disclosed;

(B) "Bureau of Criminal Investigation and Information" criminal records check results: section 4776.04 of the Revised Code;

(D) Unauthorized disclosure of information: section 7213 of the Internal Revenue Code;

(E) Unauthorized inspection of returns or return information: section 7213 (a) of the Internal Revenue Code;

(F) Civil damages for unauthorized inspection or disclosure of returns and return information: section 7431 of the Internal Revenue Code;

(G) Prohibition against divulging information: section 5703.21 of the Revised Code;

(H) Confidentiality of financial information regarding personal property taxation: section 5711.101 of the Revised Code;

(I) Confidentiality of certain estate tax information: section 5731.90 of the Revised Code;

(J) Confidentiality of annual franchise tax report: division (G) of section 5733.03 of the Revised Code;

(K) Confidentiality of information resulting from investigations: section 5739.35 of the Revised Code;

(L) Confidentiality of income tax information: division (C) of section 5747.18 of the Revised Code;

(M) Confidentiality of commercial activity tax information: section 5751.12 of the Revised Code;

(N) Confidentiality of information relating to opinions of the tax commissioner: section 5703.53 of the Revised Code;

(O) Confidentiality of motor fuel tax information: section 5735.33 of the Revised Code;

(P) Confidentiality of use tax investigation information: section 5741.24 of the Revised Code; and

(Q) Confidentiality of cigarette tax information: section 5743.45 of the Revised Code.

Last updated September 28, 2026 at 10:53 AM

History

Effective: February 1, 2011
Promulgated Under: 119.03

Ohio Adm.Code 5703-31-05 Valid reasons for accessing confidential personal information.

Pursuant to the requirements of division (B)(2) of section 1347.15 of the Revised Code, this rule contains a list of valid reasons, directly related to the department of taxation's exercise of its powers or duties, for which only employees of the agency may access confidential personal information (CPI) regardless of whether the personal information system is a manual system or computer system:

(A) Performing the following functions constitute valid reasons for authorized employees of the agency to access confidential personal information:

(1) Responding to a public records request;

(2) Responding to a request from an individual for the list of CPI the agency maintains on that individual;

(3) Administering a constitutional provision or duty;

(4) Administering a statutory provision or duty;

(5) Administering an administrative rule provision or duty;

(6) Complying with any state or federal program requirements;

(7) Processing of tax returns, including all submitted tax payments, and processing of refunds due to taxpayers;

(8) Auditing purposes;

(9) Licensure or permit processes;

(10) Investigation or law enforcement purposes;

(11) Administrative hearings;

(12) Litigation, complying with an order of the court, or subpoena;

(13) Human resource matters (e.g., hiring, promotion, demotion, discharge, salary/compensation issues, leave requests/issues, time card approvals/issues);

(14) Complying with an executive order or policy;

(15) Complying with an agency policy or a state administrative policy issued by the department of administrative services, the office of budget and management or other similar state agency; or

(16) Complying with a collective bargaining agreement provision.

(B) To the extent that the general processes described in paragraph (A) of this rule do not cover the following circumstances, for the purpose of carrying out specific duties of the Ohio department of taxation, authorized employees would also have valid reasons for accessing CPI in these following circumstances:

(1) Working with the attorney general's office regarding collection and compromise matters;

(2) Developing, implementing, or supporting agency computer systems;

(3) Administering programs to discover delinquent or noncompliant taxpayers;

(4) Internal audit functions and investigations;

(5) Considering taxpayer appeals of assessments and other findings of the tax commissioner and drafting of final determinations from such appeals; and

(6) Assisting other agencies in their tax administration and compliance efforts as allowed under Ohio law.

Last updated September 28, 2026 at 10:53 AM

History

Effective: February 1, 2011
Promulgated Under: 119.03

Chapter 5703-33 Financial Institutions Tax

Ohio Adm.Code 5703-33-01 Electronic filing of annual or estimated tax reports and tax payments.

(A) Except as provided in paragraph (B) of this rule, the reporting person for each taxpayer shall file such return and remit payment of the tax liability as follows:

(1) The returns shall be filed electronically using a means prescribed by the tax commissioner;

(2) The payment shall be made electronically in the manner prescribed by the commissioner.

(B)

(1) As authorized pursuant to division (C) of section 5726.03 of the Revised Code, if a person seeks to be excused from the requirement of mandatory electronic filing or payment, that person may apply to the tax commissioner to be excused from this requirement. A form prescribed by the commissioner for such purpose shall be posted on the department of taxation's website.

(3) Each tax year, the commissioner will prescribe a paper return to be used by de novo bank organizations and will provide the return to each registered de novo bank organization along with filing and payment instructions.

(C) Nothing in this rule affects any person's obligation to timely file all returns and timely pay all amounts required by Chapter 5726. of the Revised Code. The reporting person for a taxpayer excused from electronic filing or payment is required to file all returns and timely pay all amounts as required by Chapter 5726. of the Revised Code.

Last updated September 21, 2026 at 12:05 PM

History

Effective: January 13, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-33-02 Captive finance companies.

(A) Regarding the computation provided for in division (D) of section 5726.01 of the Revised Code, a "captive finance company" must derive at least seventy-five per cent of its gross income from the transactions listed in division (D) of section 5726.01 of the Revised Code for a three-year rolling average of the current taxable year and the two taxable years preceding the current taxable year. If for any taxable year, the company does not derive at least seventy-five per cent of its gross income from the transactions listed in division (D) of section 5726.01 of the Revised Code for a three-year rolling average of the current taxable year and the two taxable years preceding the current taxable year, then for that taxable year it is not a captive finance company.

(B)

(1) For example, a taxpayer that for its current year has eighty per cent of its gross income derived from the transactions listed in division (D) of section 5726.01 of the Revised Code, and seventy-six per cent for the immediately preceding year, but only sixty per cent for the year immediately preceding that, would not qualify as a captive finance company, because the three year rolling average ((80 + 76

60 ) / 3 = 72 per cent) is below the seventy-five per cent threshold to be a captive finance company.

(2) For example, a taxpayer for its current year that has eighty-nine per cent of its gross income derived from the transactions listed in division (D) of section 5726.01 of the Revised Code, and seventy-eight per cent for the immediately preceding year, and sixty-seven per cent for the year immediately preceding that, would qualify as a captive finance company, because the three-year rolling average ((89 + 78

67 ) / 3 = 78 per cent) equals or exceeds the seventy-five per cent threshold.

Last updated October 22, 2025 at 11:52 AM

History

Effective: June 9, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-33-03 Notification of change in ownership or applicability of chapter.

(A) When a person is no longer subject to the tax imposed by this chapter, the person shall notify the commissioner of this change in writing on a form prescribed by the commissioner available on the department of taxation's website or electronically in a manner prescribed by the commissioner.

(B) If the ownership structure of a financial institution changes such that a person is no longer includable in the annual report of the financial institution, the reporting person for the financial institution shall notify the commissioner of the change when the reporting person files its next annual report or in writing prior to the due date of that report. Persons wishing to notify the commissioner of such change prior to filing the next annual report may obtain a form prescribed by the commissioner on the department of taxation's website or may update the information electronically in a manner prescribed by the commissioner.

Last updated January 13, 2026 at 12:02 PM

History

Effective: January 13, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-33-04 Pawn shops and pawnbrokers.

(A) Chapter 4727. of the Revised Code provides the following definition of a pawnbroker: "Pawnbroker" means a person engaged in the business of lending money on deposit or pledges of personal property, other than securities, printed evidence of indebtedness, titles, deeds, or bills of sale, at a total charge, rate of interest, or discount or other remuneration in excess of eight per cent per annum, and includes a person engaged in the business of purchasing personal property from another person with an agreement that the personal property will be made available to that other person for repurchase within an agreed-to time period and for an amount greater than the price originally paid to that other person for the purchase of the personal property.

In order to qualify as a pawn shop or pawnbroker, a person must retain physical possession of the pledged tangible personal property for the agreed-to time period for all individuals pledging tangible personal property to the person.

(B) Pawn shops or pawnbrokers, as defined above, are hereby excluded from being found to be a "small dollar lender" as defined in division (M)(2) of section 5726.01 of the Revised Code. Pawn shops and pawnbrokers are also excluded from being a "financial institution" as that term is defined in division (H) of section 5726.01 of the Revised Code.

Last updated October 22, 2025 at 11:52 AM

History

Effective: June 9, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-33-05 Reporting of total equity capital.

(A) Ohio's financial institutions tax ("FIT") has been designed based upon the following fundamental concepts:

(1) The tax return will be reported on a consolidated basis at the highest level of ownership rather than on a separate entity basis.

(2) The equity of the consolidated reporting group will be based upon the generally accepted accounting principle basis reported to the appropriate federal regulatory agency rather than on a tax basis.

(B)

(1) Bank organizations that are owned through a holding company structure report the equity of the holding company and all of the entities over which the bank holding company exercises significant influence on the FR Y-9. A financial institution that is required to file the FR Y-9C pursuant to federal reserve board regulations, shall report the total equity capital from the FR Y-9C on its Ohio financial institution annual tax return. A financial institution that is a "small bank holding company" pursuant to federal reserve board regulations, is required to file the "Parent Company Only Financial Statement for Small Bank Holding Companies," the FR Y-9SP report. The FR Y-9SP report is prepared according to the equity method of accounting, as prescribed by generally accepted accounting principles, and includes the equity for all investments in subsidiaries, associated companies, and those corporate joint ventures over which the bank holding company exercises significant influence. Although the report is labeled as "Parent Company Only," the total equity capital that is being reported on it includes the equity in all of the entities over which it exercises significant influence. Therefore, it is the total equity capital from the FR Y-9SP that is reported on the Ohio financial institution annual tax return and only one Ohio annual return needs to be filed for the group.

(2) Special statutory treatment is afforded to bank organizations owned directly by a grandfathered unitary savings and loan holding company, as defined by division (J) of section 5726.01 of the Revised Code. In these situations the total equity capital is taken from the call report filed by the financial institution owned by the grandfathered unitary savings and loan holding company rather than the FR Y-9 filed by the grandfathered unitary savings and loan holding company.

(3) Since a diversified savings and loan holding company is excluded from the definition of financial institution, the equity capital is taken from the next highest level of ownership, which could be either a bank organization or a holding company of a bank organization, and will include the equity capital from all entities included in the call report or FR Y-9, as applicable.

(C) Some bank organizations are not owned through a holding company structure and are not required to file an FR Y-9. These organizations are required to file a call report rather than the FR Y-9 and it is the total equity capital from the call report that is reported on the Ohio financial institution annual tax return. Only one Ohio annual return needs to be filed for the group of entities included in the call report

(D) Small dollar lenders do not file an FR Y-9 or a call report. They will report their total equity capital on a separate entity basis.

(E) In order to determine the total Ohio equity capital, a single, gross receipts apportionment factor is applied to the total equity capital. An apportionment factor is a tax concept rather than a generally accepted accounting principle concept. The gross receipts used for the apportionment must be reflective of all of the entities whose equity is included in the total equity capital being reported.

(F) .

(1) In order to determine a financial institution's total Ohio equity capital for tax years beginning on or after January 1, 2020, a financial institution's total equity capital, to which the apportionment factor is applied, is limited to fourteen per cent of the financial institution's total assets. For purposes of this limitation, "total assets" are the financial institution's total consolidated assets reported as of the end of the taxable year as follows, subject to audit and adjustment by the tax commissioner:

(a) For a reporting person that is a bank holding company and that files a FR Y-9C, the total consolidated assets of the financial institution as reported on the FR Y-9C, including the total assets of all entities consolidated for purposes of filing the FR Y-9C;

(b) For a reporting person that is a bank holding company and that files a FR Y-9SP, the total consolidated assets of the financial institution as reported on the FR Y-9SP, including the total assets of all entities that would be consolidated for purposes of filing a FR Y-9C if the bank holding company were required to file a FR Y-9C. The total consolidated assets as reported on Schedule SC-M of the FR Y-9SP may be used if the total consolidated assets as reported reflect the actual amount of total consolidated assets of the financial institution;

(c) For a reporting person that is a bank organization and that files a call report, the total consolidated assets of the financial institution as reported on the call report, including the total assets of all entities consolidated for purposes of filing the call report;

(d) For all other reporting persons, the total consolidated assets of the financial institution in accordance with generally accepted accounting principles. If the financial institution consists of a single entity, the total consolidated assets will only comprise of that entity's total assets.

(2) Examples of the total equity capital limitation applicable to tax years beginning on or after January 1, 2020:

(a) Reporting person, A, is a large bank holding company that files a FR Y-9C. A's FR Y-9C for the period ending December 31, 2019 showed total equity capital of $950,000,000 and total consolidated assets of $10,500,000,000. To determine whether the limit on total equity capital will reduce the amount apportioned to Ohio for purposes of the FIT, A will multiply its total consolidated assets by 14% and then compare that amount to its total equity capital: 0.14 x $10,500,000,000 = $1,470,000,000. Because 14% of A's total consolidated assets ($1,470,000,000) is greater than A's total equity capital ($950,000,000), the limitation on total equity capital will not impact A for tax year 2020. A will apply its apportionment factor to its total equity capital of $950,000,000 to determine its total Ohio equity capital.

(b) Reporting person, B, is a small bank holding company that files a FR Y-9SP. B's FR Y-9SP for the period ending December 31, 2019 showed total equity capital of $40,000,000 and total consolidated assets of $250,000,000. To determine whether the limit on total equity capital will reduce the amount apportioned to Ohio for purposes of the FIT, B will multiply its total consolidated assets by 14% and then compare that amount to its total equity capital: 0.14 x $250,000,000 = $35,000,000. Because 14% of B's total consolidated assets ($35,000,000) is less than B's total equity capital ($40,000,000), B's total equity capital for purposes of determining the FIT for tax year 2020 will be reduced to equal 14% of its total consolidated assets, or $35,000,000. B will apply its apportionment factor to $35,000,000 to determine its total Ohio equity capital for tax year 2020.

(G) "FR Y-9" has the same meaning as defined in division (I) of section 5726.01 of the Revised Code.

Last updated October 22, 2025 at 11:53 AM

History

Effective: May 10, 2020
Promulgated Under: Other

Ohio Adm.Code 5703-33-06 General situsing provision.

(A) The situsing concepts provided herein should be used in calculating the gross receipts for the apportionment factor.

As used herein, unless the context otherwise requires:

(1) "Billing address" means the location indicated in the books and records of the taxpayer on the first day of the taxable year (or on such later date in the taxable year when the customer relationship began) as the address where any notice, statement and/or bill relating to a customer's account is mailed.

(2) "Borrower or credit card holder located in this state" means:

(a) A borrower, other than a credit card holder, that is engaged in a trade or business which maintains its commercial domicile in this state; or

(b) A borrower that is not engaged in a trade or business or a credit card holder whose billing address is in this state.

(3) "Card issuer's reimbursement fee" means the fee a taxpayer receives from a merchant's bank because one of the persons to whom the taxpayer has issued a credit, debit, or similar type of card has charged merchandise or services to the card.

(4) "Commercial domicile" means:

(a) The headquarters of the trade or business, that is, the place from which the trade or business is principally managed and directed; or

(b) If a taxpayer is organized under the laws of a foreign country, or of the Commonwealth of Puerto Rico, or any territory or possession of the United States, such taxpayer's commercial domicile shall be deemed for the purposes of this rule to be the state of the United States or the District of Columbia from which such taxpayer's trade or business in the United States is principally managed and directed. It shall be presumed, subject to rebuttal, that the location from which the taxpayer's trade or business is principally managed and directed is the state of the United States or the District of Columbia to which the greatest number of employees are regularly connected or out of which they are working, irrespective of where the services of such employees are performed, as of the last day of the taxable year.

(5) "Credit card" means a card, or other means of providing information, that entitles the holder to charge the cost of purchases, or a cash advance, against a line of credit.

(6) "Debit card" means a card, or other means of providing information, that enables the holder to charge the cost of purchases, or a cash withdrawal, against the holder's bank account or a remaining balance on the card.

(7) "Financial institution" has the same meaning as defined in division (H) of section 5726.01 of the Revised Code.

(8) "Loan" means any extension of credit resulting from direct negotiations between the taxpayer and its customer, and/or the purchase, in whole or in part, of such extension of credit from another. Loans include participations, syndications, and leases treated as loans for federal income tax purposes. Loans shall not include: futures or forward contracts; options; notional principal contracts such as swaps; credit card receivables, including purchased credit card relationships; non-interest bearing balances due from depository institutions; cash items in the process of collection; federal funds sold; securities purchased under agreements to resell; assets held in a trading account; securities; interests in a REMIC, or other mortgage-backed or asset-backed security; and other similar items.

(9) "Loan secured by real property" means that fifty per cent or more of the aggregate value of the collateral used to secure a loan or other obligation, when valued at fair market value as of the time the original loan or obligation was incurred, was real property.

(10) "Merchant discount" means the fee (or negotiated discount) charged to a merchant by the taxpayer for the privilege of participating in a program whereby a credit, debit, or similar type of card is accepted in payment for merchandise or services sold to the card holder, net of any cardholder charge-back and unreduced by any interchange transaction or issuer reimbursement fee paid to another for charges or purchases made its cardholder.

(11) "Participation" means an extension of credit in which an undivided ownership interest is held on a pro rata basis in a single loan or pool of loans and related collateral. In a loan participation, the credit originator initially makes the loan and then subsequently resells all or a portion of it to other lenders. The participation may or may not be known to the borrower.

(12) "Person" has the same meaning as defined in section 5701.01 of the Revised Code.

(13) "Real property owned" and "tangible personal property owned" mean real and tangible personal property, respectively, (1) on which the taxpayer may claim depreciation for federal income tax purposes, or (2) property to which the taxpayer holds legal title and on which no other person may claim depreciation for federal income tax purposes (or could claim depreciation if subject to federal income tax). Real and tangible personal property do not include coin, currency, or property acquired in lieu of or pursuant to a foreclosure.

(14) "State" means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States or any foreign country.

(15) "Syndication" means an extension of credit in which two or more persons fund and each person is at risk only up to a specified percentage of the total extension of credit or up to a specified dollar amount.

(B) Receipts factor.

(1) General. The receipts factor is a fraction, the numerator of which is the receipts of the taxpayer in this state during the taxable year and the denominator of which is the receipts of the taxpayer within and without this state during the taxable year. The method of calculating receipts for purposes of the denominator is the same as the method used in determining receipts for purposes of the numerator.

(2) Receipts from the lease of real property. The numerator of the receipts factor includes receipts from the lease or rental of real property owned by the taxpayer if the property is located within this state or receipts from the sublease of real property if the property is located within this state.

(3) Receipts from the lease of tangible personal property. The numerator of the receipts factor includes receipts from the lease or rental of tangible personal property owned by the taxpayer to the extent such property is used in this state or receipts from the sublease of tangible personal property to the extent such property is used in this state.

(4) Interest, fees, and penalties imposed in connection with loans secured by real property.

(a) The numerator of the receipts factor includes interest, fees, and penalties imposed in connection with loans secured by real property if the property is located within this state. If the property is located both within this state and one or more other states, the receipts described in this paragraph are included in the numerator of the receipts factor if more than fifty per cent of the fair market value of the real property is located within this state. If more than fifty per cent of the fair market value of the real property is not located within any one state, then the receipts described in this paragraph shall be included in the numerator of the receipts factor if the borrower is located in this state.

(b) The determination of whether the real property securing a loan is located within this state shall be made as of the time the original agreement was made and any and all subsequent substitutions of collateral shall be disregarded.

(5) Interest, fees, and penalties imposed in connection with loans not secured by real property. The numerator of the receipts factor includes interest, fees, and penalties imposed in connection with loans not secured by real property if the borrower is located in this state.

(6) Net gains from the sale of loans. The numerator of the receipts factor includes net gains from the sale of loans. Net gains from the sale of loans includes income recorded under the coupon stripping rules of Section 1286 of the Internal Revenue Code.

(a) The numerator shall include the amount of net gains (but not less than zero) from the sale of loans secured by real property where the real property is located in this state. If the net gain is from the sale of loans located both in this state and other states, then the numerator includes the proportion of the net gain that the value of the in-state real property bears to the value of all the property securing the loan.

(b) The numerator shall include the amount of net gains (but not less than zero) from the sale of loans not secured by real property from loans where the borrower is located in this state.

(7) Receipts from fees, interest, and penalties charged to card holders. The numerator of the receipts factor includes fees, interest and penalties charged to credit, debit or similar card holders, including but not limited to annual fees and overdraft fees, if the billing address of the card holder is in this state.

(8) Net gains from the sale of credit card receivables. The numerator of the receipts factor includes net gains (but not less than zero) from the sale of credit card receivables if the billing address of the cardholder is located in this state.

(9) Card issuer's reimbursement fees. The numerator of the receipts factor includes:

(a) All credit card issuer's reimbursement fees if the billing address of the cardholder is located in this state.

(b) All debit card issuer's reimbursement fees if the billing address of the cardholder is located in this state.

(10) Receipts from merchant discount.

(a) If the taxpayer can readily determine the location of the merchant and if the merchant is in this state, the numerator of the receipts factor includes receipts from merchant discount.

(b) If the taxpayer cannot readily determine the location of the merchant, the numerator of the receipts factor includes such receipts from the merchant discount multiplied by a fraction:

(i) In the case of a merchant discount related to the use of a credit card, the numerator of which is the amount of fees, interest and penalties charged to credit card holders that is included in the numerator of the receipts factor pursuant to paragraph (B)(7) of this rule and the denominator of which is the taxpayer's total amount of fees, interest and penalties charged to credit card holders, and

(ii) In the case of a merchant discount related to the use of a debit card, the numerator of which is the amount of fees, interest and penalties charged to debit card holders that is included in the numerator of the receipts factor pursuant to paragraph (B)(7) of this rule, and the denominator of which is the taxpayer's total amount of fees, interest and penalties charged to debit card holders.

(iii) In the case of a merchant discount related to the use of all other types of cards, the numerator of which is the amount of fees, interest and penalties charged to all other card holders that is included in the numerator of the receipts factor pursuant to paragraph (B)(7) of this rule, and the denominator of which is the taxpayer's total amount of fees, interest and penalties charged to all other card holders.

(c) The taxpayer's method for sourcing each receipt from a merchant discount must be consistently applied to such receipt in all states that have adopted sourcing methods substantially similar to paragraphs (B)(10)(a) and (B)(10)(b) of this rule and must be used on all subsequent returns for sourcing receipts from such merchant unless the tax commissioner permits or requires application of an alternative method.

(11) Receipts from ATM fees. The receipts factor includes all ATM fees that are not forwarded directly to another bank.

(a) The numerator of the receipts factor includes fees charged to a cardholder for the use at an ATM of a card issued by the taxpayer if the cardholder's billing address is in this state.

(b) The numerator of the receipts factor includes fees charged to a cardholder, other than the taxpayer's cardholder, for the use of such card at an ATM owned or rented by the taxpayer, if the ATM is in this state.

(12) Loan servicing fees.

(a)

(i) The numerator of the receipts factor includes loan servicing fees derived from loans secured by real property located in this state. If the fee is derived from loans located both in this state and other states, then the numerator includes the proportion of the fee that the value of the in-state real property bears to the value of all the property securing the loan.

(ii) The numerator of the receipts factor includes loan servicing fees derived from loans not secured by real property if the borrower is located in this state.

(b) In circumstances in which the taxpayer receives loan servicing fees for servicing either the secured or the unsecured loans of another, the numerator of the receipts factor shall include such fees if the borrower is located in this state.

(13) All other receipts. The numerator of the receipts factor includes all other receipts generated by the financial institution based upon the customers' benefit in this state with respect to the services or product received.

(1) Division (D) of section 5726.05 of the Revised Code allows a taxpayer to elect from two different methodologies in situsing its investment assets and activities and its trading assets and activities. The taxpayer may either apply the apportionment factor that was calculated pursuant to division (B) of section 5726.05 of the Revised Code against its gross receipts from its investment assets and activities and its trading assets and activities, or it can situs each separate and distinct type of income from these activities pursuant to the statutory guidelines set forth in division (D)(2) of section 5726.05 of the Revised Code. The practical effect of this is that, in the apportionment calculation, under the first methodology a taxpayer will exclude the gross receipts from its investment assets and activities and its trading assets and activities whereas those gross receipts will be included under the second methodology.

(2) Division (D) of section 5726.05 of the Revised Code allows a taxpayer to elect the methodology for situsing receipts from investment assets and activities and trading assets and activities. Whatever methodology the taxpayer initially elects, it shall use this method on all subsequent returns unless the taxpayer receives prior permission from the tax commissioner to use a different method.

(3) The taxpayer shall have the burden of proving that an investment asset or activity or trading asset or activity was properly assigned to a regular place of business outside of this state by demonstrating that the day-to-day decisions regarding the asset or activity occurred at a regular place of business outside this state. Where the day-to-day decisions regarding an investment asset or activity or trading asset or activity occur at more than one regular place of business and one such regular place of business is in this state and one such regular place of business is outside this state, such asset or activity shall be considered to be located at the regular place of business of the taxpayer where the investment or trading policies or guidelines with respect to the asset or activity are established. Unless the taxpayer demonstrates to the contrary, such policies and guidelines shall be presumed to be established at the commercial domicile of the taxpayer.

(D) Any apportionment of receipts and fees in accordance with these guidelines must be reasonable, reproducible, verifiable, and supportable by the taxpayer's business records.

Last updated October 22, 2025 at 11:53 AM

History

Effective: June 9, 2020
Promulgated Under: Other

Chapter 5703-35 Severance Tax

Ohio Adm.Code 5703-35-01 Severance tax severers and owners must file and pay electronically.

(A) Except as provided in paragraph (B) of this rule, each person required to file a severance tax return shall file such return and remit payment of the tax liability as follows:

(1) The returns shall be filed electronically in the manner prescribed by the tax commissioner;

(2) The payment shall be made electronically in the manner prescribed by the commissioner.

(B)

(C) A taxpayer must file a return and make a payment electronically beginning with the return for the severance of natural resources occurring in calendar quarters beginning on or after January 1, 2014.

(D) Nothing in this rule affects any person's obligation to timely file all returns and timely pay all amounts required by section 1509.50 or Chapter 5749. of the Revised Code.

Last updated April 27, 2026 at 7:37 AM

History

Effective: April 26, 2026
Promulgated Under: Other

Chapter 5703-37 Motor Fuel Supplier Tax

Ohio Adm.Code 5703-37-01 Records retention policy.

(A) Pursuant to the authority granted under section 5736.12 of the Revised Code, the tax commissioner hereby promulgates a rule that establishes a record retention policy for purposes of the tax imposed under section 5736.02 of the Revised Code. Under section 5736.12 of the Revised Code, the commissioner may identify certain records that are necessary for a supplier to maintain in order to show the extent to which that supplier is subject to the tax imposed under section 5736.02 of the Revised Code.

(B) For purposes of determining calculated gross receipts under division (E) of section 5736.01 of the Revised Code, a supplier, subject to the tax imposed under section 5736.02 of the Revised Code, shall keep and maintain primary and supporting records including but not limited to the following: sales journals, financial statements, charts of accounts, cash journals, annual reports, general ledgers, income statements and tax returns, and invoices. A supplier must maintain records and make them available to the commissioner for inspection in accordance with the provisions in section 5736.12 of the Revised Code. Such records must be maintained for at least four years from the later of the filing of or the due date of the return covering the period in which the tax imposed under section 5736.02 of the Revised Code was reported or paid.

(C) All persons making purchases within and from the distribution system must maintain the purchase records and make them available to the commissioner for inspection in accordance with the provisions in section 5736.12 of the Revised Code. Such records must be maintained for at least four years from the later of the filing of or the due date of the return covering the period in which the purchases were made.

(D) This rule also applies to all records discussed in information releases and/or administrative rules relating to the tax imposed under section 5736.02 of the Revised Code.

(E) Unless otherwise stated, pursuant to section 5736.12 of the Revised Code, all records must be maintained for a period of four years from the later of the filing of or the due date of the return covering the period to which the records relate unless the commissioner either consents in writing to their earlier destruction or, by written order, extends the time period required for retention.

Last updated August 4, 2026 at 11:09 AM

History

Effective: January 2, 2021
Promulgated Under: Other

Ohio Adm.Code 5703-37-02 Sampling.

(A) As authorized pursuant to division (G) of section 5736.09 of the Revised Code, the tax commissioner hereby prescribes sampling methods for the tax imposed under section 5736.02 of the Revised Code that the commissioner may use in lieu of a complete examination of records. The sampling methods include, but are not limited to, the following:

(1) Statistical sampling. Statistical methods of sampling are those procedures that utilize random selection and are capable of projecting population values with a known reliability; and

(2) Non-statistical sampling. Non-statistical sampling includes methods such as block sampling.

(B) The commissioner shall make a good faith effort to reach agreement with the supplier to select the most appropriate sampling methodology.

(1) The failure of the commissioner to reach an agreement with the supplier does not preclude the commissioner from sampling.

(2) In accordance with section 5736.12 of the Revised Code, a supplier that keeps records electronically is required to provide those records electronically to the department of taxation upon the commissioner's request.

Last updated August 4, 2026 at 11:10 AM

History

Effective: January 2, 2021
Promulgated Under: Other

Ohio Adm.Code 5703-37-03 Supplier must file and pay electronically.

(A) Except as provided in paragraph (B) of this rule, each supplier subject to the tax imposed under section 5736.02 of the Revised Code shall file such return and remit payment of the tax liability as follows:

(1) The returns shall be filed electronically by using the Ohio business gateway as defined in section 718.01 of the Revised Code;

(2) The payment shall be made electronically by using the Ohio business gateway as defined in section 718.01 of the Revised Code or in the manner prescribed by rules adopted by the treasurer of state under section 113.061 of the Revised Code.

(B)

(2) The commissioner will notify the supplier in writing of the commissioner's decision. Unless an earlier date is specified in the notice, the excuse shall continue to apply until revoked in writing by the commissioner. The denial or revocation of an excuse under this paragraph is not a final determination of the commissioner and is not subject to further appeal.

(C) Nothing in this rule affects any supplier's obligation to timely file all returns and timely pay all amounts required by Chapter 5736. of the Revised Code.

Last updated August 26, 2026 at 11:48 AM

History

Effective: March 26, 2021
Promulgated Under: Other

Chapter 5703-39 Replacement Tire Fee Returns

Ohio Adm.Code 5703-39-01 Replacement tire fee returns and payments to be made electronically.

(A) Except as provided in paragraph (B) of this rule, each person filing a replacement tire fee return shall file such return and remit payment of the fee electronically by using the Ohio business gateway as defined in section 718.01 of the Revised Code, or by any other means prescribed by the tax commissioner for the filing of such return or payment of such fee.

(B)

(1) Any person may apply to the commissioner to be excused from filing and paying electronically under paragraph (A) of this rule. If a form is prescribed by the commissioner for such purpose, the form will be posted on the department of taxation's web site and the person should complete such form to apply to be excused from filing and paying electronically.

(2) The commissioner will notify the person in writing of the commissioner's decision. Unless an earlier date is specified in the notice, the excuse will continue to apply until revoked in writing by the commissioner. The denial or revocation of an excuse under this paragraph is not a final determination of the commissioner and is not subject to further appeal.

(C) Nothing in this rule affects any person's obligation to timely file all returns and timely pay all amounts prescribed by section 3734.904 of the Revised Code.

Last updated July 14, 2025 at 9:24 AM

History

Effective: June 10, 2024
Promulgated Under: Other

Chapter 5703-41 Filing of Tax Returns

Ohio Adm.Code 5703-41-01 Filing of returns and payments by electronic means.

(A) Except as provided in paragraph (C) of this rule, any taxpayer subject to municipal income taxation with respect to the taxpayer's net profit from a business or profession that uses the Ohio business gateway to file a municipal net profit tax return, an extension for filing a municipal net profit tax return, or a declaration of estimated taxes, or that uses the Ohio business gateway to make payment of amounts shown to be due on such returns and declarations, shall file such tax returns, extensions, and declarations and make payments in accordance with the guidance published on the Ohio business gateway website at http://www.business.ohio.gov.

(B) Except as provided in paragraph (D) of this rule, a taxpayer that made an election under section 718.80 of the Revised Code shall file all tax returns, extensions for filing tax returns, and declarations of estimated taxes, and make payment of amounts shown to be due on such returns and declarations, electronically, either through the Ohio business gateway or in another manner as prescribed by the tax commissioner. Payments made through the treasurer of state shall be made in the manner prescribed by the rules adopted by the treasurer of state under section 113.061 of the Revised Code.

(C) Except as provided in paragraph (D) of this rule, if the tax commissioner prescribes electronic filing and payment to be made using electronic means other than the Ohio business gateway for those taxpayers that made an election under division (A) of section 718.80 of the Revised Code, such taxpayers shall file and pay using such electronic means required in accordance with the guidance published by the tax commissioner on the Ohio department of taxation's website at http://www.tax.ohio.gov.

(D)

(1) As authorized by division (B) of section 718.851 of the Revised Code, a taxpayer that made an election under section 718.80 of the Revised Code may apply to the tax commissioner to be excused from electronically filing returns and making payments. A form prescribed for such purpose will be posted on the department of taxation's website.

(2) The commissioner will notify the person in writing of the commissioner's decision. Unless an earlier date is specified in the notice, the excuse applies until revoked in writing by the commissioner. The denial or revocation of an excuse under this paragraph is not a final determination of the commissioner and is not subject to further appeal.

(E) Nothing in this rule affects any taxpayer's obligation to timely file all returns and timely pay all amounts pursuant to Chapter 718. of the Revised Code.

Last updated January 8, 2024 at 8:34 AM

History

Effective: January 6, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-41-02 Joint economic development zones and joint economic development districts.

(A) As used in this rule:

(1) "Agreement" means an agreement prescribed under division (H)(4) of section 715.691, division (F)(5) of section 715.70, division (G) of section 715.71, or division (F)(5)(c) of section 715.72 of the Revised Code, between the board of directors of a JEDD or JEDZ and a qualifying municipal corporation to administer, collect, and enforce the income tax on behalf of a JEDD or JEDZ.

(2) "Contract" means a contract creating a joint economic development district entered into under section 715.70, 715.71, or 715.72 of the Revised Code, or a contract creating a joint economic development zone entered into under section 715.691 of the Revised Code.

(3) "JEDD" means a joint economic development district that levies an income tax under section 715.70, 715.71, or 715.72 of the Revised Code.

(4) "JEDZ" means a joint economic development zone that levies an income tax under section 715.691 of the Revised Code.

(5) "Map of the JEDD or JEDZ" means a description of the area or areas included in the JEDD or JEDZ, including a map in sufficient detail to denote the specific boundaries of the area or areas, and the parcel number of any parcel located within the boundaries of the JEDD or JEDZ which is excluded from the JEDD or JEDZ.

(6) "Qualifying municipal corporation" is any municipal corporation other than a JEDD or JEDZ.

(7) "Tax collections" means any amount collected pursuant to sections 718.80 to 718.95 of the Revised Code and distributed under section 718.83 of the Revised Code.

(B) The board of directors of each JEDD and JEDZ shall provide to the tax commissioner all of the following:

(1) A copy of the signed contract and a map of the JEDD or JEDZ within thirty days of the effective date of the contract;

(2) A copy of any signed amendment to the contract within thirty days of the effective date of such amendment;

(3) Notice that a contract is renewed, terminated, or canceled, or if any change is made to the map of the JEDD or JEDZ, at least thirty days prior to the effective date of the renewal, termination, cancelation, or change; and

(4) Notice of which qualifying municipal corporation is charged with administering, collecting, and enforcing the municipal net profit tax on behalf of the JEDD or JEDZ, and a copy of the signed agreement, and any signed amendments to the agreement within thirty days of the effective date of the agreement or amendment, respectively.

(C) For each JEDD and JEDZ, the tax commissioner will distribute tax collections according to section 718.83 of the Revised Code to the qualifying municipal corporation identified by the board of directors of each JEDD or JEDZ as the qualifying municipal corporation charged with administering, collecting, and enforcing the municipal net profit tax under the agreement provided under paragraph (B)(4) of this rule. The qualifying municipal corporation receiving such distribution of tax collections on behalf of a JEDD or JEDZ shall distribute the tax collections in accordance with the applicable JEDD or JEDZ contract. The tax commissioner is not responsible for any delayed or errant distribution of tax collections under this paragraph if the board of directors of a JEDD or JEDZ fails to timely provide information prescribed by this rule.

(D) Nothing in this rule affects the exchange of information between the tax commissioner and municipal corporations under sections 718.80 to 718.95 of the Revised Code. Information provided by the commissioner to each JEDD and JEDZ will be provided to the persons identified under division (B)(4) of section 718.84 of the Revised Code.

(E) The board of directors of each JEDD and JEDZ shall provide information to the tax commissioner prescribed by this rule in accordance with guidance published by the commissioner on the Ohio department of taxation's website at http://www.tax.ohio.gov.

Last updated January 8, 2024 at 8:34 AM

History

Effective: January 6, 2024
Promulgated Under: Other

Ohio Adm.Code 5703-41-03 Change in taxable year and declaration of estimated taxes for short taxable years.

(A) Except as otherwise provided in this paragraph, terms used in this rule have the same meaning as in sections 718.80 to 718.95 of the Revised Code. As used in this rule, "short taxable year" means a taxable year consisting of a period of less than twelve full months. A short taxable year may occur if a taxpayer is not in existence for an entire taxable year or if a taxpayer changes its taxable year.

(B) If a taxpayer changes its taxable year, the taxpayer will notify the tax commissioner of such change no later than the due date of the federal short period return. Failure to timely notify the tax commissioner under this paragraph may result in inaccurate billing notices or assessments.

(C) In the case of a short taxable year, estimated taxes do not need to be paid if the amount payable as estimated taxes for the short taxable year is less than two hundred dollars.

(D) Except as otherwise provided in paragraph (C) of this rule, in the case of a short taxable year, the taxpayer shall file a declaration of estimated taxes and remit estimated taxes in the amount of at least ninety per cent of the combined tax liability for the taxable year to the tax commissioner on or before the fifteenth day of the last month of the short taxable year.

(E) Although not a short taxable year, in the case of a taxpayer in existence for the entire taxable year but becoming subject to the municipal net profit tax for the first time after the beginning of the taxpayer's taxable year, the taxpayer shall file a declaration of estimated taxes and remit estimated taxes in the amount of at least ninety per cent of the combined tax liability for the taxable year by the fifteenth day of the last month of the taxable year.

Last updated September 3, 2024 at 8:35 AM

History

Effective: August 30, 2024
Promulgated Under: Other

Chapter 5703-43 Adult Use Cannabis Tax

Ohio Adm.Code 5703-43-01 Definitions.

(A) Any term used in this chapter and Chapter 3796. of the Revised Code for purposes of tax administration that is not otherwise defined has the same meaning as when used in a comparable context in Chapter 5739. of the Revised Code relating to sales and use taxes unless a different meaning is clearly indicated.

(B) "Taxpayer" means any vendor that sells marijuana or adult-use marijuana other than medical marijuana, including a licensed dispensary selling adult-use marijuana that is registered for an adult-use marijuana tax account by the tax commissioner.

Last updated June 25, 2026 at 7:56 AM

History

Effective: June 25, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-43-02 Licensing.

(A)

(1) The tax commissioner will establish an adult-use marijuana tax account for each dispensary licensed by the department of commerce to sell adult-use marijuana.

(2) The commissioner may cancel an adult-use marijuana tax account if the department of commerce notifies the commissioner that the dispensary's license has been canceled, revoked, suspended, or if the license was not renewed.

(B) The commissioner will notify the department of commerce if a person that needs to file and pay the tax levied under section 3796.40 of the Revised Code fails to file or pay the tax and may also notify the department of commerce if such person is otherwise out of compliance with the tax laws of the state of Ohio.

(C) The commissioner may recommend that the department of commerce suspend or revoke a license issued pursuant to section 3796.10of the Revised Code or an equivalent license as described in section 3796.33 of the Revised Code if the commissioner finds that the dispensary is delinquent in filing any returns, submitting any information required by the commissioner, or remitting any payments with respect to any tax, fee, or charge administered by the commissioner.

(D) Notwithstanding any provision of this chapter, any person that sells marijuana or adult-use other than medical marijuana without first holding a current, valid license issued under Chapter 3796. of the Revised Code or holding an equivalent license as described in section 3796.33 of the Revised Code is liable for any amounts, including tax, interest, and penalties imposed under section 3796.40 of the Revised Code and under this chapter in the same manner as persons that do hold such a license.

(E) The commissioner may issue an assessment against a person described in paragraph (D) of this rule for any amount due under section 3796.40 of the Revised Code, section 3780.22 of the Revised Code as that section existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly, and this chapter in the same manner provided under rule 5703-43-07 of the Administrative Code.

Last updated June 25, 2026 at 7:56 AM

History

Effective: June 25, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-43-03 Exchange of information.

(A) Periodically, upon request of the department of commerce, the tax commissioner may examine the department of taxation's records for each licensee identified by the department of commerce to determine if the licensee is delinquent in filing any returns, submitting any information requested by the commissioner, or remitting any payments with respect to any tax, fee, charge, interest, or penalty for any tax administered by the commissioner.

(B) If a delinquency or liability exists, the commissioner may send a notice to the licensee advising the licensee of the nature and amount of any delinquency or liability.

(C) The commissioner will notify the department of commerce of the delinquency or liability and provide any requested information. If the licensee resolves the delinquency or liability, the commissioner will notify the department of commerce of that fact.

Last updated June 25, 2026 at 7:56 AM

History

Effective: June 25, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-43-04 Electronic filing and payment.

For purposes of the administration of the tax levied under section 3796.40of the Revised Code, the text of divisions (A), (D), (E), and (F) of section 5739.12 of the Revised Code is hereby incorporated herein except that wherever the term "this chapter" appears in that section substitute "Chapter 3796. of the Revised Code", and wherever the term "5739.02" appears in that section substitute "3796.40".

The tax commissioner may prescribe an alternative filing frequency if the commissioner finds that it will be in the best interests of the administration or upon request of the taxpayer.

Last updated June 25, 2026 at 7:56 AM

History

Effective: June 25, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-43-06 Refunds.

For purposes of the administration of the tax levied under section 3796.40of the Revised Code or the tax levied by section 3780.22 of the Revised Code as that section existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly, the following applies:

(A) The text of section 5739.07 of the Revised Code is hereby incorporated herein except that wherever the term "this chapter" appears in that section substitute "Chapter 3796. of the Revised Code", and wherever the term "5739.132 of the Revised Code" appears in that section substitute "rule 5703-43-08 of the Administrative Code".

(B) The text of section 5739.072 of the Revised Code is hereby incorporated herein except that wherever the term "section 5739.33" appears in that section substitute "paragraph (C) of rule 5703-43-08 of the Administrative Code".

(C)

(1) An application for refund of the tax levied by section 3796.40 of the Revised Code or the tax levied by section 3780.22 of the Revised Code as that section existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly, illegally or erroneously paid will be made on a form prescribed by the commissioner and filed with the department of taxation in accordance with instructions thereon. The application may be filed by a taxpayer, consumer, or by a tax representative. The application will state the basis for the refund, i.e., why the payment of tax was illegal or erroneous.

(2) The department will deny applications if the refund application form is incomplete and a complete listing of every invoice included in the refund application is not provided. If the refund application includes twenty-five or more invoices, the listing will be provided in an electronic spreadsheet.

(3) An application filed by a taxpayer or tax representative will show that the tax was remitted to the state. The taxpayer or tax representative will submit one original, fully-completed refund application form and one set of the following supporting documentation:

(a) Copies of original invoices or similar documents.

(b) Copies of credit memos, a statement from the consumer, signed by the consumer with specified amounts, agreeing to await reimbursement of the tax until final determination of the refund claim, or some other proof that the accounts receivable was adjusted for the tax or account activity.

(c) A spreadsheet provided electronically for all claims containing twenty-five or more invoices. The spreadsheet will be provided in a compatible format, needs to list every invoice separately, and the total should equal the amount requested on the refund application.

(d) If the claim is due to an amended return, proof need be provided of the original and amended figures for the period or periods claimed on the refund application. The proof may consist of sales journals, cash register receipts, summary reports or any other document used to prepare the tax return.

(e) Copies of accrual sheets for the periods referenced on the refund application if tax was erroneously accrued on purchases.

(4) An application filed by a consumer will show that the consumer paid the tax to the taxpayer. The application will also show that the consumer first requested a refund of the tax from the taxpayer and the taxpayer denied the request. The consumer will provide one original, fully-completed refund application form and one set of the following supporting documentation:

(a) Copies of original invoices or similar documents.

(b) Copies of canceled checks or some other proof that the invoices were paid in full, including the tax.

(d) The reason why the payment of the tax was illegal or erroneous. If the consumer is claiming a use-based exemption, the consumer will supply a detailed description of how the marijuana was used. References to the Revised Code or legal opinions, alone, are insufficient to substantiate a refund request.

(5) An application for refund of adult-use marijuanatax needs to be filed within the period specified by paragraph (A) of this rule. Tax is paid on the date it is remitted to the state and not on the date it is collected by a taxpayer from a consumer.

(D)

(1) A consumer seeking refund of over-collected adult-use marijuanatax need first request a refund from the taxpayer that collected the tax in question. A request for refund from a taxpayer is not an application for refund to the commissioner.

(2) If a taxpayer denies a consumer's refund request, the adult use consumer may file an application for refund with the commissioner pursuant to paragraph (C)(4) of this rule. Requesting a refund directly from the commissioner is the consumer's sole remedy to claim a refund of the tax. Any such application needs to be filed with the commissioner within the time prescribed in paragraph (C)(5) of this rule.

(E) Any refund amount that is determined to be due a taxpayer based on an application for refund of adult-use marijuana tax will first be applied to any outstanding indebtedness of that taxpayer pursuant to paragraph (B) of this rule or in accordance with section 5703.77 of the Revised Code. Any amount remaining after the satisfaction of such outstanding indebtedness will be paid to the taxpayer.

Last updated June 25, 2026 at 7:58 AM

History

Effective: June 25, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-43-07 Assessments.

The procedures prescribed by sections 5739.13 to 5739.16 of the Revised Code, including those governing the imposition of penalties and interest, apply to assessments for the tax levied under section 3796.40 of the Revised Code and the tax levied by section 3780.22 of the Revised Code as that section existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly.

Last updated June 25, 2026 at 7:58 AM

History

Effective: June 25, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-43-08 Liability of unpaid taxes.

(A) If amounts due under Chapter 3796. of the Revised Code, Chapter 3780. of the Revised Code as that chapter existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly, or rule 5703-43-04 of the Administrative Code are not paid on or before the day the amounts are due, interest will accrue on the unpaid amounts at the rate per annum prescribed by section 5703.47 of the Revised Code from the day the amounts were due until the amounts are paid or until the day an assessment is issued under rule 5703-43-07 of the Administrative Code, whichever occurs first. Interest will be paid in the same manner as the tax, and may be collected by assessment.

(B) Interest will be allowed and paid on any refund granted pursuant to rule 5703-43-06 of the Administrative Code from the date of the overpayment. The interest will be computed at the rate per annum prescribed by section 5703.47 of the Revised Code.

(C) If any taxpayer obligated to file returns and to remit tax due to the state under Chapter 3796. of the Revised Code, Chapter 3780. of the Revised Code as that chapter existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly, or rule 5703-43-04 of the Administrative Code fails for any reason to make the filing or payment, any of its employees having control or supervision of or charged with the responsibility of filing returns and making payments, or any of its officers, members, managers, or trustees who are responsible for the execution of the taxpayer's fiscal responsibilities, will be personally liable for the failure. The dissolution, termination, or bankruptcy of a taxpayer will not discharge a responsible officer's, member's, manager's, employee's, or trustee's liability for a failure of the taxpayer to file returns or remit tax due. The sum due for the liability may be collected by assessment in the manner provided in rule 5703-43-07 of the Administrative Code.

Last updated June 25, 2026 at 7:58 AM

History

Effective: June 25, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-43-09 Recordkeeping.

(A) Each taxpayer will keep complete and accurate records of sales, together with a record of the tax collected on the sales, which will be the amount due under section 3796.40of the Revised Code and the amount due under section 3780.22 of the Revised Code as that section existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly, and will keep all invoices, bills of lading, and other such pertinent documents.

(B) Such records and other documents maintained pursuant to paragraph (A) of this rule will be provided to the tax commissioner upon request and will be preserved for a period of four years, unless the commissioner, in writing, consents to their destruction within that period, or orders that the records be kept longer.

(1) Primary records such as purchase invoices, bills of lading, sales invoices, guest checks, tax payment receipts, and cash register tapes;

(2) Secondary records such as bank deposit receipts and day books, journals, or any other records in which accumulated data is recorded. Secondary records will be supported by complete primary records.

(D) Records are adequate if the records demonstrate to the commissioner that the taxpayer collected the proper amount of tax due on the taxpayer's sales.

(E) If any taxpayer fails to maintain complete primary sales records which may be utilized in verifying the accuracy of the figures reflected in their secondary records and/or reported on their tax returns, the commissioner may audit and assess as provided in rule 5703-43-07 of the Administrative Code.

(F) If records are normally kept by the taxpayer electronically, the taxpayer will provide such records to the commissioner electronically upon the commissioner's request.

Last updated June 25, 2026 at 7:58 AM

History

Effective: June 25, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-43-10 Penalties.

(A) A penalty may be added to every amount assessed under section 3796.40of the Revised Code, or under section 3780.22 of the Revised Code as that section existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly, or rule 5703-43-07 of the Administrative Code as follows:

(1) In the case of an assessment against a taxpayer who fails to collect and remit the tax levied by Chapter 3796. of the Revised Code or the tax levied by Chapter 3780. of the Revised Code as that chapter existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly, up to fifty per cent of the amount assessed;

(2) In the case of a taxpayer whom the tax commissioner believes has collected the tax but failed to remit it to the state as prescribed by Chapter 3796. of the Revised Code or by Chapter 3780. of the Revised Code as that chapter existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly, up to fifty per cent of the amount assessed;

(3) In the case of all other assessments, up to fifteen per cent of the amount assessed.

(B) No amount assessed under section 3796.40 of the Revised Code, section 3780.22 of the Revised Code as that section existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly, or rule 5703-43-07 of the Administrative Code will be subject to a penalty under this rule in excess of fifty per cent of the amount assessed.

(C) All assessments issued under rule 5703-43-07 of the Administrative Code will include preassessment interest computed at the rate per annum prescribed by section 5703.47 of the Revised Code. Interest will accrue as prescribed in division (A) of section 5739.132 of the Revised Code.

(D) The commissioner may abate any penalty provided for under this rule.

(E) Whoever violates section 3796.40of the Revised Code, section 3780.22 of the Revised Code as that section existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly, or any lawful rule promulgated by the commissioner under authority of such section, will be fined not less than twenty-five nor more than one hundred dollars.

(F) Whoever violates rule 5703-43-04 of the Administrative Code by failing to remit to the state the tax collected under section 3796.40of the Revised Code, or the tax collected under section 3780.22 of the Revised Code as that section existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly is guilty of a felony of the fourth degree.

Last updated June 25, 2026 at 7:59 AM

History

Effective: June 25, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-43-11 Tax administration.

Pursuant to section 3796.40 of the Revised Code and section 3780.22 of the Revised Code as that section existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly, the tax commissioner will collect the tax consistent with Chapter 5739. of the Revised Code. For any applicable provision of Chapter 5703. of the Revised Code where Chapter 5739. of the Revised Code or any section in that chapter is referenced, the commissioner will collect the tax imposed by section 3796.40 of the Revised Code or the tax levied by section 3780.22 of the Revised Code as that section existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly consistent with those provisions.

Last updated June 25, 2026 at 7:59 AM

History

Effective: June 25, 2026
Promulgated Under: Other

Ohio Adm.Code 5703-43-12 Enforcement.

(A) As used in this rule, "felony" has the same meaning as in section 109.511 of the Revised Code.

(B) For purposes of enforcing this chapter, Chapter 3796. of the Revised Code, and Chapter 3780. of the Revised Code as that chapter existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly, and subject to paragraph (C) of this rule, the tax commissioner, by journal entry, may delegate any investigation powers of the commissioner to an employee of the department of taxation who has been certified by the Ohio peace officer training commission and who is engaged in the enforcement of those chapters. A separate journal entry will be entered for each employee to whom that power is delegated. Each journal entry will be a matter of public record and will be maintained in an administrative portion of the journal as provided for in division (L) of section 5703.05 of the Revised Code. When that journal entry is completed, the employee to whom it pertains, while engaged within the scope of the employee's duties in enforcing the provisions of this chapter or Chapter 3796. of the Revised Code or Chapter 3780. of the Revised Code as that chapter existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly, has the power of a police officer to carry concealed weapons, make arrests, and obtain warrants for violations of any provision in those chapters. The commissioner, at any time, may suspend or revoke the commissioner's delegation by journal entry. No employee of the department will divulge any information acquired as a result of an investigation pursuant to this chapter or Chapter 3796. of the Revised Code or Chapter 3780. of the Revised Code as that chapter existed prior to its repeal by Am. Sub. S.B. 56 of the 136th General Assembly, except as may be ordered by the commissioner or a court.

(C)

(1) The commissioner will not delegate any investigation powers to an employee of the department of taxation pursuant to paragraph (B) of this rule on a permanent basis, on a temporary basis, for a probationary term, or on other than a permanent basis if the employee previously has been convicted of or has pleaded guilty to a felony.

(2)

(a) The commissioner will revoke the delegation of investigation powers to an employee to whom the delegation was made pursuant to paragraph (B) of this rule if that employee does either of the following:

(i) Pleads guilty to a felony;

(ii) Pleads guilty to a misdemeanor pursuant to a negotiated plea agreement as provided in division (D) of section 2929.43 of the Revised Code in which the employee agrees to surrender the certificate awarded to that employee under section 109.77 of the Revised Code.

(b) The commissioner will suspend the delegation of investigation powers to an employee to whom the delegation was made pursuant to division (B) of this rule if that employee is convicted, after trial, of a felony. If the employee files an appeal from that conviction and the conviction is upheld by the highest court to which the appeal is taken or if the employee does not file a timely appeal, the commissioner will revoke the delegation of investigation powers to that employee. If the employee files an appeal that results in that employee's acquittal of the felony or conviction of a misdemeanor, or in the dismissal of the felony charge against that employee, the commissioner will reinstate the delegation of investigation powers to that employee. The suspension, revocation, and reinstatement of the delegation of investigation powers to an employee under paragraph (C)(2) of this rule will be made by journal entry pursuant to paragraph (B) of this rule. An employee to whom the delegation of investigation powers is reinstated under paragraph (C)(2)(b) of this rule will not receive any back pay for the exercise of those investigation powers unless that employee's conviction of the felony was reversed on appeal, or the felony charge was dismissed, because the court found insufficient evidence to convict the employee of the felony.

(3) Paragraph (C) of this rule does not apply regarding an offense that was committed prior to January 1, 1997.

(4) The suspension or revocation of the delegation of investigation powers to an employee under paragraph (C)(2) of this rule will be in accordance with Chapter 119. of the Revised Code.

Last updated June 25, 2026 at 7:59 AM

History

Effective: June 25, 2026
Promulgated Under: Other