Ohio adopted the economic link in July 2019 and began enforcing it on August 1, 2019. Today, more than two years later, the Ohio Department of Taxation updated an FAQ page for clarify distance selling that distance sellers must take into account when calculating the economic link threshold.

Under the 2019 Law (House Bill 166), a distance seller establishes an economic connection if, in the current or previous calendar year, he:

  • Has gross receipts in excess of $ 100,000 from the sale of tangible personal property for storage, use or consumption in Ohio or from the provision of services for which profit is made in the State; Where

  • Engages in 200 or more separate transactions selling tangible personal property for storage, use, or consumption in Ohio or providing services for the benefit of the state

Although gross receipts “include combined taxable and non-taxable sales” (see FAQ 2), remote businesses that only conduct exempt sales in the state do not need to apply for a seller’s license. The department recalls that any business with a physical presence in Ohio is required to register.

In FAQ 15, the department notes that “only sales considered to be retail sales are included in the calculation of the economic link threshold” because “RC 5739.01 (I) and RC 5739.01 (B) define” receipts “and “sales” as effectively retail sales. ”Ohio does not consider“ sales for resale ”to be retail sales.

With respect to services, distant businesses should only count the sales of services listed in RC 5739.01 (B) (3) when calculating the economic link threshold. These include, without limitation, the following:

  • Building maintenance or janitorial services

  • Clean, paint, polish, wash or wax a motor vehicle

  • Installation services of tangible personal property (with certain exceptions)

  • Landscaping and lawn care services

  • Laundry and dry cleaning services

  • Personal care services

  • Fitness facility services

  • Repair services of tangible personal property (with certain exceptions)

  • Satellite broadcasting services

  • Snow removal service

Sales of services not listed in RC 5739.01 (B) (3) do not count towards the $ 100,000 threshold.

Market sales

Market Facilitators have been responsible for collecting and remitting Ohio Sales and Use Tax on behalf of third party sellers (aka Marketplace Sellers) since September 1, 2019. Nonetheless, Marketplace Sellers who perform direct sales in Ohio may still be required to register with the Ohio tax department, collect and remit Ohio sales tax on direct sales in the state, and file returns.

When determining whether they have reached an economic tie point, Marketplace Sellers should “aggregate all Ohio sales and transactions made through all Market Facilitators as well as all Ohio sales they perform themselves ”.

Distant, economically connected businesses that sell directly to Ohio in addition to selling in one or more markets must report all gross sales on their returns. Sales made through a market facilitator should then be deducted “by listing those sales with their exempt sales”.

Market Facilitators who conduct direct sales in addition to facilitating sales to third parties are encouraged to acquire a second account to report their sales to third parties. Their direct sales should be reported on their vendor’s or existing vendor’s user account.

Ohio Supply Market Sales

Destination sourcing rules apply to sales to third parties facilitated by a marketplace. This means the tax rate is based on the shipping address.

However, sourcing of origin rules apply to any direct sale by a market facilitator when the order is received in Ohio. For such orders received and shipped from Ohio, the rate should be based on the location where the order is received.

Additional details can be found on the Ohio Department of Taxation website. Information on economic link laws in other states can be found in this state-by-state guide to economic link laws.

It can be difficult to keep up with every update or clarification to every tax rule in the states where you sell. Find out how automating tax compliance can help.


Avalara inc. published this content on December 27, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on December 27, 2021 01:16:09 PM UTC.

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