Richard B. Fry Law Blog

Any Ohio business not consistently filing an Ohio use tax return is exposed to an Ohio Department of Taxation (“Department”) investigation. If any of the following apply, and you do not regularly file an Ohio use tax return, immediate action is required:

The Iowa Supreme Court recently handed down a decision in the case of Kentucky Fried Chicken v. The Iowa Department of Revenue and Finance, affirming the imposition of Iowa’s corporate income tax on KFC, despite lacking a physical presence in the state. The price tag for KFC was nearly a quarter billion dollars.  KFC, which operates in the state solely as a licensor of... Read More

Annually, The Tax Foundation ranks the 50 states according to how friendly their tax climate is to businesses. A friendly tax climate can be especially beneficial in difficult economic times, like the present, by attracting new business to the state thereby creating economic and job growth. “Taxes matter to business. Business taxes affect business decisions, job creation and retention, plant location, competitiveness, the transparency of the tax system and the long-term health of... Read More

As described in Part 1 of this article, the scope of the manufacturing exemption from Ohio sales and use tax is determined by the beginning and end of the “manufacturing operation.” A product being manufactured is complete, thereby ending the manufacturing process, when all the... Read More

In a decision last week, the U.S. District Court for the Western District of Washington ruled that internet retail giant Amazon.com was protected from disclosing its customer names and certain other information to the North Carolina Department of Revenue. The Court ruled that the First Amendment protected the “disclosure of an individual’s reading, listening and viewing habits.” However, it appears that a state taxing authority could obtain individual customer information... Read More

An often over-looked and underutilized exemption from Ohio sales and use tax is the so-called “packaging exemption”. To claim this exemption, the business must engaged in one of several enterprises, including manufacturing or making retail sales.  This exemption is available for packaging materials and equipment, which are defined broadly. Further, since packaging material includes any property that restrains movement of the product in more than one plane of... Read More

A drop shipment is when a vendor accepts an order from a consumer for a product it does not have in stock and directs its supplier (a manufacturer or wholesaler) to ship the product directly to the vendor’s customer. The supplier then delivers the product to the consumer via common carrier or in its own trucks, or may have the consumer pick up the product from the supplier’s location. Thus, there are two sales occurring: first, the supplier (i.e., drop shipper) sells the... Read More

The Ohio Department of Taxation (“Department”) recently published an Information Release concerning the Ohio sales and use tax exemption under R.C. 5739.02(B)(27) for persons licensed to conduct  food service operations. Under this exemption, personal property primarily used for any of the following is exempt from... Read More

You probably have been hearing a lot of news about so called “Amazon” laws being enacted to increase sales/use tax collection for Internet sales. Until recently, there have been essentially two types of these “Amazon” laws. The first presumes that a retailer has nexus with a state, requiring it to collect the state’s sales tax, by virtue of having affiliates in the state linking to the retailer’s website and the retailer realizing a certain threshold of... Read More

As the deemed consumer, a contractor must pay Ohio sales/use tax (“tax”) on its purchases of materials incorporated into real property, unless an exemption exists. The contactor’s related transaction with the property owner is characterized as a construction contract. Since tax was already paid on the contractor’s purchases, no sales tax needs to be collected from the property owner on the construction contract. 

Alternatively, if the materials do not... Read More