On January 2, 2025, Ohio Governor Mike DeWine signed Am. Sub. House Bill 315 (HB 315), which while primarily a measure to revise township laws, included tax-related provisions affecting Ohio's sales and use tax and Commercial Activity Tax (CAT).

Ohio sales and use tax change — network delivery services

HB 315 amends ORC 5741.01(Q)'s definition of a "marketplace facilitator" to include a person who owns, operates, or controls a physical or electronic marketplace through which delivery network services are facilitated on behalf of marketplace sellers. HB 315 adds new ORC 5739.01(XXX)(3) to define "network delivery services" to include both of the following when performed as part of a single transaction:

1. Pickup of a local product by a delivery network courier¹ from a local merchant² that is not under common control of the delivery network company

And

2. Delivery by the network delivery courier of that local product to a location designated by the consumer that is not more than 75 miles from the local merchant's place of business where the pickup of the local product occurs.

ORC 5741.01(E) provides that a marketplace facilitator is treated as a seller of taxable goods sold by marketplace sellers through the marketplace facilitator.

HB 315 adds ORC 5741.072, which allows a delivery network company that facilitates network delivery services to request, from the Department of Taxation (Department) on a form to be specified, a waiver³ from the requirement to be treated as the seller of the goods sold by the marketplace seller through the marketplace facilitator.

The wavier, if granted, does not affect the delivery network company's status as a seller of its network delivery services, which are taxable under HB 315; it only waives the requirement to collect tax on the local products delivered. See new ORC 5739.01(B)(13).

There is no specified effective date for these provisions in the uncodified law, so it appears these provisions are effective on April 3, 2025, the effective date of HB 315.

Sales tax exemption for professional sports facilities

Ohio law historically exempts from sales and use tax building and construction materials incorporated into the original construction of certain professional sports facilities. HB 315 expands this exemption to include all tangible personal property and construction materials incorporated into any construction (not just the original construction) of the professional sports facility. HB 315 also provides that a person who leases a county-owned professional sports facility may sign an exemption certificate on behalf of the county.

This change applies for tax periods beginning on or after May 1, 2025.⁴

CAT sourcing rule change

HB 315 also amends ORC 5751.033 by adding new subsection (M), which sources gross receipts from the sale or lease of a motor vehicle to Ohio if the vehicle is issued a certificate of title showing the owner's or lessee's address in Ohio.

This change appears to be in response to the Ohio Board of Tax Appeal's (BTA) recent decision in Straub Nissan LLC v. Harris, Ohio BTA No. 2022-422 (October 23, 2024), in which the BTA held that sales of motor vehicles by a West Virginia dealership were not sourced to Ohio when purchased by an Ohio resident who subsequently brought the vehicles into Ohio. ORC 5751.033(E) sources gross receipts from the sale of tangible personal property to Ohio if the property is received in Ohio by the purchaser. The BTA concluded that since the taxpayer received the vehicle in West Virginia the analysis stopped there. While the statute sources the sale of tangible personal property delivered by motor carrier or other means of transportation to the place where the property is ultimately received after all transportation has been completed, the BTA found it did not apply since the purchase and delivery occurred in West Virginia.

This change is effective for tax periods beginning before, on, or after the effective date of HB 315, which is April 3, 2025.⁵

Implications

Businesses that provide delivery network services on behalf of marketplace facilitators should consider the ability to request a waiver from collecting tax on the sales of local products. EY has observed that local merchants often charge sales tax on goods sold through marketplace facilitators, making it challenging for delivery network service companies to show that taxes were paid. This change may provide some relief to such companies.

The changes to the CAT sourcing statute indicate that Ohio dealers who sell vehicles to non-Ohio residents may situs those receipts to the customers' home states.