Philosophy, Law and Politics

Clarity and Equality in the Ohio Sales Tax Statute?


The following Comment Letter was submitted today to the Ohio General Assembly Joint Committee on Agency Rule Review for consideration during its review of a proposed amendment of an Ohio Sales Tax regulation regarding interstate commerce.


May 10, 2018

Joint Committee on Agency Rule Review

The Ohio General Assembly

Vern Riffe Center

77 South High Street

Concourse Level

Columbus, Ohio 43215

Sent Via Email to:

Re: Department of Taxation Proposed Amendment of Rule Number 5703-9-39 (Interstate commerce)

Dear Members of the Joint Committee on Agency Rule Review,

I write with interest in the proposed amendment of Rule Number 5703-9-39 of the Ohio Administrative Code by the Department of Taxation regarding the imposition of a tax upon retail sale transactions between Ohio residents and out-of-state vendors. The Rule Summary and Fiscal Analysis submitted by the Department of Taxation to accompany this proposed amendment states that the Department seeks merely to make grammatical corrections in the Rule and not adopt any substantive changes.

The proposed amendment does not adequately revise the text of the Rule to correct certain wording that is confusing to citizens and residents of the various States who would engage in commerce, as well as those engaging in commerce abroad. For, it does not clearly indicate that purchases are exempt from taxation if delivered via an interstate carrier to either the buyer or the agent of the buyer and, instead, gives the sense that the exemption applies only to interstate carrier deliveries made to an agent.

Similarly, the proposed amendment retains reference to “an agent of his” in acknowledgement that Ohio purchasers of goods from foreign vendors may avail themselves of an agent to receive the goods purchased. Legal drafters in the 21st century style to no longer use personal pronouns reflective of gender when the concept of gender is not materially relevant to the import and substance of the law.

Finally, the Rule would also lessen confusion if it did not refer to the sales tax as a “retail sales tax” unless such is done consistently throughout Ohio Revised Code Chapter 5703: Sales Tax and Ohio Administrative Code Chapter 5703-9: Sales and Use Tax. For, the sales tax is more often referred to as an “excise tax,” and O.R.C. §5739.02, in implementing the sales tax, expressly states that “an excise tax is hereby levied on each retail sale made in this State.”

In respect of the foregoing, I offer the following modification of the amendment, with proposed changes italicized:

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 sales Tax tax does not apply. However, where tangible personal property pursuant to a sale is delivered in this State to either the buyer or to an its agent, of his other than an interstate carrier the retail Sales Tax sales tax applies, unless the delivery is made by means of an interstate carrier, notwithstanding that the buyer may subsequently transport the property out of the State.

 The grant of a sales tax exemption for purchases made by Ohioans from out-of-state vendors whom, themselves, have no physical presence within Ohio or nexus with Ohio, is a great encouragement to the advance of commerce. It provides economic efficiency to domestic purchasers and encourages reciprocity in the tax policy of other States.

I thank you greatly for considering my comments on this Rule. And, I may certainly be contacted as indicated above.


Lori G. Nuckolls


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