Legislation pending in the Ohio House of Representatives would free residents from paying state, county and/or local use taxes on mail order and Web purchases.
This bill (H-80) is reportedly the first of its type to be introduced in any state legislative body.
Sponsored by Democratic Rep. Edward S. Jerse, the measure would add a new section to the state tax code’s list of exemptions, which would now include out-of-state mail order, telephone and Internet purchases worth less than $2,000.
But the bill states that exemption would not “apply to purchases of motor vehicles or aircraft or to watercraft or outboard motors required to be registered” under other state laws.
State tax commissioner Tom Zanio is against the bill, as it could ruin his plan to collect some $1.8 million in use fees from Ohio residents this year.
Zanio, who is conducting a statewide collection campaign, estimates that by 2003 state and local governments will lose more than $597 million in use tax revenue. Noting that a statewide survey found that 86% never heard of the tax and 48% denied making taxable mail order or Internet purchases, Zanio said this meant 52% “probably do owe the tax.”
Jerse says it’s difficult to get state residents to admit to buying via mail, telephone and Internet from out-of-state companies. And he says Ohio can’t collect because of the U.S. Supreme Court’s ruling in North Dakota v. Quill.
Eight years ago, the high court overturned a ruling by the North Dakota State Supreme Court ordering Quill, a Lincolnshire, IL-based office supplies cataloger, to pay use taxes on its sales in the state although it lacked a physical presence in North Dakota. The court held that the Constitution’s commerce clause prohibited such taxes without specific authorization from Congress.
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