Legislation pending in the Ohio House of Representatives would free residents from paying state, county and/or local use taxes on their mail order or Internet purchases worth $2,000 or less.
This bill is believed to be the first of its type to be introduced in any state legislative body.
The measure, House Bill 80, sponsored by Representative Edward S. Jerse would add a new section to the list of exemptions in the state tax code exempting out-of-state mail order, telephone and Internet purchases worth less than $2,000.
But it notes that the tax 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 wreak havoc on his plan to collect some $1.8 million in use taxes from Ohio residents this year.
Zanio, who is conducting a statewide campaign to collect the tax, estimates by 2003 state and local governments will lose more than $597 million in use tax revenues. Noting that a statewide survey found 86% never heard of the tax and 48% denied making taxable mail order or Internet purchases, Zanio said that meant 52% “probably do owe the tax.”
Jerse, citing difficulty in getting state residents to admit to making purchases by mail, telephone and over the Internet to out-of-state companies, notes that the state is blocked from trying to collect the tax because of the U.S. Supreme Court’s ruling in North Dakota v. Quill.
Eight years ago, the nation’s top 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 High Court held that the Constitution’s Commerce Clause prohibited such taxes without specific authorization from Congress.
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