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07/06/2018

Kentucky Sales Tax and Ohio Tax Law Changes

Source: Rudler, PSC, E-Tips and E-News, July 3, 2018

July 1st Kentucky Sales & Use Tax Changes Could Affect You

Kentucky passed House Bill 366 on April 13 and with that came a pretty substantial list of services that are now taxable for sales and use tax purposes (see Rudler PSC e-Tip Kentucky Sales & Use Tax Changes for a list). The very next day House Bill 487 was adopted which contained some more changes and technical corrections. Some of the major changes include:

Manufacturing and Industrial Processing Exemptions – House Bill 487 excludes charges for labor or services to apply, install, repair or maintain tangible personal property directly used in manufacturing or an industrial processing process (the charges for labor or services must be separately stated on the invoice)

Economic Nexus for Retailers Without Physical Presence in Kentucky – A 1992 US Supreme Court case (Quill v. North Dakota) has allowed out-of-state retailers to circumvent collecting sales tax on sales to purchasers in Kentucky if the retailer didn’t have a physical presence in Kentucky. This is outdated in the age of online retail and currently another case involving Wayfair is set to overturn or modify the Quill ruling.

In anticipation of this change Kentucky will require (effective 7/1/18) remote retailers selling tangible personal property or digital property delivered to or transferred electronically to a Kentucky purchaser to register and collect sales tax if:

  • The retailer had 200 or more such transactions with Kentucky purchasers in the current or previous calendar year OR
  • The retailer had gross receipts from such transactions to a Kentucky purchaser in the current or previous calendar year that exceeds $100,000

Read the full E-News article.


New Ohio Municipal Tax System Upheld

The constitutionality of the new municipal tax filing system through the Ohio Business Gateway was challenged by over 160 Ohio municipalities. This new system allows Ohio to administer the municipal taxes in a centralized location versus businesses having to file with multiple localities. The Court upheld the law and denied the challenge by the municipalities.


Individual Changes Align with Tax Cut & Jobs Act

Ohio 529 Plans

For tax years beginning in 2018 and ending in 2025, the Ohio 529 deductible contributions have been expanded to include, not only post-high school tuition, but also private or parochial kindergarten through grade 12 tuition as well.

Dependents

Ohio authorizes taxpayers to claim an exemption for dependents on their Ohio return even though their federal return will not show an exemption due to new tax law.

HB 24 Allows deduction for certain subsidized health insurance premiums.

This bill helps to clarify and codify the deduction for eligible subsidized insurance premiums in 2017 and later. This happened late in March so it’s possible returns could have been filed before these changes went into effect that could have benefited from the deduction.

Read the full Ohio Tax Changes article.

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