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September 2007 State of Ohio Tax Update Sales tax provisions in this year's budget have simplified the rules for remitting sales and use tax by electronic funds. The existing multiple electronic funds transfer remittance schedules for different sellers has been replaced with a new one that applies uniformly to all persons required to remit sales or use tax by electronic funds transfer and requires just one remittance per month based on anticipated tax liability. Under the bill, 75% of the anticipated tax liability for a month must be remitted by the 23rd day of that month. Then, by the 23rd of the next month, the actual tax liability must be determined for the preceding month, subtract the pre-payment made in the preceding month, and remit the balance due. A 5% charge may be imposed if the 75% pre-payment is less than 75% of its actual liability for the month unless the pre-payment is a least equal to the actual tax liability for the same month in the preceding year. This change is effective January 1, 2008. Current law requires all vendors who have not converted from origin-based to destination-based sourcing for the collection of sales tax to convert before January 1, 2008. The current year's bill states that Ohio intents to become a full member of the Streamlined Sales and Use Tax Agreement and requires the Ohio Tax Commissioner to determine by October 1, 2007 if there can be an exception for small businesses with sales of less than $500,000 in a prior calendar year to continue to use the origin-based sourcing. If the exception is certified, these small businesses will be allowed to continue on the origin-based sourcing. Watch for an update in October. Another change this year's budget has made is in regard to the homestead exemption for real estate taxes. The bill changes the eligibility criteria and the calculation of the homestead exemption that is targeted to seniors and the disabled. Eligibility is no longer dependent on income and the tax reduction is equal to the taxes on a flat $25,000 of the property's value. To qualify for the new exemption, homeowners must live in their home as their primary residence and be either: at least 65 years old or turn 65 in 2007 or, be certified totally and permanently disabled as of January 1, 2007, or be a surviving spouse age 59 to 64 of a person who applied for and qualified for a tax reduction. The deadline to file original applications for the new reduction is October 1, 2007. For further information and questions on the above State of Ohio tax changes, please contact us.
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