This release is intended to reiterate the Ohio Department of Taxation's position with regards to the typical drop shipment situation. This situation is as follows:

• Party A (located outside of Ohio and registered with Ohio for collection of Ohio use tax) sells merchandise to Party B (also located outside of Ohio but not registered with Ohio) with Party B instructing that Party A deliver the merchandise to Party C who is the consumer and is located in Ohio.

  What is Party A's obligation in the collection of the Ohio use Tax?

In the above situation, Party A has no obligation to collect the Ohio use tax as their sales to Party B are exempt for reason of "resale." It is our position that Party A should require an exemption certificate (statement) from Party B indicating "resale" as the statutory claim for exemption. This certificate (statement) protects Party A if Party A should be audited by the State of Ohio.

In the above situation, we would encourage Party B to register with Ohio and begin collection of the Ohio use tax even though Party B may not have nexus with Ohio. Party B's refusal to register does not relieve the Ohio consumer from the responsibility of paying the Ohio use tax on taxable purchases. If requested by the Department of Taxation, Party A must provide all pertinent information concerning these transactions which would allow us to collect the use tax due from Ohio consumers.

If you have any questions regarding this matter, you should direct your questions to one of our district offices or call 1-888-405-4039.

OHIO RELAY SERVICES FOR
THE HEARING OR SPEECH IMPAIRED
Phone: 1-800-750-0750