Ohio Department of Taxation News Releases

News Release

June 29, 2004  -  Columbus, Ohio  - Change in Food Definition saves Ohio Consumers $21 Million Annually

Columbus -- Ohio consumers will be biting off less sales tax soon because of a new law changing Ohio’s definition of “food.”

Beginning July 1, some items newly defined as “food” will no longer be subject to sales tax. Those items include:

• bottled, unsweetened water;
• ice (sold at grocery, convenience or similar stores);
• fruit or vegetable juice with fruit or vegetable content of more than 50%;
• chewing gum and breath mints; and
• sweetened beverages that contain milk, a milk product or milk substitute.

These changes in “food” definitions result from Ohio’s participation in the Streamlined Sales Tax Project (SSTP), a multi-state effort to make sales tax laws, rules, and systems more uniform across states and easier for vendors to collect sales taxes.

The move will cost Ohio about $21 million in sales tax revenue over the next twelve months, but Tax Commissioner William W. Wilkins says in the long run, Ohio’s state and local governments stand to gain a much larger chunk of tax revenue.

“Ohio, and every other state with a sales tax, is losing hundreds of millions of dollars in sales tax revenue on sales by Internet and catalog retailers that are not required by law to collect state taxes. The goal of the Streamlined Sales Tax Project is to capture that revenue with those out-of-state retailers either volunteering, or being required by Congress, to collect state sales taxes.”

Wilkins says the SSTP will benefit Ohio retailers who currently collect the sales tax and who have to compete with out-of-state retailers who don’t have to charge tax.

The Ohio Department of Taxation (ODT) has been working to notify merchants of the new definitions through brochures, other informational mailings, meetings with the Ohio Grocers Association and other interested groups, as well as updates on the ODT Web site (tax.ohio.gov).

Also New

• “Food” in Ohio is now defined as: substances, whether in liquid, concentrated, solid, frozen, dried or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste and nutritional value.
• A “soft drink” is now determined by whether the beverage is sweetened, not whether it is carbonated. A soft drink, generally a beverage that contains a sweetener, natural or artificial, is not food and is subject to sales tax.
  
  However, beverages containing milk products, milk substitutes, or more than fifty percent fruit or vegetable juice are not soft drinks and are food.
• Coffee or tea with a sweetener is now considered a soft drink and is subject to tax. (Plain coffee or tea is food and is not taxable.)
• Any item with a “Nutrition Facts” box on the label, including nutritional and diet products (e.g. Ensure®, SlimFast®, etc.), is generally considered to be food and it is not taxable. Any item with a “Supplement Facts” box on the label, including items sold as dietary supplements, is generally not considered to be food and so is subject to sales tax.

No Change

• Food consumed off the premises where it’s sold is not taxed. Food consumed on the premises is taxed.
• Purchases using food stamps are not taxable.
• Alcoholic beverages are not food and are subject to sales tax. Non-alcoholic beer with less than 0.5% alcohol content is considered food and is not taxable.

(For more information, contact Gary Gudmundson, ODT Communications Director, at 614-644-6903.