Governor Kasich Issues Executive Order for Ohio to Become Full SSUTP Member


Following wishes of the General Assembly expressed in Am. Sub. H.B. 59, last week, Governor John Kasich issued an executive order directing the Ohio Tax Commissioner to take all steps necessary to become a full member of the Streamlined Sales and Use Tax Project (SSUTP). Full membership is expected to increase Ohio use tax collections by $20 million annually from sellers located outside Ohio who are making sales to customers inside Ohio.

Background: The SSUTP is a joint effort among representatives of taxing jurisdictions and taxpayers to simplify and make the sales and use tax laws of the various states more uniform. This is undertaken with the hope that Congress would pass legislation that would permit states in compliance with the program to require sellers located outside the state, but making sales into the state, to collect sales or use tax on those transactions (known as “remote sales”).

Ohio has been an associate member for a number of years. It has not been a full member, however, because of questions regarding the sourcing of sales. This is important in order to make sure the correct jurisdiction receives the correct amount of tax. Ohio has historically sourced sales based on the location of the vendor’s place of business (known as “origin sourcing”). However, many states, and the Streamlined Sales and Use Tax Agreement (SSUTA), have based the source of transactions on the place where the customer receives the object or service that is the subject of the transaction (known as “destination sourcing”).

In 2012, the SSUTA was amended to permit states to retain some elements of origin-based sourcing. Ohio has enacted the sourcing rules contained in the SSUTA in R.C. 5739.033, but has not acted to become a full member of the SSUTP.

Executive Order 2013-09K: On July 9, 2013, Governor Kasich issued Executive Order 2013-09K. This order noted the existence of the SSUTP and the revision in the sourcing rules. It further directs the Tax Commissioner to “immediately take the necessary actions” to seek full membership with the SSUTP. Full membership means that Ohio is in compliance with the terms of SSUTA.

Congress is considering a number of bills that would permit states to require out-of-state sellers to collect sales or use taxes on remote sales. Currently, states can require only those vendors having “substantial nexus” with the state to collect and remit the taxes.1 Because the Quill decision is based upon the Commerce Clause of the U.S. Constitution, Congress can pass laws that would permit states to require vendors to collect and remit the taxes on those sales. The laws being considered generally require a state to comply with the SSUTA as a condition of its ability to collect the tax from the vendor that does not have substantial nexus with the state. Should Congress pass some version of this legislation, Ohio’s full membership in the SSUTP would authorize it to collect sales and use taxes on remote sales from the sellers.


  1. Quill Corp. v. North Dakota, 504 U.S. 298 (1992)

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