Sales and use taxes are transactional based and impact everyone and every business. Ohio, in particular, imposes sales and use tax on enumerated services, or specific services it deems taxable, rather than all services by default. Historically, Ohio has imposed sales and use tax on employment services and employment placement services.
As part of its recent budget bill (Am. Sub. H.B. 110), Ohio repealed the sales and use tax on employment services and employment placement services, effective October 1, 2021.
What Is an Employment Service or Employment Placement Service?
An employment service is defined as “providing or supplying personnel, on a temporary or long-term basis to perform work or labor under the supervision or control of another, when the personnel so provided or supplied receive their wages, salary, or other compensation from the provider of the service.”
An employment placement service is defined as “locating or finding employment for a person or finding or locating an employee to fill an available position.”
What Do Businesses Need to Do Now that These Services Are Not Taxed?
There are few things to address. First, review your vendor invoices to confirm that sales tax does not continue to be charged for services rendered on or after October 1, 2021. Also be sure to review and update your use tax procedures.
Additionally, be mindful this repeal is limited to employment services and employment placement services only. Ohio continues to impose sales and use tax on other enumerated services, including but not limited to:
- Services to repair tangible personal property
- Automatic data processing
- Computer services
- Electronic information services
- Landscaping and lawn care services
- Private investigation and security services
- Building maintenance and janitorial services
- Exterminating services
With the ever-changing tax codification, taxpayers must stay on their toes to remain compliant.
Contact Mike Fink at firstname.lastname@example.org or a member of your service team to discuss this topic further.
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.