RealWorld: Ohio Sales Tax Changes -- NEW!!!

CHANGES FOR SALES TAX FOR GOODS AND SERVICES DELIVERED ACROSS COUNTY LINES IN THE STATE OF OHIO

Ohio lawmakers passed H.B. 204 providing a six-month transition period for vendors to begin complying with section 5739.003 of the Revised Code.  The new code requires vendors to charge sales tax by the tax rate of the county the good or services are being delivered to instead of the vendor’s county of business.  The law takes effect January 1, 2005, on a voluntary basis.  On July 1, 2005, compliance becomes mandatory.

It is important to note that there is no change in method of taxation for over-the-counter sales (the vast majority of retail sales).

Please use the following instructions in order to properly setup your RealWorld Accounting System for charging sales tax by ship-to address:

RealWorld Classic Accounting

There are two approaches to how you may wish to implement these changes to your accounting system.  You may choose to make the change over time while billing your customers.  As you bill a customer from a county you have not sold in, you must first add the county to the tax codes and update the customer’s ship-to address.  You may also choose to add all the Ohio counties you currently sell in to the tax codes, and update all your customer’s ship-to addresses. 

Once the changes for tax codes and customer ship-to addresses have been completed, all order entry and billing programs will recognize the new tax code by customer ship-to address and will use the new code.  This will only occur on new business that has been entered after the tax code was added and the customer ship-to was updated.  Existing orders, invoices, and credit memos would have to be manually updated.  This change affects both the Accounts Receivable and Order Entry modules.

Tax Codes

From the A/R menu, select Master information… followed by Tax codes.  Add a tax code for each county you sell in.  Set the proper tax rates and conditions for each county.  You may choose to continue using one GL account number for all sales tax or break out each county by GL account. Contact your controller or accountant regarding your company’s General Ledger requirements.

Customer Ship-to Addresses

From the A/R menu, select Master information… followed by Ship-to addresses.  For each customer, update field number 8 and enter the proper tax code. 

Further Information

Visit the Ohio Department of Taxation at http://tax.ohio.gov (see "Streamlined Sales Tax" link for more details on taxing delivery sales).  You can also call toll-free 800-304-3211 through June 30, 2006, or Taxpayer Services 888-405-4039.

For any RealWorld Classic Accounting questions, contact DCH Support.