Ohio House Bill 466 has been signed into law, resulting in a win for companies doing business in Ohio that advertise on the Internet (for example, inventory advertising). HB 466 amends the Ohio Revised Code to specifically exempt digital advertising services from sales and use tax[1]. Ohio’s biennial budget, passed in 2015, retained a tax exemption on all advertising services. However, the Ohio Department of Taxation’s December 2015 Information Release interpreted the definition of Electronic Information Services, a taxable service, to include digital advertising services. Enactment of HB 466 clarifies that companies doing business in Ohio can advertise on the Internet tax free. Digital advertising is rapidly replacing more traditional methods of advertising that were historically tax exempt. Subjecting digital advertising to Ohio sales tax would have created additional burdens with tax compliance for businesses rely on internet advertising of their inventory, and who bundle services or have multiple locations.

Digital Advertising Exemption

Digital advertising services means providing access, by means of telecommunications equipment, to computer equipment that is used to enter, upload, download, review, manipulate, store, add, or delete data for the purpose of electronically displaying, delivering, placing, or transferring promotional advertisements to potential customers about products or services or about industry or business brands[2]. Providing digital advertising services prior to the amendment was considered taxable automatic data processing or computer services.

HB 466 also exempts business-related automatic data processing, computer services, and electronic information services (hereafter referred to collectively as “taxable electronic services”) from sales and use tax if those services are provided in conjunction with digital advertising services but are merely incidental or supplemental to the advertising service.

Contact Us
For more information on Ohio House Bill 466, and how your organization may benefit from this ruling, have a member of the Barnes Dennig team contact you here, or call 513-241-8313.

[1]  R.C. 5739.01(Y)(2).

[2]  R.C. 5739.01(RRR).