The Ohio House of Representatives today passed House Bill 466, sponsored by State Representative Ryan Smith (R-Bidwell), which exempts all digital advertising from sales and use tax.

In passing the biennial budget last year, the Ohio House effectively voted to retain a tax exemption on all advertising services. However, a recent tax audit interpreted the definition of “Electronic Information Service” (EIS), which is a taxable service, to include digital advertising, potentially subjecting businesses to penalties and interest going back four years. 

“Enactment of this bill means that businesses can utilize digital advertising services tax free, putting less of financial burden on these establishments,” said Rep. Smith.

In effect, this legislation clarifies that digital advertising services, such as the ones that often appear on web pages, are included in the body of professional services that are already exempted under the definition of EIS. This places digital advertising on the same foot as print, radio, and other forms of advertising that are exempt from this tax.

House Bill 466 now goes to the Ohio Senate for further consideration.

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