The Ohio House today approved House Bill 104, legislation sponsored by State Representative Tim Schaffer (R-Lancaster), which allows vendors to receive a refund for sales tax remitted for credit card transactions that the customer later defaults on.

“This is a good day for retailers who provide thousands of jobs in Ohio, but have been losing millions of dollars each year to the state in unreimbursed sales taxes from faulty transactions,” Schaffer said.  “This is money that does not belong to the government.  It belongs to the retailers.  And today is a major step in fixing this job-killing situation.”

In recent years, some retailers have started contracting with private credit card companies to manage the operation of their in-store credit card. When this is the case, the retailer must promptly pay the sales tax to the state for the items bought by the customer even if the credit card bill has yet to be paid, meaning the store is essentially providing an advance for the sales tax.

However, if the consumer defaults on the card and the debt becomes uncollectable, under current law, the retailer is unable to receive a refund for the sales tax that they paid to the state. House Bill 104 will modernize the tax code to allow for these venders to recoup the sales tax that they have remitted.

For retailers who operate their own in-store credit card, they are already able to receive a refund for the sales tax in uncollectable circumstances. This legislation simply extends that ability to retailers that have contracted with private companies. If enacted into law, it is estimated that HB 104 will save Ohio retailers $8 million per year.

Similar legislation has already passed in Texas, California, Michigan, Florida, Wisconsin, Pennsylvania and Illinois. The bill received a unanimous vote on the House floor, and now awaits further consideration by the Ohio Senate.

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