COLUMBUS – The Ohio House today passed legislation clarifying when sales tax can be collected within the oil and gas industry. House Bill 430, sponsored by State Representative Tim Schaffer (R-Lancaster), reaffirms current statute in addition to clarifying and narrowing the scope of already existing exemptions. House Bill 430 rejects the Ohio Department of Taxation’s recent expansion of the state sales tax to parts of the oil and gas production industry that have been recognized as exempt since 1934.


“The oil and gas industry is a key economic driver in Ohio. We are one step closer to resolving this pressing issue, which is important to the energy producing areas of the state, this industry, its employees, their families and their associated businesses,” said Schaffer.


Schaffer also says that this reinterpretation of the Ohio Revised Code and an agreement affirming the Code in 1960 will have drastic and harmful impacts on the oil and gas industry, which includes “mom and pop” small business drillers. These excess and burdensome taxes could lead to the closure of many of these companies.


“We cannot have these businesses living in an uncertain and hostile tax climate. Like any business tax, certainty and fairness are critically important. Today is one victory on the pathway to regaining that certainty,” Schaffer said.


Tom Stewart, from the Ohio Oil and Gas Association, added, “We are grateful for the Ohio House supporting Representative Schaffer’s legislation. It’s taking a huge step to reestablish tax payer clarity and certainty.”


As it is currently written, the intention of Ohio law is to exempt the exploration of oil and gas from sales tax collection. This policy is consistent with other business ventures, as well as 1960 doctrine between the Ohio Department of Taxation and the Ohio Oil and Gas Association, where sales tax is assessed and collected at the final point of sale, not before.


Recently, the Ohio Department of Taxation auditing staff changed Ohio’s sales tax policy unilaterally and has tried to collect improper sales tax at various points of the oil and gas production, which is contrary to the current law and the doctrine created in 1960. For that reason, House Bill 430 is needed in order to reaffirm Ohio code and to reestablish clear standards for the Ohio Department of Taxation.


The legislation passed the Ohio House with bipartisan support and will now go to the Ohio Senate for further consideration.

 
 
 
  
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