Ohio Repeals Sales Tax on Employment Services

 

Governor Mike DeWine has signed legislation that repeals the Ohio sales tax on employment services that has affected businesses for more than three decades.  The repeal provision goes into effect on October 1, 2021, and is part of Ohio’s Budget Bill, H.B. 110.
The Ohio Revised Code had defined “employment services” as “providing or supplying personnel, on a temporary or long-term basis to perform work or labor under the supervision or control of another, when the personnel so supplied receive their wages, salary, or other compensation from the provider of the service.” This includes those services utilized by several industries, including manufacturing, distribution, and healthcare providers who use the services of temporary employees or “temp-to-hire” personnel.
Specifically, Ohio courts had previously ruled that the use of temporary employees in a manufacturing setting did not qualify for an exemption to the employment services tax. The new legislation effectively provides that employers who use such services to manufacture products will, generally, not be subject to the tax on services.
Employers should prepare in advance for the effect this may have on their ability to staff employees. The attorneys at Pickrel, Schaeffer, and Ebeling can help you navigate these changes. Whether you are negotiating existing service agreements or making decisions about the workforce, contact Kristina at (937) 223-1130 or kcurry@pselaw.com.