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MODULE 16 — REMOTE SELLERS & MARKETPLACE FACILITATORS
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PURPOSE
This module establishes the exact legal framework governing Ohio's economic nexus
rules, remote-seller obligations, and marketplace facilitator requirements following
the South Dakota v. Wayfair (2018) decision. It identifies enforcement gaps and
proposes SSUTA-aligned improvements.

SECTION 1 — GOVERNING LAW

Primary statutes:

• ORC 5741.01 — Use tax definitions
https://codes.ohio.gov/ohio-revised-code/section-5741.01

• ORC 5741.02 — Consumer use tax imposition
https://codes.ohio.gov/ohio-revised-code/section-5741.02

• ORC 5739.01(I) — Definition of "seller" (includes remote sellers)
https://codes.ohio.gov/ohio-revised-code/section-5739.01

• ORC 5739.01(JJ) — Marketplace facilitator definition
https://codes.ohio.gov/ohio-revised-code/section-5739.01

• ORC 5739.01(KK) — Marketplace seller definition
https://codes.ohio.gov/ohio-revised-code/section-5739.01

• ORC 5739.02(C) — Marketplace facilitator collection requirement
https://codes.ohio.gov/ohio-revised-code/section-5739.02

Federal precedent:

• South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018)
— Eliminated physical presence requirement for sales tax nexus

Streamlined Sales and Use Tax Agreement (SSUTA):

• Ohio is a member state
• Governs sourcing rules, exemption certificates, definitions

SECTION 2 — ECONOMIC NEXUS THRESHOLD (EXACT)

Under Ohio law:

A remote seller has nexus with Ohio and must collect/remit Ohio sales tax if,
in the current or prior calendar year, the seller meets either threshold:

• Gross sales to Ohio customers exceed $100,000
OR
• 200 or more separate transactions to Ohio customers

Below these thresholds: no Ohio sales tax collection obligation for the remote seller.

At or above either threshold: full collection and remittance obligation applies
(same as in-state vendor).

Key implication:

The threshold is measured per calendar year, not rolling 12-month period.
A seller who crosses the threshold mid-year has an obligation starting at that point.

SECTION 3 — MARKETPLACE FACILITATOR RULES

Under ORC 5739.01(JJ) and ORC 5739.02(C):

A "marketplace facilitator" is an entity that:

• Facilitates a retail sale by a marketplace seller
• Collects the sales price
• Makes/processes the payment

Examples: Amazon, eBay, Etsy, Walmart Marketplace, Shopify (when processing payments)

Obligation:

When a marketplace facilitator's Ohio sales exceed the $100,000 / 200-transaction
threshold, the FACILITATOR — not the individual marketplace seller — is responsible
for collecting and remitting Ohio sales tax.

Result:

• Small sellers on Amazon do not need to register in Ohio if Amazon handles it
• Amazon is treated as the vendor for Ohio sales tax purposes on marketplace sales
• Platform vs. seller responsibility is clearly split at the facilitator threshold

SECTION 4 — SOURCING RULES

Under SSUTA and Ohio law:

Sales are sourced (taxed) based on the destination of the shipment, not the origin.

For Ohio:

• A product shipped to an Ohio address is an Ohio sale
• Ohio rate applies: county + state combined rate (typically 6.75% to 8%)
• The origin state's rate does NOT apply

Key exception:

• Digital goods and electronically delivered services may have different sourcing rules
(see Module 8 — Marketplace & E-Commerce, digital goods classification)

SECTION 5 — REAL-WORLD APPLICATION

In practice:

• Major platforms (Amazon, eBay, Etsy) collect Ohio tax automatically above thresholds
• Small direct-to-consumer remote sellers may not know they have Ohio nexus
• The $100,000/$200-transaction threshold resets January 1 of each year
• A seller who drops below the threshold in year 2 still owed tax in year 1

Registration requirement:

Remote sellers with nexus must:
1. Register with the Ohio Department of Taxation
2. Obtain a vendor's license (ORC 5739.17)
3. File sales tax returns on the applicable filing schedule

SECTION 6 — POINTS OF CONFUSION / MISAPPLICATION

1. Threshold Calculation Errors
   • Sellers miscounting transactions (returned/voided sales count?)
   • Misunderstanding calendar year vs. rolling window

2. Multi-State Platform Confusion
   • Sellers using multiple platforms (Etsy + own website) must aggregate Ohio sales
   across all channels to determine nexus — not just per-platform

3. Exempt Sales Still Count Toward Threshold
   • Sales of tax-exempt items (food, prescription drugs) still count toward the
   $100,000 / 200-transaction threshold — only the collection obligation is exempt
   on those individual transactions, not the nexus calculation

4. Marketplace Seller Assumption
   • Marketplace sellers sometimes assume the facilitator handles everything and
   neglect their own direct-sale channel obligations

5. SSUTA Exempt Categories
   • Ohio follows SSUTA definitions for exempt categories, which may differ from
   what sellers expect based on their home state's rules

SECTION 7 — TRANSPARENCY & ENFORCEMENT GAPS

Transparency issues:

• No public database of registered remote sellers
• Consumers cannot verify whether a remote seller is properly collecting Ohio tax
• No automatic notification when a seller's threshold triggers mid-year

Enforcement limitations:

• Ohio Department of Taxation relies on self-registration by remote sellers
• No automated detection system for sellers crossing thresholds without registering
• Audit capacity for remote sellers is limited relative to the volume of online commerce
• Unregistered remote sellers face back-tax liability plus penalties and interest

SECTION 8 — POLICY PROBLEMS

Structural weaknesses:

1. Threshold self-monitoring — sellers must track their own Ohio sales across
   all channels; no state system prompts registration when threshold is crossed

2. Platform fragmentation — a seller on five platforms must aggregate Ohio sales
   manually; there is no unified reporting mechanism

3. SSUTA gap — Ohio's SSUTA membership standardizes some definitions but
   does not close enforcement gaps for non-member-state sellers

4. Small seller burden — sellers near the threshold face disproportionate
   compliance complexity relative to their revenue exposure

5. Digital goods ambiguity — electronically delivered products remain inconsistently
   classified across states, creating multi-state compliance uncertainty

SECTION 9 — PROPOSED FIXES

1. Automated Threshold Notification System
   • Require major platforms to report Ohio sales data to ODT quarterly
   • ODT triggers registration notice when seller approaches $80,000 (80% of threshold)

2. Unified Multi-Platform Reporting Portal
   • Allow sellers to report all-channel Ohio sales in a single filing interface
   • Reduces manual aggregation burden and errors

3. Expanded SSUTA Adoption
   • Push for broader uniformity in digital goods classification across SSUTA states
   • Ohio should adopt SSUTA digital goods definitions explicitly in ORC

4. Safe Harbor for Small Sellers
   • Explicit small-seller safe harbor (below $10,000 Ohio sales) with simplified
   registration and reduced audit risk

5. Platform Reporting Mandate
   • Require all marketplace facilitators operating in Ohio to submit annual seller
   sales reports to ODT — similar to 1099-K federal reporting

END MODULE 16