Employment Services Contracts for Permanent Employees Not Taxable in Ohio

Monday, August 6th, 2018

Staffing agency looking over candidate's resume.

The Ohio Board of Tax Appeals recently addressed whether contracts entered into by an employment services agency were taxable employment services.

The taxpayer was an employment services agency (i.e., temporary staffing agency). The taxpayer received an assessment for unpaid sales tax on a contract with a meat processing company.

Ohio taxes employment services. However, employment services are not taxable when (1) the seller and purchaser enter into a contract covering a period of at least one year and (2) employees covered under the contract are assigned on a permanent basis. An employee is assigned on a "permanent basis" when (1) the assignment does not specify an ending date, (2) the employee is not a substitute for a current employee, and (3) the employee is not used for seasonal or short-term workload needs. The ruling determined that the contract was for more than one year. The ruling also found that the contract did not include end dates for employees, employees were not provided as substitutes, and employees were not provided for seasonal or short-term workload needs. As a result, the contract qualified for the exclusion.

https://www.ttrus.com/Employment Services Contracts

About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at www.ttrus.com or call 866.578.8193.

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