Taxpayer's Contract for Vehicle Drivers Not Taxable Employment Service

Wednesday, March 11th, 2015

A man driving a car.

The Ohio Board of Tax Appeals ("Board") ruled that a taxpayer's contract for vehicle drivers was not subject to tax as an employment service.

The taxpayer was a specialty metal products provider with satellite offices in Ohio. The taxpayer contracted with an employment service provider to hire drivers for the taxpayer's vehicles. The taxpayer employed no drivers outside the contract and contracted for drivers for at least one year. The taxpayer was audited for use tax on the contract.

Ohio taxes the sale of employment services. Ohio defines an "employment service" as providing personnel, on a temporary or long-term basis, to perform work supervised by another. The personnel must receive their wages or other compensation from the employment service provider. "Employment services" does not include contracts that are for more than one year and that assign employees on a permanent basis. "Permanent" means that (1) the assignment has no specified ending date and (2) the employee is not being provided either as a substitute for a current employee who is on leave or to meet seasonal or short-term workload conditions.

The Board ruled that this was not a taxable employment service because the drivers were assigned on a permanent basis. The taxpayer provided testimony from three witnesses that (1) the taxpayer employed no drivers outside the contract, (2) the drivers were employed for more than one year, and (3) the drivers were not seasonal or temporary replacements for permanent employees. The Board found that the taxpayer's practices showed the taxpayer intended to keep the workers for more than one year and on a permanent basis. Therefore, the contract was not subject to tax.

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 or call 866.578.8193.

Washington Penalty Reduction Program

Monday, May 21st, 2018 -Businesses that apply to register with Washington's Marketplace Fairness Penalty Reduction Program by June 30,...

Fuel Used to Heat Detached Garages Taxable in Maine

Monday, May 21st, 2018 -Maine Revenue Services recently released a publication explaining that sales tax applies to fuel that is used ...

Cloud Software No Longer Taxable in Indiana

Thursday, May 17th, 2018 -Effective July 1, 2018, cloud software will no longer be taxable in Indiana. Indiana taxes the sale, lease,...

Sales Tax Increase in the Historic Triangle Region of...

Monday, May 14th, 2018 -Effective July 1, 2018, there will be an additional one percent (1%) regional sales and use tax imposed in the...

Sales by Charitable Organizations Generally Exempt in...

Friday, May 11th, 2018 -The Arkansas Department of Finance and Administration recently addressed the taxability of sales made by a non...

Credit Card Convenience Fees Taxable in New York

Wednesday, May 9th, 2018 -The New York Department of Taxation and Finance recently ruled that convenience fees for credit card purchases...