The Court of Appeals of Ohio held that a Georgia-based wholesaler of lawn and garden products established nexus and its sales were properly included in the Commercial Activity Tax (CAT) base.
The taxpayer was a wholesaler of garden equipment that did not have property, employees or other presence in Ohio. The Taxpayer’s primary customers were “big-box” retailers that were headquartered outside of Ohio but maintained distribution centers in Ohio and other states. The Taxpayer was not responsible for shipping its sold goods as its customers arranged for shipping. However, the Taxpayer was provided with a bill of lading that indicated the destination of the goods.
The Ohio Department of Revenue assessed the CAT based on the bill of lading information received by the Taxpayer. Where there is the transportation of goods, “the place at which such property is ultimately received after all transportation has been completed shall be considered the place where the purchaser receives the property.” Ohio Rev. Stat. § 5751.033(E). This rule ignores where the title passes or other conditions of sale. The court went on to find that these sales exceeded Ohio’s $500,000 sales nexus threshold and that the Commerce and Due Process Clauses were not offended. Greenscapes Home & Garden Prod., Inc. v. Testa, 2019-Ohio-384 (Ohio Ct. App. 2019).