The Supreme Court of Ohio held that gross receipts from a taxpayer’s services performed out-of-state had situs with Ohio for purposes of the state’s commercial activity tax (CAT) because the benefit of the services was received in Ohio. The taxpayer provided dialysis services to patients in Ohio. To support the dialysis business, the taxpayer and its parent provided administrative and laboratory services from outside the state. The taxpayer filed a refund claim for the CAT paid on the gross receipts from the administrative and laboratory services. Under R.C. 5751.033(I), services are sitused to Ohio if the purchaser receives the benefit in Ohio. The taxpayer argued that the administrative and laboratory services should be sitused to the location where the services were performed. Under Ohio Admin. Code 5703-29-17(C)(28), healthcare services provided within and without the state may be reasonably allocated.
In affirming the Board of Tax Appeals, the court held that while the taxpayer’s laboratory and administrative services were healthcare service, the services were ancillary to and supportive of the dialysis services provided entirely in Ohio and therefore must also be sitused to Ohio.
Total Renal Care, Inc. v. Harris, Slip Op. No. 2024-Ohio-5685 (Ohio Dec. 9, 2024).