Justia Tax Law Opinion Summaries

The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) affirming the decision of the tax commissioner concluding that Appellant’s purchase of an aircraft and then leasing it to its sole corporate member was taxable, holding that Appellant failed to carry its burden to show that it met the requirements of the sale-for-resale exception. See Ohio Rev. Code 5739.01(E) and 5741.02(C)(2).Appellant purchased the aircraft without paying sales or use tax on it and then leased it to its sole corporate member. The tax commissioner assessed used tax against Appellant for this purchase, thus rejecting Appellant’s argument that the purchase was nontaxable under the definition of “retail sale,” commonly known as the sale-for-resale exception. Specifically, the tax commissioner found that Appellant was not “engaging in business” within the meaning of the exception. The BTA affirmed. The Supreme Court affirmed, holding that the BTA (1) did not misapply the sale-for-resale exception; (2) did not run afoul of due process in disregarding certain portions of Appellant’s brief; and (3) did not err in making certain discovery rulings. View "Pi In The Sky, LLC v. Testa" on Justia Law

The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) concluding that because Great Lakes Bar Control’s service of cleaning beer-tap lines was primarily a maintenance service, any cleaning was merely incidental to that maintenance and was therefore not subject to sales tax as a “building maintenance and janitorial service” under Ohio Rev. Code 5739.01(B)(3)(j), holding that the beer-line service did not fit the plain meaning of “cleaning” in the context of providing a “janitorial service.”Great Lakes provided services related to selling, installing, and servicing beer-dispensing systems and provided a beer-line maintenance service to remove buildup of sediment and prevent lines from becoming blocked. The Ohio Department of Taxation determined that the beer-line service involved cleaning of tangible personal property under section 5730.01(II) and was subject to the sales tax. The BTA reversed. The Supreme Court affirmed, holding that the beer-line service did not fit the plain meaning of “cleaning” in the context of providing a “janitorial service.” View "Great Lakes Bar Control, Inc. v. Testa" on Justia Law

The Supreme Court affirmed the decision of the board of tax appeals (BTA) affirming the tax commissioner’s denial of a charitable-use property-tax exemption for the subject property, holding that the BTA’s factual findings were supported by the record in this case.Chagrin Realty, the property owner, was a nonprofit organization exempt from federal income tax under 26 U.S.C. 501(c)(2). Chagrin leased the property to Community Dialysis Center (CDC), a nonprofit tenant, which operated a hemodialysis facility on the property. The Centers for Dialysis Care, Inc., a for-profit management company, contracted with the CDC and employed the personnel who worked for the CC. Chagrin Realty filed an application for real-property-tax exemption relating to the subject property, but the tax commissioner determined that Chagrin Realty did not satisfy the requirements for exemption under Ohio Rev. Code 5709.12 or 5709.121. The BTA affirmed, thus rejecting Chagrin Realty’s contention that its 501(c)(2) federal tax status and its reliance on vicarious-exemption theories qualified it as a “charitable” institution. The Supreme Court affirmed, holding that the BTA reasonably and lawfully found that Chagrin Realty is not a charitable institution. View "Chagrin Realty, Inc. v. Testa" on Justia Law

The Supreme Court reversed the decision of the Board of Tax Appeals (BTA) affirming the decision of the tax commissioner, holding that the sale-for-resale exemption of Ohio Rev. Code 5739.01(E) applied to preclude Cincinnati Reds, LLC (the Reds) from having to pay use tax on promotional items it purchased.The tax commissioner denied the Reds’ request to remove the promotional items from the use-tax assessment, concluding that there was no evidence that the promotional items were resold with admission to games. The BTA affirmed, finding that the promotional items were given away for free and that the cost of the promotional items was not included in the ticket price. The Supreme Court reversed, holding (1) consideration is given in exchange for the Reds’ agreement to supply fans with the promotional items, and therefore, the transfer of promotional items to fans constitutes a “sale” under section 5739.01(B)(1); and (2) accordingly, the promotional items were subject to the sale-for-resale exemption of section 5739.01(E). View "Cincinnati Reds, LLC v. Testa" on Justia Law

The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) upholding a use-tax assessment on the purchases of natural gas by East Manufacturing Corporation (East) and not granting an exemption under Ohio Rev. Code 5739.011(B)(4), (B)(8), or (C)(5).East manufactures custom aluminum truck trailers. The tax commissioner issued a use-tax assessment for East’s natural gas purchases, exempting only the portion of natural gas used in painting operations. On appeal to the BTA, East argued that the natural gas used to heat the its buildings was exempt because maintaining the temperature at fifty degrees Fahrenheit or higher in the plant’s buildings was essential to its manufacturing process. The BTA affirmed the commissioner’s assessment on the portion of the natural gas that East used to heat its plant and denied East’s claim for exemption in its entirety. The Supreme Court affirmed, holding that the BTA correctly determined that East did not qualify for an exemption for total environmental regulation of a “special and limited area” of the facility, for items used in a manufacturing operation, or for gas used in a manufacturing operation. View "East Manufacturing Corp. v. Testa" on Justia Law

The Supreme Court affirmed the decision of the Board of Tax Appeals affirming the decision of the tax commissioner finding that Ohio Rev. Code 5709.911 subordinated a property’s original tax increment financing (TIF) exemption to the public-worship exemption from taxation.The Fairfield Township Board of Trustees filed a complaint against the continued exemption from taxation as a house of public worship, claiming that by granting the property owner the public-worship exemption and by continuing the exemption, the tax commissioner unlawfully relieved the church of its payment obligations as the owner of property subject to a recorded covenant. The covenant in question related to a TIF agreement entered into between the Township and a previous owner of the church property. The tax commissioner rejected the Township’s agreement, and the Board of Tax Appeals affirmed. The Supreme Court affirmed, holding (1) by dictating that TIF exemptions be subordinated to other exemptions, section 5709.911 barred the enforcement of the real covenant with respect to service payments; and (2) the Township lacked standing to raise its constitutional challenge to section 5709.911. View "Fairfield Township Board of Trustees v. Testa" on Justia Law

At issue was whether the Ohio use tax applied to Lafarge North America, Inc.’s purchases of fuel and repair parts for equipment used to break up and transport solidified slag, a by-product from molten ore during steelmaking, from the “slag mountain," a large slag mass. Whether the tax applied depended on whether the activity was part of Lafarge’s “manufacturing operation” under Ohio Rev. Code 5739.02(B)(42)(g).The Department of Taxation assessed a use tax and penalty against Lafarge for purchases for the equipment at issue. Lafarge challenged the assessment. The tax commissioner determined that the breaking up and transport of slag from the slag mountain preceded Lafarge’s manufacturing operation and that equipment used to move raw materials prior to the start of the manufacturing process was taxable. The Board of Tax Appeals affirmed the tax assessment and penalty. The Supreme Court reversed, holding that Lafarge’s manufacturing operation began once Lafarge cut slag from the mountain and continued as the material was crushed, placed in dump trucks, and transported to a screening plant. View "Lafarge North America, Inc. v. Testa" on Justia Law

In this real-property-valuation case, the Supreme Court vacated the decision of the Board of Tax Appeals (BTA) finding that the appraisal report presented by the Washington County Board of Revision and Washington County auditor (collectively, the County) constituted the most competent and probative evidence of the value of the subject property for tax year 2013.The BTA relied on the County’s report to value a property owned by Lowe’s Home Centers, Inc./Lowe’s Home Centers, LLC (collectively, Lowe’s), even though Lowe’s presented its own appraisal report. The Supreme Court vacated the BTA’s decision, holding (1) the Court’s decisions in Steak ’N Shake, Inc. v. Warrant County Board of Revision, 48 N.E.3d 535 (Ohio 2015), Rite Aid of Ohio, Inc. v. Washington County Board of Revision, 54 N.E.3d 1177 (Ohio 2016), and Lowe’s Home Centers, Inc. v. Washington County Board of Revision, 49 N.E.3d 1266 (Ohio 2016), provide the proper guideposts for resolving this controversy; and (2) because the BTA had yet to evaluate the evidence in light of the legal standards articulated in these three decisions, the case must be remanded for further proceedings. View "Lowe's Home Centers, Inc. v. Washington County Board of Revision" on Justia Law

The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) following the Court’s remand in Navistar I, holding that the BTA acted reasonably and lawfully in upholding the tax commissioner’s reduction of Navistar Inc.’s commercial-activity-tax (CAT) credit to zero.In Navistar I, the Supreme Court concluded that the BTA had ignored the testimony of Navistar’s experts in upholding the commissioner’s reduction of Navistar’s CAT credit to zero, an omission that made the BTA’s decision unreasonable and unlawful. After the BTA again upheld the tax commissioner’s decision, Navistar appealed, objecting to the BTA’s findings and its conclusion. The Supreme Court affirmed, holding that the BTA’s findings were supported by reliable and probative evidence and that the BTA’s conclusion was reasonable and lawful. View "Navistar, Inc. v. Testa" on Justia Law

The Supreme Court reversed the decision of the Board of Tax Appeals (BTA) affirming the tax commissioner’s order of two reductions that decreased Dana Corporation’s amortizable amount against the commercial-activity tax (CAT) to $4,728,051.At issue was the special credit against the CAT set forth at Ohio Rev. Code 5751.53. One factor in calculating the CAT credit was the net operating losses (NOLs) that were incurred by the corporation before the CAT. To take the credit, Dana Corporation was required to file report with the tax commissioner that calculated an amount that would be applied gradually over a period of up to twenty years (amortizable amount) against the CAT. Dana Corporation argued that its amortizable amount was $12,493,003. The tax commissioner ordered two reductions that ultimately decreased the amortizable amount to $4,728,051. On appeal, Dana argued that the second adjustment was not authorized by 5751.53(F). The BTA disagreed. The Supreme Court reversed, holding that the BTA erred in affirming the reduction of the amortizable amount based on cancellation-of-debt income offset of federal NOLs. View "Dana Corp. v. Testa" on Justia Law