Justia Tax Law Opinion Summaries

Mason Companies, Inc., a company based in Wisconsin, appealed from the imposition of Ohio’s commercial-activity tax (CAT) on revenue it earned from its sales of goods through orders received via telephone, mail, and the Internet. Mason challenged the imposition of the CAT assessments based on its being operated outside Ohio, employing no personnel in Ohio, and maintaining no facilities in Ohio. The Supreme Court upheld the CAT assessments against Mason, holding that, after applying the holding in Crutchfield Corp. v. Testa, the lack of Mason’s physical presence within Ohio was not a necessary condition for imposing the obligations of the CAT law given that the $500,000 sales-receipts threshold adequately assured that Mason’s nexus with Ohio was substantial. View "Mason Cos., Inc. v. Testa" on Justia Law

In this companion case to Crutchfield Corp. v. Testa, the Supreme Court considered Newegg, Inc.’s appeal from the imposition of Ohio’s commercial-activity tax (CAT) on revenue it earned from sales of computer-related products that it shipped into the state of Ohio. Newegg contested its CAT assessments based on its being operated outside Ohio, employing no personnel in Ohio, and maintaining no facilities in Ohio. In Crutchfield, the Supreme Court held that, under the Commerce Clause, the physical presence of an interstate business within Ohio is not a necessary condition for imposing the obligations of the CAT law given that the $500,000 sales receipts threshold adequately assures that the taxpayer’s nexus with Ohio is substantial. After applying Crutchfield’s holding in this case, the Supreme Court upheld the CAT assessments against Newegg. View "Newegg, Inc. v. Testa" on Justia Law

The tax commissioner issued commercial-activity tax (CAT) assessments against the Crutchfield Corporation on revenue it earned from sales of electronic products that it shipped from the state of Ohio. Crutchfield, whose business in Ohio consisted solely of shipping goods from outside the state to its consumers in Ohio using the United States Postal Service or common-carrier delivery services, challenged the issuance of CAT assessments against it, arguing that Ohio may not impose a tax on the gross receipts associated with its sales to Ohio consumers because Crutchfield lacks a “substantial nexus” with Ohio. Citing case law interpreting this substantial-nexus requirement, Crutchfield argued that its nexus to Ohio was not sufficiently substantial because it lacked a “physical presence” in Ohio. The Board of Tax Appeals (BTA) affirmed the assessments issued by the tax commissioner. The Supreme Court affirmed the decision of the BTA and upheld the CAT assessments against Crutchfield, holding (1) the physical presence requirement recognized by the United States Supreme Court for purposes of use-tax collection does not extend to business-privileges taxes such as the CAT; and (2) the statutory threshold of $500,000 of Ohio sales constitutes a sufficient guarantee of the substantiality of an Ohio nexus for purposes of the dormant Commerce Clause. View "Crutchfield Corp. v. Testa" on Justia Law

New York Frozen Foods, Inc. filed its Bedford Heights income-tax returns on a separate-entity basis for tax years 2005 through 2007. In 2010, Frozen Foods and its affiliates filed consolidated amended returns for the same tax years and claimed a refund of taxes it had previously paid based on its separate returns. Regional Income Tax Agency, acting in its capacity as the city’s tax administrator, denied the refund. The Bedford Heights Income tax Board of Review affirmed the denial of refunds. The Board of Tax Appeals (BTA) affirmed, agreeing that the amended returns were improper. Frozen Foods appealed. Bedford Heights cross-appealed, arguing that the BTA erred by failing to deny the refund on an alternative ground. The Supreme Court affirmed the decision to deny Frozen Foods’ claim for a refund on the alternate ground that the city ordinance barred a change from a separate return to a consolidated return when filing an amended return because the change constituted a “change in method of accounting” prohibited by the ordinance. View "New York Frozen Foods, Inc. v. Bedford Heights Income Tax Board of Review" on Justia Law

Albany Commons Ltd., the owner of a 240-unit apartment complex, filed a complaint for tax year 2005 seeking a reduction from the auditor’s valuation of $13,600,000 to $9,720,000. At a hearing before the Franklin County Board of Revision (BOR), Albany Commons presented an appraisal by James Horner, a certified appraiser, that proposed a property valuation of $9,338,000. The BOR adopted Horner’s valuation. The Columbus City Schools Board of Education (BOE) appealed. The Board of Tax Appeals (BTA) adopted Horner’s appraisal valuation without adjustment and without discussion of other issues raised by the BOE. BOE again appealed, arguing that the absence of market data from the appraisal report and other flaws in the appraisal rendered the appraisal defective and unreliable. The Supreme Court affirmed, holding that the BOE did not establish an abuse of discretion in the BTA’s decision to credit Horner’s testimony and report. View "Columbus City Schools Board of Education v. Franklin County Board of Revision" on Justia Law

The tax commissioner, in a final determination journalized on June 8, 2010, reduced to $927,513 the almost $17 million amortizable amount that International Paper Company had reported. The tax commissioner’s letter to International Paper memorializing this determination was not mailed until July 12, 2010. The Board of Tax Appeals (BTA) reinstated International Paper’s amortizable amount, concluding that the tax commission violated Ohio Rev. Code 5751.53(D) by failing to notify International Paper of its assessment by the June 30 deadline. The tax commissioner appealed. The Supreme Court reversed, holding (1) Ohio Rev. Code 5751.53(D) requires that a reduction in the amortizable amount be embodied in a timely issued final determination to effect a reduction of the amortizable amount; (2) Ohio Rev. Code 5751.53(D) requires the tax commissioner to enter his determination on the journal by June 30, but the determination need not be mailed to the taxpayer by that date to be effective; (3) thus, the BTA erred by finding the tax commissioner’s final determination void; and (4) International Paper did not jurisdictionally forfeit any right to a remand for consideration of its substantive claim by failing to file a protective cross-appeal. Remanded for consideration of International Paper’s substantive challenge to the tax commissioner’s decision. View "International Paper Co. v. Testa" on Justia Law

Jefferson Industries Corporation filed a complaint challenging the valuation for tax year 2011 of a plant involved in manufacturing and stamping car frames. The Madison County Auditor valued the property at $34,500,000. On appeal, the Madison County Board of Revision (BOR) adjusted the valuation to $28,000,000. Jefferson Industries again appealed and offered its appraisal valuation of $10,420,000. The Board of Tax Appeals (BTA) agreed with the BOR’s value, largely on the basis of the Jefferson Local School District Board of Education’s (BOE) appraisal. The Supreme Court vacated the decision of the BTA, holding that the BTA did not explicitly address important evidentiary conflicts but should have. Remanded to the BTA to reconsider the evidence in light of particular objections that were raised to the BOE’s appraisal but were not addressed by the BTA. View "Jefferson Indus. Corp. v. Madison County Bd. of Revision" on Justia Law

At issue in this case was property owned by Innkeeper Ministries, Inc. that contained two large residential buildings and various recreational amenities. Innkeeper’s mission was to invite religious leaders to stay at the property at no charge and to enjoy the amenities and free meals as a type of spiritual retreat. Innkeeper filed an exemption application in 2008 seeking an exemption for, inter alia, charitable use. The tax commissioner denied exemption, stating, as for charitable use, that the activity at issue did not meet the charity standard. The Board of Tax Appeals (BTA) reversed. The Supreme Court reversed, holding that, given the residential use of the property by a caretaker couple, the BTA erred by failing to require proof of the primacy of charitable hospitality. View "Innkeeper Ministries, Inc. v. Testa" on Justia Law

Appellant, a property owner, applied to exempt real property used as a public community school for tax year 2010. The tax commissioner denied the exemption to the property that Appellant leased to the community school. Appellant appealed, arguing that because it was wholly owned by a 501(c)(3) nonprofit corporation whose members include the community school to whom the property is leased, the property should qualify for exemption under the public-schoolhouse exemption and an exemption for exclusive charitable use. The Board of Tax Appeals (BTA) affirmed the denial of an exemption, concluding that the record showed a “view to profit” on the part of the lessor. The Supreme Court affirmed, holding that the record contained sufficient support for the BTA’s view-to-profit finding. View "250 Shoup Mill, LLC v. Testa" on Justia Law

James and Tina Renacci filed a joint Ohio tax return for tax year 2000 without reporting and paying Ohio individual income tax on amounts earned by a trust (Trust) that owned shares of three Subchapter S corporations. In 2003, the tax commissioner assessed the Renaccis in relation to the unreported S-corporation income. The Renaccis paid all amounts demanded by the state and then filed a refund claim for the double-interest penalty amount. The tax commissioner denied the refund claim. The Board of Tax Appeals affirmed the denial of penalty remission. The Supreme Court reversed, holding that the tax commissioner, under the circumstances of this case, abused his discretion in denying the refund request. Remanded with instructions that the penalty be refunded. View "Renacci v. Testa" on Justia Law