United States

Ohio: Goods Picked Up in Georgia were Ohio-Sitused Receipts

Jul 24, 2017
From KPMG TaxWatch

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The Ohio Board of Tax Appeals recently addressed where a taxpayer’s receipts should be sitused when goods were picked up in Georgia and subsequently transported to Ohio. The taxpayer at issue was a Georgia-based wholesaler of lawn and garden products. The taxpayer’s retail customers arranged transportation of purchased products from the taxpayer’s Georgia facility to distribution centers, including centers in Ohio. Ownership of the purchased product was transferred in Georgia when the goods were loaded onto the trucks arranged for by the taxpayer’s customers. The taxpayer provided the truck drivers with a bill of lading that indicated the ultimate “ship to” address. The Ohio Department of Taxation, on audit, asserted that all of the receipts from sales of goods with a ship to address in Ohio were Ohio-sitused receipts. This meant that the taxpayer met the Commercial Activity Tax or CAT economic nexus threshold and had an Ohio CAT filing requirement.

Before the Board of Tax Appeals, the taxpayer argued that it lacked the requisite connections under the Due Process and Commerce Clauses to be subject to the CAT. The taxpayer also objected to the situsing position taken on audit because ownership of its product transferred to customers prior to shipment, it did not arrange for shipment, and some of the products bound for distribution centers in Ohio were subsequently shipped outside of the state. The Board was precluded from addressing the taxpayer’s constitutional claims, but did rule on the sourcing issue. Notably, in a 1980 corporate franchise tax case, the Ohio Supreme Court held that goods picked up in Ohio for shipment outside of the state were not Ohio sales. In the Board’s view, the opposite was true and so goods picked up outside Ohio that were ultimately destined for Ohio were considered Ohio-sitused sales.  Because the taxpayer had no evidence that certain of the goods were subsequently removed from Ohio and sent to other states, the Board concluded that the taxpayer failed to prove that the Commissioner erred in situsing all of the “ship to” sales to Ohio. Please contact Dave Perry at 513-763-2401 with questions on Greenscapes Home and Garden Products, Inc. v. Testa.


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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.