Home / The Buzz / CAT “Tails” Continue at the Ohio Supreme Court

CAT “Tails” Continue at the Ohio Supreme Court

PDF/Printer Friendly Version

cat tails continue at the ohio supreme court

The commercial activity tax (“CAT”) continues to cause trepidation for sellers of goods transported to Ohio distribution and fulfillment centers (“DCs”) or similar warehouses. Two decisions issued by the Ohio Board of Tax Appeals (“Board”), which we reported on in this Buzz, have been appealed to the Ohio Supreme Court (“Court”). On October 12, 2023, Jones Apparel Group/Nine West Holdings (“Jones”) filed its notice of appeal of the Board’s decision in Jones Apparel Group USA/Nine West, BTA Case No. 2020-53 (September 13, 2023) with the Court. Case No. 2023-1288. A day later, the Tax Commissioner filed an appeal of the Board’s decision in VVF Intervest, LLC, BTA Case No. 2019-1233 (September 13, 2023). Case No. 2023-1296.

It is currently unclear how the cases will proceed; on October 17th, the Court referred both cases to mediation under Supreme Court Practice Rule 19.01. Although the Court’s orders for mediation stayed all filing deadlines, notices of cross-appeal have been filed in both cases.

In its notice of appeal, Jones argues that the Board erred in determining that Jones’ goods ultimately received outside of Ohio should be sitused to Ohio. The Board determined that the representative sample Jones provided was insufficient to prove that the goods were received outside of Ohio. Jones contends that they provided sufficient documentation and information to demonstrate where its goods were ultimately received. Jones also argues that the Board did not address whether customer store location information is sufficient to demonstrate where goods were received.

In her cross-appeal, the Tax Commissioner disputes the Board’s statement that there could be circumstances in which a taxpayer could present evidence obtained after transportation was complete that would demonstrate that goods were ultimately received outside of Ohio. The Tax Commissioner argues that there is a requirement for taxpayers to have knowledge of the ultimate destination at the time of transportation. Specifically, she cites the CAT statutes and accompanying rules that require a taxpayer’s CAT situsing to “be supported by business records as they existed at the time” or “within a reasonable time thereafter.” The Tax Commissioner asserts that the ultimate destination of the property is the location reflected on the taxpayer’s contemporaneous documentation.

As in Jones, in her appeal of VVF, the Tax Commissioner argues that the Board erred in determining that there is not a requirement of contemporaneous knowledge of the ultimate destination at the time of transportation. The remainder of the Tax Commissioner’s appeal focuses on the Board’s determination that the delivery of VVF’s goods to a Columbus distribution center is one leg of a continuous delivery process. The Tax Commissioner argues that the Columbus distribution center is the location where VVF’s goods are ultimately received and any subsequent transportation from the distribution center constitutes separate and distinct transactions that are not relevant for CAT situsing purposes.

In its cross-appeal, VVF argues that it does not have substantial nexus with Ohio and the tax imposed on its gross receipts violates the Commerce Clause of the U.S. Constitution and the Due Process Clause of the U.S. and Ohio Constitutions. VVF states that it is an excluded person under R.C. 5751.01(E)(1) because it has less than $150,000 of taxable gross receipts, and therefore is not subject to the CAT.


Depending on how the required mediations proceed, some or all of these arguments may be heard and briefed before the Court. Any subsequent decisions by the Court could have a substantial impact on taxpayers who, like Jones and VVF, ship goods to Ohio DCs or similar warehouses.

If you would like to further discuss the contents of this post, please reach out to any of our professionals.

Talk To One Of Our Professionals

Contact Us