In a recent ruling that clarifies how commercial activity tax (CAT) applies in Ohio, the Ohio Board of Tax Appeals (BTA) has resolved a dispute concerning the situsing of sales for CAT purposes. The case centered around VVF Interest LLC (“VVF”), a company represented by attorneys Rich Fry, Steve Dimengo and Nate Fulmer of Buckingham.
In this case, VVF had challenged the standard for determining the situsing of its sales for CAT purposes, arguing that the fact that their product was routed through an Ohio distribution center (DC) didn’t determine their ultimate location. The outcome of this case matters greatly for companies that ship goods through Ohio DCs, as their tax burden can heavily depend on the situsing of their sales, affecting the overall profitability of their business.
In the end, the BTA sided with VVF, ruling that the sales situs should indeed be the ultimate delivery location, not the Ohio distribution center the products passed through. This ruling sets significant precedent in Ohio—and potentially other states as well—regarding how sales are to be sitused for the purposes of CAT.
Importantly, this outcome signals to other companies facing similar issues in their supply chain that they may have grounds for challenging their CAT in the state of Ohio, given the BTA’s recent decision.
The full details of the case, VVF Intervest, LLC v. Harris, BTA Case No. 2019-1233, can be found in the Decision and Order dated September 13, 2023. The ruling underscores the importance of diligent legal representation and a thorough understanding of commercial activity tax rules in securing a favorable outcome.
Further insight into this case is available, shedding light on how Ohio’s CAT rules apply in practice and opening up a broader discussion on the situsing of sales in the context of distribution center routing.