On August 17, 2021, the Ohio Department of Taxation finalized amendments to its rule governing the determination of resident status for personal income tax purposes. See our prior coverage of the draft (now finalized) rule here. The amendments are intended to modernize the factors to be considered – and to be disregarded – in
Apple alleges Ohio CAT improperly imposed on agency receipts
Apple recently appealed an Ohio Commercial Activity Tax (CAT) assessment, alleging that the Department of Taxation improperly treated receipts from sales made through its app store as Apple’s receipts for purposes of determining its tax base under the CAT. Ohio law allows agents to exclude gross receipts (other than commission) from the agent’s CAT base.…
News from the Buckeye State: an update on Ohio’s legislative session, budget and more
In this episode of the SALT Shaker Podcast policy series, host and Eversheds Sutherland Partner Nikki Dobay is joined by Tony Long, Director of Tax and Economic Policy at the Ohio Chamber of Commerce. During their conversation, they cover highlights from Ohio’s latest legislative session, review details of the state’s budget and reference…
Bye-Bye Buckeye (State)? Ohio Department of Taxation proposes amendments to residency rules
The Ohio Department of Taxation recently proposed amendments to its rule governing the determination of resident status for personal income tax purposes. The current rule identifies factors considered in making a determination of an individual’s domicile (e.g., the number of contact periods in Ohio during a taxable year and the individual’s activities in tax years…
Ohio Board of Tax Appeals concludes banking software subject to sales tax
The Ohio Board of Tax Appeals found that banking software was subject to sales tax in Cincinnati Federal Savings & Loan v. McClain, Case No. 2018-2247 (December 22, 2020). The banks purchased software for their online banking system. After initially paying tax on the purchases, the banks filed refund claims, claiming that the software…
Ohio Supreme Court Rejects Look-Through Sourcing for Sale of Customer Contracts
The Ohio Supreme Court held that under the Commercial Activity Tax (“CAT”), Defender Security Company’s (“Taxpayer”) gross receipts from selling alarm monitoring service contracts to ADT Security Services, Inc. (“ADT”) should be sourced to the location where ADT itself receives the benefit from purchasing these contracts, rather than the location of the ultimate consumer of…
Ohio Updates Sourcing Guidance for Marketplace Facilitators
Late last month, the Ohio Department of Taxation updated its existing sourcing bulletin to provide that marketplace facilitator sales into the state are sourced for sales and use tax purposes at the location where a consumer receives an order or service. The change allows marketplace facilitators to apply the same destination-based sourcing rules to both…
First Things First: Cincinnati Billboard Tax Does Not Violate First Amendment
On June 18, 2020, the Ohio Court of Appeals held that Cincinnati’s excise tax on the gross receipts generated by billboards does not violate the First Amendment to the United States Constitution. The court found persuasive Clear Channel Outdoor, Inc. v. Director, Department of Finance of Baltimore, 223 A.3d 1050 (Md. Ct. Spec. App.…
Cleveland Gets Personal Taxing Nonresident Retiree’s Stock Options
The Ohio Board of Tax Appeals (BTA) affirmed the Cleveland Board of Income Tax Review’s (Board) decision that it properly denied a refund claim of municipal income tax paid on income from stock options that a nonresident was granted while working in the city but exercised after she retired and moved to Florida. Willacy v.
Federal Treatment Not “Controlling” but “Persuasive”: Ohio Board of Tax Appeals Holds CAT Inapplicable to Three Types of Finance Company Receipts
On February 6, 2020, the Ohio Board of Tax Appeals held that a captive automobile financing company was not subject to commercial activity tax (CAT) on receipts that it earned in connection with three types of revenue streams:
- receipts from sales of retired leased vehicles,
- receipts from securitization transactions, and
- interest subvention payments.
Background:…