The Ohio Board of Tax Appeals (“BTA”) held that vehicles sales made to Ohio buyers at a West Virginia dealership were not subject to Ohio Commercial Activity Tax (“CAT”). Straub-Nissan LLC, v. Harris, BTA Case No. 2022-422 (Oct. 23, 2024). The Ohio purchasers traveled to the West Virginia dealership where they took title, control, and possession of the vehicles. There was no transportation involved in the delivery of the vehicles to the purchasers. The BTA held that the dealership’s gross receipts were not sitused to Ohio since the purchase, sale, and delivery of the vehicle occurred outside of Ohio.
Following the Straub decision, the Ohio General Assembly amended the CAT situsing statute to provide that gross receipts from motor vehicle sales are only sitused to Ohio if the motor vehicle is titled in Ohio. R.C. 5751.033(M). This amendment applies retroactively to periods prior to its enaction. 135 Am. Sub. H.B. 315, uncodified Section 22.
Straub-Nissan, LLC (“Straub”), a member of a group of automotive dealerships located in West Virginia, was audited and assessed Ohio CAT on gross receipts from vehicles sold to Ohio residents. Straub asserted that the vehicles sold to Ohio buyers were purchased and possessed in West Virginia and, therefore, its gross receipts from these sales should not be sourced to Ohio under R.C. 5751.033(E). Conversely, the Tax Commissioner argued that the sales should be sourced to Ohio because that is the location where the vehicles came to rest after the purchasers drove the vehicles to their residences in Ohio. The BTA sided with Straub holding that the purchasers did not receive the vehicles in Ohio.
The BTA distinguished the vehicle sales at issue from those where property is delivered to Ohio or picked up outside of Ohio for transportation into the state via motor carrier or other transportation. In this case, the vehicles were not delivered via motor carrier or any other form of transportation. The Ohio buyers took title, possession, and control over the motor vehicles in West Virginia. In other circumstances where goods are delivered to Ohio, even when the purchaser takes possession and control outside Ohio and transports the goods into the state, the Board and Ohio courts have sitused the out-of-state business’ gross receipts to Ohio due to the purchaser’s transportation into the state. See e.g., Greenscapes Home & Garden Prods., Inc. v. Testa, 2019-Ohio-384. However, in this case, the Board found that the entire transaction, including purchase, receipt, and delivery, were completed outside Ohio at the Straub dealership in West Virginia. Accordingly, since transportation of the vehicle to Ohio was not part of the delivery, the gross receipts from these sales were not sitused to Ohio.
The result may have been different if Straub loaded the vehicle onto a truck and delivered it to the customer in Ohio or the Buyer hired a motor carrier to transport the vehicle to Ohio from the West Virginia dealership. However, there was no transportation involved in delivery of the vehicles to the Ohio buyers.
This case showcases the Ohio Tax Department’s aggressive approach in applying Ohio’s CAT sourcing rules.
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