Justia Ohio Supreme Court Opinion Summaries

VVF Intervest, L.L.C., a contract manufacturer based in Kansas, produced bar soap for High Ridge Brands (HRB), the brand owner. HRB, an "asset light" entity, directed VVF to ship the soap from Kansas to a third-party distribution center in Columbus, Ohio. Subsequently, HRB resold most of the product to national retailers, and the soap was shipped out of Ohio to various locations. Between 2010 and 2014, VVF paid Ohio’s commercial-activity tax (CAT) on its gross receipts from these sales to HRB.After making these payments, VVF sought a refund from the Ohio tax commissioner, arguing that its gross receipts should not be sitused to Ohio since the products left the state soon after arrival. The tax commissioner denied the refund, emphasizing that the relevant sale for tax purposes was VVF’s sale to HRB, not HRB’s subsequent sales to retailers. VVF appealed to the Ohio Board of Tax Appeals, which held that the Columbus distribution center was merely an interim stop and that the gross receipts should not be sitused to Ohio. The board also found that VVF had not adequately preserved an alternative statutory argument regarding services and declined to rule on constitutional claims.The Supreme Court of Ohio reviewed the appeal and reversed the Board of Tax Appeals’ decision. The court held that under R.C. 5751.033(E), VVF’s gross receipts from sales to HRB are properly sitused to Ohio because HRB, as the purchaser, received the goods in Ohio. The court dismissed VVF’s alternative statutory argument for lack of jurisdiction and rejected VVF’s constitutional challenges under the Due Process, Commerce, and Equal Protection Clauses. Thus, VVF is not entitled to a refund of the CAT paid on these transactions. View "VVF Intervest, L.L.C. v. Harris" on Justia Law

A taxpayer in the City of Findlay filed a mandamus action against the city and various municipal officials, alleging that the city failed to comply with municipal income-tax statutes and initiated fraudulent tax collection efforts against him and other delinquent taxpayers. He sought to enjoin the city from engaging in these tax collection activities and to compel compliance with local tax ordinances. In his filings, the taxpayer did not claim that any tax complaint was currently pending against him or allege a specific, individualized injury. Instead, he asserted standing as a taxpayer and attempted to bring his action on behalf of all taxpayers, invoking the public right doctrine.Previously, this dispute had resulted in several adverse judgments against the taxpayer in both the Third District Court of Appeals and the Supreme Court of Ohio, all relating to similar underlying facts concerning Findlay’s efforts to collect unpaid municipal taxes. In the present matter, the Third District Court of Appeals granted the city’s motion to dismiss the mandamus action under Civil Rule 12(B)(6). The appellate court found that the taxpayer lacked standing because he failed to allege a specific injury distinct from the general public and that his claims were not cognizable in mandamus. The court also denied his request for leave to file a third amended complaint, concluding that he had not demonstrated good cause to do so.On review, the Supreme Court of Ohio affirmed the judgment of the Third District Court of Appeals. The Supreme Court held that the taxpayer lacked standing to pursue the mandamus action because he did not allege an actual injury personal to him that was fairly traceable to the city’s conduct, as required for individual standing. The Supreme Court also rejected reliance on the public right doctrine, reaffirming its prior decision that this doctrine had been overruled, and denied both the motion to supplement the record and the request for oral argument. View "State ex rel. Martens v. Findlay" on Justia Law

A limited partnership operating a timber farm in Monroe County, Ohio, purchased a Mercedes-Benz Geländewagen in 2018 for use on its rugged, 1,100-acre property, which is primarily forested. The farm, with a history dating back to 1902, had transitioned from fruit and dairy to timber production. The vehicle was acquired to facilitate forest management activities, including traversing difficult terrain to apply chemicals and equipment for the removal of invasive species, inspect timber, and support sustainable harvesting practices. The farm had not reported timber sales or income since 2011, but had invested in forest management and hired consultants to implement long-term plans for sustainable timber production.The Ohio Tax Commissioner issued a use-tax assessment on the vehicle, finding that the farm was not actively engaged in the business of farming due to the absence of recent sales or income, and that the vehicle was not used directly or primarily in farming activities. The Board of Tax Appeals affirmed the assessment, concluding that the vehicle was used mainly for transportation around the property rather than for direct farming purposes, and that the farm had not demonstrated the vehicle’s primary use was for farming.The Supreme Court of Ohio reviewed the case and reversed the Board of Tax Appeals’ decision. The court held that the statutory exemption for use tax on items used in farming does not require “direct” use, and that the farm’s activities—including forest management and preparation for future timber sales—constituted engagement in the business of farming. The court found that the vehicle was used in farming and primarily for that purpose, based on uncontradicted testimony. The case was remanded for cancellation of the tax assessment. View "Claugus Family Farm, L.P. v. Harris" on Justia Law

A company constructed and operated a large interstate natural gas pipeline running through Ohio, which was completed in late 2018. The project’s actual construction costs significantly exceeded initial estimates due to unusually heavy rainfall causing delays and an environmental incident that led to regulatory actions and further delays. During construction, an investment firm acquired a substantial indirect ownership interest in the pipeline’s parent company, paying a price that implied a high valuation for the pipeline.For the 2019 tax year, the Ohio Tax Commissioner assessed the taxable value of the Ohio portion of the pipeline using a statutory cost-based method, resulting in a valuation that the company believed was excessive. The company challenged the assessment, arguing that the pipeline’s true value was much lower, citing alternative appraisal methods and the impact of construction delays and overruns. The Tax Commissioner rejected these arguments, maintaining that the statutory method produced the correct value.The company appealed to the Ohio Board of Tax Appeals, where both parties presented expert appraisals. The company’s appraiser used a unit appraisal approach and arrived at a lower value, while the Tax Commissioner’s appraiser, using both cost and income approaches, opined a higher value. The Board found the Tax Commissioner’s appraisal more credible, especially in light of the investment firm’s transaction and the actual construction costs, and ordered the pipeline to be valued according to that appraisal.On further appeal, the Supreme Court of Ohio reviewed whether the Board’s decision was reasonable and lawful. The court held that the Board has broad discretion in weighing competing appraisals and evidence, and that its adoption of the Tax Commissioner’s appraisal was supported by the record. The court affirmed the Board’s decision, upholding the higher valuation for tax purposes. View "Rover Pipeline, L.L.C. v. Harris" on Justia Law

Aramark Corporation provides food services to clients in various industries, purchasing food, labor, and materials from third-party vendors. Under management-fee contracts, clients reimburse Aramark for these purchases and pay a management fee. Aramark sought a refund for the commercial-activity tax (CAT) it paid on these reimbursements, arguing that it acted as an agent for its clients and thus the reimbursements should be excluded from gross receipts under the CAT statute.The Tax Commissioner denied Aramark's refund claim, determining that Aramark did not meet the requirements for the gross-receipts exclusion. The Board of Tax Appeals affirmed this decision, concluding that Aramark failed to establish an agency relationship with its clients as required by the statute. The board found that Aramark did not have the authority to bind its clients to its activities with third-party vendors and that the reimbursements constituted gross receipts.The Supreme Court of Ohio reviewed the case and affirmed the Board of Tax Appeals' decision. The court held that Aramark did not qualify for the gross-receipts exclusion under the CAT statute because it did not act as an agent for its clients. The court found that Aramark kept the reimbursements for itself and did not hold them on behalf of its clients. Additionally, the court disapproved of the approach used in a previous case, Willoughby Hills, which required a showing of actual authority to establish an agency relationship for CAT purposes. The court concluded that the reimbursements Aramark received from its clients were taxable gross receipts and rejected Aramark's alternative argument that the reimbursements did not contribute to the production of gross income. View "Aramark Corp. v. Harris" on Justia Law

Total Renal Care, Inc. (TRC) provides dialysis services to patients in Ohio. TRC filed quarterly commercial-activity tax (CAT) returns and made corresponding payments for the period from April 1, 2012, to December 31, 2014. Later, TRC sought refunds, arguing that some of its gross receipts should be sitused outside Ohio because certain supporting services, such as laboratory and administrative functions, were performed outside the state.The Tax Commissioner denied TRC's refund claims, and the Board of Tax Appeals affirmed this decision. The Board determined that TRC's laboratory and administrative services were part of the healthcare services provided in Ohio. It concluded that the gross receipts from these services should be sitused to Ohio because the benefit of the services was received in Ohio.The Supreme Court of Ohio reviewed the case and affirmed the Board of Tax Appeals' decision. The court held that under R.C. 5751.033(I), gross receipts from services should be sitused to the location where the purchaser receives the benefit of the service. Since TRC's dialysis services were provided entirely in Ohio, the gross receipts from these services were correctly sitused to Ohio. The court found no conflict between the statute and the administrative rule, which also emphasizes the location where the purchaser benefits from the service. Therefore, TRC's gross receipts for the relevant period should be sitused to Ohio, and the Board's decision was neither unreasonable nor unlawful. View "Total Renal Care, Inc. v. Harris" on Justia Law

George Martens filed a complaint in the Third District Court of Appeals for a writ of mandamus against various judges and courts in Hancock County, alleging that they lacked jurisdiction to decide certain tax cases. Martens did not allege that he was a party to any tax case pending before those courts when he filed this action. The judges and courts filed a motion to dismiss, arguing that Martens lacked standing and had not stated a cognizable mandamus claim.The Third District Court of Appeals dismissed the case, concluding that Martens lacked standing to bring the complaint and had failed to state a claim for mandamus relief. Martens appealed to the Supreme Court of Ohio, arguing that he did not need to meet the traditional standing requirement based on the public-right doctrine recognized in State ex rel. Ohio Academy of Trial Lawyers v. Sheward. Alternatively, he claimed taxpayer standing.The Supreme Court of Ohio rejected Martens's reliance on Sheward, overruling the public-right doctrine established in that case. The court held that Sheward was contrary to the deeply rooted standing requirement and the Ohio Constitution. The court also found that Martens could not establish taxpayer standing, as he had not shown any special interest in the public funds at issue or cited statutory authority authorizing him to bring a taxpayer suit. Consequently, the Supreme Court of Ohio affirmed the Third District's dismissal of Martens's complaint for lack of standing. View "State ex rel. Martens v. Findlay Municipal Court" on Justia Law

The City of Rittman filed an original action in prohibition against Judge Corey E. Spitler of the Wayne County Common Pleas Court. Rittman sought to prevent Judge Spitler from exercising jurisdiction over a class-action lawsuit in which Rittman was named as a defendant. The lawsuit, filed by Tara Boler and Trista Bise, alleged that Rittman had illegally collected a 0.5 percent income tax increase beyond its authorized period and sought refunds for the overcharged taxes from 2008 to 2022.In the Wayne County Common Pleas Court, Judge Spitler denied Rittman’s motion to dismiss and motion to stay discovery, and he established a case-management schedule. Rittman then sought a writ of prohibition from the Supreme Court of Ohio to stop Judge Spitler from proceeding with the case, arguing that the lawsuit was an impermissible attempt to bypass the statutory process for obtaining tax refunds.The Supreme Court of Ohio reviewed the case and determined that Judge Spitler had jurisdiction and statutory authority under R.C. 2723.01 to hear the case. The court found that the plaintiffs' claims were substantively governed by R.C. 2723.01, which allows common pleas courts to enjoin the illegal levy or collection of taxes and entertain actions to recover them when collected. The court concluded that although the plaintiffs did not explicitly invoke R.C. 2723, their claims fit within its scope. Therefore, the Supreme Court of Ohio denied the writ of prohibition, allowing Judge Spitler to continue exercising jurisdiction over the underlying case. View "State ex rel. Rittman v. Spitler" on Justia Law

The City of Obetz initiated a mandamus and prohibition action against Franklin County Auditor Michael Stinziano and Franklin County Treasurer Cheryl Brooks Sullivan. The dispute arose from a tax-increment-financing (TIF) arrangement established by Obetz in 1997. Obetz erroneously received TIF proceeds in 2015, 2016, and 2017. To correct this, Obetz returned some funds to the county, but the county also withheld Obetz's real-property-tax distribution for the first half of 2022 and reallocated it to other taxing jurisdictions.The Franklin County Court of Common Pleas initially reviewed the case, where Obetz sought to compel the county to return the funds it had tendered and to pay future settlement distributions without setoff. The lower court's decision led to the current appeal.The Supreme Court of Ohio reviewed the case. The court held that Obetz was not entitled to the return of the $212,963.01 it had voluntarily paid to the county. Additionally, the court denied Obetz's request for the county to pay $194,944.32, which had been withheld and reallocated to other jurisdictions. However, the court granted a limited writ of mandamus, compelling the county to pay future settlement distributions to Obetz without setoff. The court found that the county did not have the authority under R.C. 319.44, R.C. 323.133(B), R.C. 5713.08, or R.C. 5715.22 to withhold future settlement funds from Obetz. The court also denied Obetz's request for a writ of prohibition, as the county's actions did not constitute the exercise of judicial power. View "State ex rel. Obetz v. Stinziano" on Justia Law

A group of landowners challenged the Ohio Tax Commissioner’s decision to set a woodland-clearing-cost rate of $1,000 per acre for the purpose of calculating the current agricultural use valuation (CAUV) of their properties for tax years 2015 through 2020. The landowners argued that the rate was too low and not based on reliable evidence, causing their woodlands to be overvalued and resulting in higher property taxes.The Board of Tax Appeals (BTA) upheld the Tax Commissioner’s decision, finding that the Commissioner did not abuse her discretion in setting the $1,000 rate. The BTA concluded that the rate was within the Commissioner’s discretion and based on input from the agricultural advisory committee. The BTA also rejected the Tax Commissioner’s argument that some landowners lacked standing to challenge the CAUV entries for certain years.The Supreme Court of Ohio reviewed the case and found that the Tax Commissioner abused her discretion by adopting the $1,000 rate without reliable evidence or a sound reasoning process. The court noted that the decision was arbitrary and not supported by any fixed rules or standards. The court also found that the Tax Commissioner failed to comply with Ohio Administrative Code 5703-25-33, which requires obtaining information from reliable sources and ensuring that CAUV tables are accurate, reliable, and practical.The Supreme Court of Ohio reversed the BTA’s decision and remanded the case to the Tax Commissioner with instructions to adopt a woodland-clearing-cost rate that complies with the administrative code. The court emphasized that the Tax Commissioner must base the rate on reliable evidence and follow the prescribed standards. View "Adams v. Harris" on Justia Law