The Ohio Supreme Court upheld the Board of Tax Appeals’ (BTA) denial of an apparel company’s refund claim for Commercial Activity Tax (CAT) paid on merchandise sold to its client that maintained an Ohio distribution center. The court ruled that the taxpayer failed to provide sufficient documentary evidence to establish the amount of gross receipts for goods ultimately shipped to its client’s retail stores outside Ohio.
The taxpayer sold apparel, shoes, and accessories and shipped the merchandise to the client’s Columbus, Ohio distribution center before delivery to the client’s nationwide retail stores. For tax years 2010-2016, the taxpayer paid CAT on gross receipts, situsing them to Ohio. The taxpayer later sought a refund, claiming receipts should be sitused to the states where merchandise was ultimately shipped. The tax commissioner and BTA denied the claim, finding insufficient evidence to support the taxpayer’s position.
On appeal, the taxpayer asserted that the CAT should not apply to gross receipts from sales where merchandise was received outside Ohio, even if the company lacked knowledge of the final destination at the time of shipment. The taxpayer presented testimony and data suggesting that the taxpayer shipped at least 80% of its merchandise sold to its clients to stores outside Ohio. However, the court found that while the taxpayer may have demonstrated that a portion of its merchandise left Ohio, it did not provide sufficient documentary evidence to establish the exact amount of gross receipts attributable to goods shipped out of state. The court noted that the evidence, which included estimates and post-period data, did not quantitatively support the refund claim for the relevant tax years.
Because the taxpayer failed to provide adequate documentary evidence of the amount of gross receipts for merchandise transported outside Ohio, the court affirmed the BTA’s decision denying the CAT refund. (Jones Apparel Group/Nine West Holdings v. Harris, Ohio S. Ct., Dkt. No. 2023-1288, 01/14/2026.)
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