Mockensturm, Ltd.
Have Tax Questions? Talk To One Of Our Experienced Professionals.
P: 419-442-7764 TF: 800-718-0722

Is the CAT out of the bag?

This week, the Ohio Supreme court heard oral arguments in a case that one of the justices suggest will not be decided with their decision. The question involves the Ohio Commercial Activity Tax and the state's imposition of it on out-of-state retailers.

A state's authority to tax a business or an individual is typically tied to that person or entity's contacts with the state. For in-state businesses, the contacts are obvious. Traditionally, out-of-state retailers have been immune from taxation from states where they have no significant contacts. This usually means they have no physical assets located in the state, like stores, warehouses, factories or sales people.

Ohio, like most states, is interested in obtaining a cut of the immense volume of dollars that now flow through online retailers. Ohio's solution was the creation of the Commercial Activity Tax, which it claims is a tax on the privilege of doing business in Ohio. In this case, the "privilege" appears to be the privilege of being taxed by the Department of Taxation.

Ohio also argued that the online retailers use of some businesses that have assets in Ohio also qualify as part of the equation of contacts that provide the authority to tax. The difficulty of this argument is that it would seemingly mean an endless search for connections, no matter how tenuous, to locate taxing authority.

Such a ruling would create a completely new meaning to the words "tax planning" for businesses that sold products across state lines.

No matter the ruling, it is likely the losing side will appeal and that the U.S. Supreme Court will ultimately decide this issue.

Source:, " Ohio's Commercial Activity Tax," Karen Kasler, May 4, 2016

No Comments

Leave a comment
Comment Information
Email Us For A Response

Start Here by Contacting Us

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

P: 419-442-7764 | TF: 800-718-0722 | F: 419-724-3495 |

1119 Adams Street
Floor 1
Toledo, OH 43604

Toll Free: 800-718-0722
Phone: 419-442-7764
Fax: 419-724-3495
Map & Directions