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Three recent decisions by the Ohio Supreme Court confirm that out-of-state businesses selling goods online to buyers in Ohio can be subject to the state’s Commercial Activity Tax (“CAT”) even if such sales were not subject to Ohio sales or use tax.  The three cases include: Crutchfield Corp. v. Testa, Slip Opinion No. 2016-Ohio-7760; Mason Companies, Inc. v. Testa, Slip Opinion No. 2016-Ohio-7768; Newegg, Inc. v. Testa, Slip Opinion No. 2016-Ohio-7762.


None of the businesses had any physical presence in Ohio such as an office or warehouse.  The businesses did make multi-million dollar online retail sales to Ohio consumers.  In a 5-2 decision, the Ohio Supreme Court ruled that the out-of-state sellers were subject to the CAT.  The Court recognized that in order to impose sales taxes on an out-of-state vendor the vendor had to have a physical presence within Ohio.  The Court went on to state, however, that the United States Supreme Court has never extended the physical presence requirement to business taxes such as the CAT.  The businesses involved in the case may appeal to the United States Supreme Court.


If you have any questions about this topic, feel free to contact Dana Rose or your Weston Hurd attorney.


Dana A. Rose, Esq.

Weston Hurd LLP

 1301 East 9th Street, Suite 1900

Cleveland, Ohio 44114-1862

p: 216.687.3342; f: 216.621.8369