Businesses of all sorts provide “free” promotional items to their clients and customers. When businesses purchase these promotional items from vendors to be used as giveaways, they may or may not be paying Ohio sales tax on the items. A recent Ohio Supreme Court case indicates that businesses might not be obligated to pay sales taxes on the purchase of promotional items. In Cincinnati Reds, LLC v. Testa (November 21, 2018), Slip Op. 2018-Ohio-4669, the Court ruled that the Cincinnati Reds baseball club was not obligated to pay sales or use tax on its purchase of “bobblehead dolls,” which the Reds in turn gave away to ticket buyers. Using logic favoring the taxpayer, the Court ruled that the bobbleheads qualified for the purchase for resale exemption to sales tax and were therefore not subject to sales tax.
Promotional giveaways to customers, clients and other people include anything and everything from coffee mugs and golf balls to pens and flash drives. Sellers and purchasers of these promotional items may benefit from this court decision and should review the status of sales tax payments with regard to such items.
Dana A. Rose