Crutchfield Corp. v. Testa

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The tax commissioner issued commercial-activity tax (CAT) assessments against the Crutchfield Corporation on revenue it earned from sales of electronic products that it shipped from the state of Ohio. Crutchfield, whose business in Ohio consisted solely of shipping goods from outside the state to its consumers in Ohio using the United States Postal Service or common-carrier delivery services, challenged the issuance of CAT assessments against it, arguing that Ohio may not impose a tax on the gross receipts associated with its sales to Ohio consumers because Crutchfield lacks a “substantial nexus” with Ohio. Citing case law interpreting this substantial-nexus requirement, Crutchfield argued that its nexus to Ohio was not sufficiently substantial because it lacked a “physical presence” in Ohio. The Board of Tax Appeals (BTA) affirmed the assessments issued by the tax commissioner. The Supreme Court affirmed the decision of the BTA and upheld the CAT assessments against Crutchfield, holding (1) the physical presence requirement recognized by the United States Supreme Court for purposes of use-tax collection does not extend to business-privileges taxes such as the CAT; and (2) the statutory threshold of $500,000 of Ohio sales constitutes a sufficient guarantee of the substantiality of an Ohio nexus for purposes of the dormant Commerce Clause. View "Crutchfield Corp. v. Testa" on Justia Law