Ohio Tax - Manufacturers' Education Council

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LL Bean Case / Constitutional Nexus Challenges • L.L. Bean, Inc. – Certificate of Final Determination • Issued August 10, 2010 • L.L. Bean acknowledged receipts in excess of $500,000 annually to customers located in Ohio • L.L. L Bean argued that it did not have a physical presence and the imposition of the CAT violated the Commerce Clause • Commissioner determined that substantial nexus existed as a result of the “continuous, systematic, and significant exploitation of the economic marketplace in Ohio” • Commissioner reserved ruling on the assertion that the company lacked physical presence, and will render findings on this issue if an adverse ruling is issued by the BTA and the case is remanded • L.L. Bean has appealed to Board of Tax Appeals • First case challenging the constitutionality of the CAT nexus standard • Anticipated 4-5 year time frame for BTA decision 7
LL Bean Case / Constitutional Nexus Challenges • What are the implications of the L.L. Bean case to person’s in similar situations that meet the $500,000 receipts Bright Line nexus threshold but don’t have physical presence • Persons identified by the state – audit & assessment process • No abeyance procedures • Audits and assessments are not being held in abeyance • Petitions for Reassessment required to protest • Certificates of Final Determination are not being held in abeyance • Appeal to the BTA may be required • Likely held in abeyance at BTA level • Taxpayer Options • Registration and payment – may be followed by protective refund claims • Registration and filing (with actual receipts) but no payment (protest) – immediate assessments issued with 20% penalties for failure to file and failure to pay • No registration (full protest) – additional 35% failure to register penalties imposed 8
Page 1 and 2: Ohio Tax Workshop S Ohio CAT, Nexus
Page 3 and 4: Biographical Information Laura M. S
Page 5 and 6: Presenters Michael Baker • State
Page 7 and 8: LL Bean Case / Constitutional Nexus
Page 9: LL Bean Case / Constitutional Nexus
Page 13 and 14: LL Bean Case / Constitutional Nexus
Page 15 and 16: Filing Group Issues 12
Page 17 and 18: Filing Group Issues • Changes in
Page 19 and 20: Filing Group Issues Comparison of C
Page 21 and 22: Filing Group Issues • Complex Fil
Page 23 and 24: Filing Group Issues • Complex Fil
Page 25 and 26: Example MG-1 K J Taxpayer initially
Page 27 and 28: Types of Gross Receipts (See Append
Page 29 and 30: Sourcing Issues 26
Page 31 and 32: Sourcing Issues • Intangibles - O
Page 33 and 34: Sourcing Issues • Services - ORC
Page 35 and 36: Sourcing Issues • Tangible Person
Page 37 and 38: Sourcing Issues • Tangible Person
Page 39 and 40: Miscellaneous Issues 36
Page 41 and 42: Administrative Update - Voluntary D
Page 43 and 44: Administrative Update - Penalties
Page 45 and 46: Contact Information Michael Baker,
Page 47 and 48: 2011 Ohio Tax Conference Ohio Comme
Page 55 and 56: 11. Government contracts 2011 Ohio
Page 59 and 60: 32. Oil Exchanges 2011 Ohio Tax Con
Page 61 and 62:
42. Rewards points program 2011 Ohi
Page 63 and 64:
52. Foreign common owner 2011 Ohio
Page 65 and 66:
2011 Ohio Tax Conference Ohio Comme
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Ohio Tax - Manufacturers' Education Council

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