Ohio Tax - Manufacturers' Education Council

2011 Ohio Tax Conference
Ohio Commercial Activity Tax (CAT) Audit Experiences
Appendix A
The third party can also provide flights to unrelated parties as well using the taxpayer’s airplanes.
The airplanes are hangered in Ohio, but are flown throughout the country. The Department
determined that 100% of the gross receipts are sitused to Ohio as the airplanes are hangered in
Ohio.
37. Trademarks/Royalties
Taxpayers have attempted to situs trademarks/royalties using a corporate headquarters test. The
Department has not been receptive to this type of situsing and has requested that the taxpayers
provide information that indicates where the trademarks/royalties are being used [see R.C.
5751.033(F)].
38. Situsing of contract manufacturing
The taxpayer, which has a division that does contract manufacturing, did not include the contract
manufacturing receipts in its CAT filing. The Department attempted to situs the receipts based on
the taxpayer’s manufacturing facilities (SC and OH) since the taxpayer indicated it did not know
where they were shipping the product. After the taxpayer calculated the amount of tax due based
on that situsing approach, the taxpayer found the information as to where the product was
shipped. The taxpayer needed to include as taxable gross receipts all products shipped into Ohio
from both its Ohio and South Carolina locations.
39. “Shipped from” v. “shipped to”
The taxpayer utilized its “shipped from” location when situsing sales of tangible personal
property for its CAT filings. Under audit, the Department determined that the “shipped to”
location was the proper way to situs the taxpayer’s gross receipts relating to sales of tangible
personal property.
40. Sales office v. job site
The taxpayer, an employer service provider, utilized its sales office as the means to situs its gross
receipts from the sale of employment services. The Department determined that the job site (or
post of duty) was the proper method to situs gross receipts from the sale of employment services.
41. Repair receipts
The taxpayer installed its product in Ohio for its customer. The product subsequently needed
repaired and the taxpayer’s customer sent the product back to the taxpayer to be repaired in
Pennsylvania. The taxpayer sent the repaired product back to the customer in Ohio. The taxpayer
sitused the repair receipts to Pennsylvania. The Department determined that the benefit of the
repair service was received by the customer in Ohio. As a result, the Department picked up the
repair services as a taxable gross receipt. [See OAC 5703-29-17(44)]
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