Cleveland and Cincinnati TEI chapters meet with Ohio Department of Revenue.

• Position: Chapter News

On July 21, members of TEI's Cleveland and Cincinnati Chapters attended their annual liaison meeting with the Ohio Department of Taxation. The TEI contingent sat down with high-level department personnel including Commissioner Rich Levin and many of his direct reports. Participants discussed the state budget, the commercial activities tax (CAT), the State's sales and use tax, and other issues. "We wanted to cover the issues most important to the members in our chapters, and we were able engage in substantive discussions with the Department representatives on those subjects," said Cleveland Chapter member Vince Magnacca of The Goodyear Tire and Rubber Company.

passing a balanced budget has become a challenge for States as tax revenues have continued their rapid decline. The Department representatives reported, however, that Ohio passed its budget without significant changes to its major taxes (i.e., the CAT, and the sales and use tax). On the spending side, the Ohio Board of Tax Appeals saw its budget reduced by 50 percent, prompting the Board to reduce its legal staff from six to two. This reduction in attorneys will significantly slow the progress of cases moving through that office.

The Department also discussed an important case pending before the Ohio Supreme Court that could significantly affect the application of the CAT. In Ohio Grocers Association v. Ohio Tax Commissioner, the taxpayer is arguing that the CAT is essentially a sales tax since the tax is imposed on total gross receipts. Under Ohio's constitution, the State may not impose a sales tax on sales of certain foods. The lower court agreed with the taxpayer holding that the CAT was unconstitutional as applied to sales of food. Overstock. com has taken this argument a step further arguing that, if the CAT is held to be a sales tax, physical presence is required for Ohio to assert nexus under Quill Corp. v. North Dakota.

If Overstock prevails, it would upend the Ohio statute...