The U.S. Court of Appeals for the Eighth Circuit today affirmed a federal district court, and concluded that the federal court lacked subject matter jurisdiction over a Missouri company's challenge to the imposition of Ohio Commercial Activity Tax on goods manufactured and shipped into Ohio.
The case is Diversified Ingredients, Inc. v. Testa, No. 16-2791 (8th Cir. January 23, 2017). Read the Eighth Circuit decision [PDF 73 KB]
The Ohio Department of Taxation assessed a Missouri corporation as owing over $561,000 in unpaid tax, penalties, and interest under Ohio's Commercial Activity Tax (CAT). The CAT is an annual tax imposed on the privilege of doing business in Ohio and is based on a company’s gross receipts sitused to the state. The company filed suit in federal district court seeking an order enjoining Ohio from asserting jurisdiction to assess and collect the CAT on its sales of goods manufactured and shipped from outside Ohio to locations within the state. The company argued that Public Law 86-272 precluded Ohio from taxing receipts from sales of goods delivered to locations within Ohio. The district court dismissed the action, finding it was barred by the Tax Injunction Act and by the principles of comity that bar federal courts from entertaining claims for relief that would affect state tax administration. The Eighth Circuit today affirmed.
© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.