On January 2, 2025, Ohio Governor Mike DeWine signed into law House Bill 315 (HB 315), providing Ohio Commercial Activity Tax (CAT) relief to automobile dealers with respect to recent Ohio Board of Tax Appeals (BTA) decisions.
Ohio HB 315 Background
In October of 2024, the BTA issued an opinion (Case No. 2022-422, Ohio Bd. Of Tax App. (10/23/24)), vacating an Ohio CAT) assessment and holding that because vehicle sales transactions occurred outside of Ohio, the gross receipts from these sales were not sitused to Ohio and were not subject to Ohio’s CAT, even though the purchaser subsequently brought the automobile into Ohio. Specifically, Straub Nissan, LLC (Straub), a Wheeling West Virginia auto dealership, was not required to include in its Ohio CAT gross receipts its sales to Ohio residents who transported the vehicle to Ohio.
While not expressly mentioned in the BTA’s opinion, the logical result of this opinion would require Ohio auto dealers to include sales to out-of-state customers in their Ohio CAT receipts, potentially leading to substantial increases in a dealership’s Ohio CAT liability. The Ohio Department of Taxation (Department) may provide additional clarification on this point closer to HB 315’s effective date.
What is HB 315
HB 315 clarifies the sourcing of motor vehicles that are intended to be transported out of state. Specifically, gross receipts from the sale or lease of a motor vehicle are to be sitused to Ohio only if the motor vehicle is issued a certificate of title evidencing the owner or lessee’s address is in the state. In other words, the sale of a motor vehicle from an out-of-state dealership to an Ohio resident who will title the vehicle in Ohio under an Ohio address, similar to the facts in the Straub case, will be included in Ohio CAT gross receipts. Sales from Ohio dealerships to out-of-state customers who will title the vehicle under an address outside of Ohio will not be included in Ohio gross receipts for CAT purposes.
Our Thoughts On HB 315
HB 315 provides resolution to the Straub decisions and welcome relief to Ohio auto dealers making sales to out-of-state customers, as these sales are likely not included in Ohio CAT gross receipts. However, HB 315 does not provide specific guidance on the sourcing of receipts for dealers making sales from out-of-state dealerships to Ohio residents who will title the vehicle in Ohio, though it is likely these receipts would be sourced to Ohio for CAT purposes. Out-of-state dealerships should continue to monitor guidance from the Department with respect to these sales.
In light HB 315, automobile dealerships should analyze their out-of-state sales to determine if they properly reflect the updated legislation with respect to CAT receipts situsing. The Schneider Downs State and Local Tax (SALT) practice is equipped to help you evaluate the impact of these revenue situsing changes on your Ohio CAT filings. Please direct inquiries to Stephen Worth, Schneider Downs State & Local Tax Practice Leader at [email protected].
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