Tax insight

Ohio Supreme Court rejects CAT refund claim for lack of evidence that goods were transported out of state

Insight
5 minute read
February 18, 2026

What happened?

The Ohio Supreme Court held that products shipped to an in-state distribution center for subsequent shipment to the purchaser’s retail locations inside and outside of Ohio were properly sitused to Ohio for Commercial Activity Tax (CAT) purposes because the taxpayer did not establish where the purchaser received the property after all transportation was complete.

[Jones Apparel Group/Nine West Holdings v. Harris, Ohio S.Ct., No. 2026-Ohio-74, 1/14/2026]

Why is it relevant?

The court rejected the tax commissioner’s argument that shipping labels and bills of lading identifying Ohio as the delivery location is not in itself determinative, and the taxpayer may produce other evidence regarding where the purchaser receives the goods "after all transportation is complete.” This provides taxpayers a potential avenue for obtaining refunds in situations where the purchaser utilizes Ohio distribution centers and subsequently ships the goods to its stores outside the state.

Actions to consider

Because the decision ultimately went against the taxpayer because of failure to document the ultimate destination of the goods, it is important for taxpayers in similar situations to obtain and manage data tying directly to the shipment of the goods generating the receipts subject to CAT.