Central Transport, Inc. v. Tracy

Cook, J.,

dissenting. I respectfully dissent. The decision of the BTA should be reversed and Central Transport found not liable for these assessments because the required “substantial nexus” with Ohio is absent.

As this court stated in Norandex, Inc. v. Limbach (1994), 69 Ohio St.3d 26, 29, 630 N.E.2d 329, 332, in order for Ohio to impose a tax, a taxable event must occur and the four-prong test of Complete Auto Transit, Inc. v. Brady (1977), 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326, must be satisfied.

Although it can be argued that a taxable event as to the disputed property occurred in Ohio when Central took title to and possession of the property at the Toledo facility, such a finding is not enough to allow Ohio to collect a tax. The court must further find, under the first prong of the Complete Auto Transit test, that the taxed activity has a substantial nexus with the taxing state. In Norandex, the company’s Cleveland office placed the order for the disputed property. In support of its finding of the substantial nexus, the Norandex court cited the following facts: The Cleveland office of “Norandex set up the ordering system and controlled the branch employees who ordered and ultimately obtained the cases. It centrally ordered the cases, received them, and controlled their disposition. These exercises of ownership and control over these cases, the taxed activities, happened in Ohio and satisfied the substantial nexus prong.” Norandex, 69 Ohio St.3d at 31, 630 N.E.2d at 333.

Unlike the property in Norandex, the Central Transport property merely passed through the Toledo terminal during, and as part of, an interstate commerce transportation process. Central made the purchases from its principal place of business in Michigan. The property, when it arrived at the cross-dock in Toledo, was not opened or stored because Central’s Toledo terminal was a truck-to-truck operation. The property in its original packaging was immediately *299placed on an outgoing truck headed for the out-of-state destination as previously directed by the principal office in Michigan. Moreover, because Central made its determination as to where items would be delivered in Michigan at the time of the purchase, the workers at the cross-dock did not decide where to ship the property.

Accordingly, I would hold that the decision of the BTA is unreasonable and would reverse that decision.

Wright and Pfeifer, JJ., concur in the foregoing dissenting opinion.