On January 14, 2026, the Ohio Supreme Court upheld the Board of Tax Appeals’ (BTA) denial of a Jones Apparel Group/Nine West Holdings refund claim for Commercial Activity Taxes (CAT) paid on goods that were sold to a customer that maintained its sole distribution center in Columbus, Ohio, but which were ultimately sold outside of Ohio. In upholding the BTA’s decision, the Court concluded that the company did not provide sufficient evidence to establish the amount of goods that were ultimately shipped outside of Ohio, for which the company may have been entitled to a tax refund. In its decision, the Court emphasized that the company failed to provide sufficient evidence as to a quantitative showing of the amount of gross receipts that could be used to calculate a refund.
In Jones Apparel Group/Nine West Holdings v. Harris, Slip Opinion No. 2026-Ohio-74, the appellant, Jones Apparel Group/Nine West Holdings filed a refund claim with appellee, the Tax Commissioner of Ohio, requesting a refund of Commercial Activity Taxes it paid with respect to a portion of merchandise that was sold and shipped to its customer’s distribution center in Ohio. While all of the merchandise was received at its distribution center in Ohio, large portions of the merchandise where shipped to the customers stores outside of Ohio. Jones Apparel Group argued that because certain merchandise was ultimately shipped outside of the state of Ohio, that merchandise was therefore exempt from Ohio CAT. The Tax Commissioner denied the claim for a refund, which the Board of Tax Appeals confirmed. Consequently, the appellant brought an appeal to the Ohio Supreme Court for reconsideration of the Board of Tax Appeals decision.
At issue in the case was the amount and type of evidence required to satisfy the requirements of R.C. 5751.08(A) with respect to the requirement that an applicant for a refund based on taxes that are overpaid, paid illegally or erroneously be supported by documentation. As evidence for its argument, Jones Apparel provided testimony, as well as Form 10-K’s filed by its customer with the United States Securities and Exchange Commission, which Jones Apparel contended proved that a significant amount of the merchandise was ultimately sold outside of Ohio. The evidence, however, was severely lacking quantitatively, as Jones Apparel never provided evidence of the actual amount of the claimed refund. In holding that Jones Apparel failed to provide sufficient evidence to justify the issuance of a refund, the Court held that “[b]y using the word ‘amount, R.C. 5751.08(A) contemplated that the taxpayer must make a quantitative showing of the amount of the claimed refund with documentary evidence that justifies the issuance of a refund.”
While the Court found that the evidence presented by Jones Apparel was sufficient to prove that some portion of the merchandise that was sold ended up outside of Ohio, Jones Apparel was required to provide sufficient evidence to establish the actual amount of gross receipts for the merchandise that was actually transported outside of Ohio. Having found that Jones Apparel’s evidence fell short of the evidentiary showing necessary to prove the amount of the claimed refund, the Court affirmed the Board of Tax Appeals ruling that Jones Apparel was not entitled to its claimed CAT refund.
This case will likely impact how businesses track their sales of goods that are shipped to Ohio but ultimately sold outside of the state, which will play an important role in avoiding taxation in multiple states for the same sale of goods. It is extremely important for business in Ohio to both provide and collect sufficient information related to CAT taxes and their associated refunds.
