Case Title: Mason Cos., Inc. v. Testa

Citation: 2016-Ohio-7768

Docket Number: 2015-0794

State: ohio

Court: Ohio Supreme Court

Date: 2016-11-17T00:00:00Z

Document:
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Mason Cos., Inc. v. Testa, Slip Opinion No. 2016-Ohio-7768.] 
 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in an 
advance sheet of the Ohio Official Reports.  Readers are requested to 
promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65 
South Front Street, Columbus, Ohio 43215, of any typographical or other 
formal errors in the opinion, in order that corrections may be made before 
the opinion is published. 
 
 
SLIP OPINION NO. 2016-OHIO-7768 
MASON COMPANIES, INC., APPELLANT AND CROSS-APPELLEE, v. TESTA, TAX 
COMMR., APPELLEE AND CROSS-APPELLANT. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Mason Cos., Inc. v. Testa, Slip Opinion No. 2016-Ohio-7768.] 
Commercial-activity tax—Commerce Clause—Physical presence of an interstate 
business within Ohio is not a necessary condition for imposing the 
obligations of the commercial-activity tax. 
(No. 2015-0794—Submitted May 3, 2016—Decided November 17, 2016.) 
APPEAL and CROSS-APPEAL from the Board of Tax Appeals, Nos. 2012-1169 and 
2012-2806. 
____________________ 
O’NEILL, J. 
{¶ 1} We decide this case as a companion case to Crutchfield Corp. v. Testa, 
__ Ohio St.3d __, 2016-Ohio-7760, __ N.E.3d __, with which this case was 
consolidated for purposes of oral argument.  Appellant and cross-appellee, Mason 
Companies, Inc., is based in Wisconsin, and it appeals from the imposition of 
SUPREME COURT OF OHIO 
 
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Ohio’s commercial-activity tax (“CAT”) on revenue it has earned from its sales of 
goods through orders received via telephone, mail, and the Internet.  Like 
Crutchfield, Mason Companies contests its CAT assessments because it operates 
outside Ohio, employs no personnel in Ohio, and maintains no facilities in Ohio. 
{¶ 2} The 24 assessments at issue here cover the period from July 1, 2005, 
through September 30, 2011.  In determining that our holding in Crutchfield 
requires us to affirm these assessments, we rely on Mason Companies’ decision to 
restrict its protest to the imposition of the tax, while not contesting the amounts of 
tax assessed, to conclude that Mason Companies satisfied the $500,000 sales-
receipts threshold, triggering its CAT liability during that period.  See R.C. 
5751.01(H)(3) and (I)(3).  Mason Companies, however, asserts that Ohio’s CAT 
violates the Commerce Clause of the United States Constitution and that therefore 
Ohio had no authority to tax any of those receipts. 
{¶ 3} Just as in Crutchfield, we first confront a cross-appeal by the tax 
commissioner concerning whether Mason Companies properly raised and 
preserved its constitutional challenge.  The circumstances of the present case being 
no different from those in Crutchfield, we resolve the cross-appeal against the tax 
commissioner’s position on the authority of Crutchfield.  Similarly, we rely on 
Crutchfield to reject Mason Companies’ contentions that the CAT statutes should 
be construed to preclude the assessments at issue in this appeal. 
{¶ 4} In Crutchfield, we held that under the Commerce Clause, the physical 
presence of an interstate business within Ohio was not a necessary condition for 
imposing the obligations of the CAT law, given that the $500,000 sales-receipts 
threshold adequately assured that the taxpayer’s nexus with Ohio was substantial 
pursuant to R.C. 5751.01(H)(3) and (I)(3).  Crutchfield Corp., __ Ohio St.3d __, 
2016-Ohio-7760, __ N.E.3d __, ¶ 3, 5.  Applying that holding here resolves Mason 
Companies’ constitutional challenge under the Commerce Clause.  It also makes 
January Term, 2016 
 
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unnecessary consideration of whether Mason Companies’ Internet contacts with its 
Ohio customers constituted a physical presence for Commerce Clause purposes. 
{¶ 5} For the foregoing reasons, we affirm the decision of the BTA and 
uphold the CAT assessments against Mason Companies. 
Decision affirmed. 
O’CONNOR, C.J., and PFEIFER, O’DONNELL, and FRENCH, JJ., concur. 
LANZINGER and KENNEDY, JJ., dissent and would reverse the decision of 
the Board of Tax Appeals for the reasons stated in the dissenting opinion in 2015-
0386, Crutchfield v. Testa. 
_________________ 
 
Brann & Isaacson, Martin I. Eisenstein, and David W. Berton; and Baker 
Hostetler and Edward J. Bernert, for appellant and cross-appellee. 
 
Michael DeWine, Attorney General, and Daniel W. Fausey and Christine 
Mesirow, Assistant Attorneys General, for appellee and cross-appellant. 
 
Macey, Wilenski & Hennings, L.L.C., and Peter G. Stathopoulos; and 
Robert Alt, urging reversal for amici curiae Buckeye Institute for Public Policy 
Solutions, Mackinac Center for Public Policy, NetChoice, and American Catalog 
Mailers Association, Inc. 
Fredrick Nicely and Nikki Dobay, urging reversal for amicus curiae Council 
on State Taxation. 
 
Goldstein & Russell, P.C., Eric F. Citron, and Thomas C. Goldstein, urging 
affirmance for amici curiae National Governors Association, National Conference 
of State Legislatures, Council of State Governments, National Association of 
Counties, National League of Cities, U.S. Conference of Mayors, International 
City/County Management Association, International Municipal Lawyers 
Association, and Government Finance Officers Association. 
SUPREME COURT OF OHIO 
 
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Bricker & Eckler, L.L.P., Mark A. Engel, and Anne Marie Sferra, urging 
affirmance for amici curiae Ohio Manufacturers’ Association, Ohio State Medical 
Association, Ohio Dental Association, and Ohio Chemistry Technology Council. 
 
Bruce Fort, urging affirmance for amicus curiae Multistate Tax 
Commission. 
_________________