[Until this opinion appears in the Ohio Official Reports advanc e sheets, it may be cited as Defender Sec. Co. v. McClain , Slip Opinion No. 2020-Ohio-4594.]

NOTICE This slip opinion is subject to f ormal revision before it is pu blished in an advance sheet of the Ohio Official Reports. Readers are reques ted to promptly notify the Reporter of Decisions, Supreme Court of Ohi o, 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.

S LIP O PINION N O
. 2020-O HIO -4594
D EFENDER S ECURITY C OMPANY , A PPELLANT , v . M C C LAIN , T AX C OMMR ., A PPELLEE . [Until this opinion appears in t he Ohio Official Reports advanc e sheets, it may be cited as Defender Sec. Co. v. McClain , Slip Opinion No. 2020-Ohio-4594.] Taxation—Commercial-activity tax—Gr oss receipts—R.C. 5751.033(I)—Situs is established where intangible contract rights are used or their benefit is received—Court of appeals’ judgment reversed and cause remanded to the tax commissioner for issuance of refunds. (No. 2019-0531—Submitted April 28, 2020— Decided September 29, 2 020.)
A PPEAL from the Court of Appeals fo r Franklin County, No. 18AP-238,
2019-Ohio-725.

____________________ O’C ONNOR , C.J. {¶ 1} Appellant, Defender Security Co., claims entitlement to a $73,3 34.82 refund of the commercial activit y tax (“CAT”) that it paid on g ross receipts earnedS UPREME C OURT OF O HIO

2 between January 2011 and December 2013. The CAT is imposed on gross receipts derived from income-producing activity in Ohio, and the receipt s at issue in this case consisted of payments made by ADT Security Services, Inc. to Defender. Appellee, tax commissioner, and later the Board of Tax Appeals (“BTA”) and the Franklin County Court of Appeals all concluded that the receipt s were Ohio-taxable receipts under the CAT law. We reverse and remand to the tax c ommissioner to
issue refunds.
I. RELEVANT BACKGROUND {¶ 2} ADT provides security services to residential and commercial property owners throughout the c ountry. ADT enters into alarm- services contracts with its customers and provides remote monitoring services by r eceiving information from security equipment installed at customers’ pro perties. When an alarm is triggered, ADT contacts the customer and the police or fire authorities. {¶ 3} Defender is an Indianapolis-based company whose business consis ts of serving as an “authorized dealer” of ADT under an Authorized Dealer Agreement (the “master agreement”). Pursuant to the master agr eement, Defender acts “exclusively” in its relationship to ADT, but it is not an agent of ADT. Defender (1) generates leads for new ADT customers through adve rtising, (2) installs equipment at the Ohio property of new customers, for w hich it collects and retains a fee, and (3) at time of installation, signs an alarm- services contract with Ohio customers under which ADT p rovides security-monitoring ser vices to the
Ohio customer. {¶ 4} Within Ohio, Defender operates f our branch locations: Cincinnat i, Columbus, Toledo, and Akron. But executive and administrative staff work is performed in Indiana at Defende r’s Indianapolis headquarters. ADT interacts with
both Defender and with Ohio custo mers from locations outside Oh io. {¶ 5} Defender collects new Ohio alarm-services contracts at its Indianapolis headquarters and forwards them to ADT’s dealer-sup port unit inJanuary Term, 2020

3 Aurora, Colorado. ADT decides whether to take assignment of ea ch contract. The gross receipts at issue consist of payments ADT makes to Defend er when ADT has accepted assignment of a customer contract. In 5 to 6 percent of instances, ADT rejects assignment of the contract and the customer pays Defend er for securitymonitoring services provided by ADT. In all instances, ADT pro vides securitymonitoring services to Ohio customers from one of six monitorin g locations, all
outside Ohio. {¶ 6} These transactions lead to three types of revenue sources for Defender: (1) payments made by Ohio customers to Defender for t he cost and
installation of alarm-services e quipment, (2) payments made by Ohio customers to Defender under the alarm-services contracts that are not accept ed by ADT, and (3) payments made by ADT to Defender under the master agreement as consideration for ADT’s purchase of Ohio alarm-services contracts from Defend er. There is no dispute as to the first two: Defender pays the CAT on the fees it obtains from Ohio customers for installing equipment and for alarm services when ADT does not purchase the contract. Only the third category, which we refer to as “ADT funding,” is at issue.
II. COURSE OF PROCEEDINGS {¶ 7} Defender’s refund claim seeks the return of $73,334.82 for the quarterly tax periods during calendar years 2011, 2012, and 201 3. To document the amount of refund, Defender s ubmitted two summary documents but did not submit the business records underlying those summaries. First, Defender submitted a spreadsheet showing, for each quarter, the amount of “ADT fun ding,” the CAT rate of tax, and the resulting amount of refund claimed. Secon d, Defender submitted a spreadsheet showing, for each quarter, the total ta xable gross receipts reported on Defender’s CAT retur n, the CAT amount paid, the tax able gross receipts “per refund claim,” and t he amount of the CAT claimed as refund.S UPREME C OURT OF O HIO

4 {¶ 8} The tax commissioner denied the refund claim. He noted that Defender “seeks a refund for CAT it paid with respect to the Al arm Services Contract-fees it received from ADT,” but he did not question th e sufficiency of the
documentation of the refund amount s. The final determination a lso stated that
Defender “obtains customer relati onships for ADT” for which “AD T pays [Defender] a fee.” The commissi oner concluded that Defender’s purchaser, ADT,
“realizes the benefit of the Ohi o-based Alarm Services Contract s in Ohio,” reasoning that “[w]ithout Ohio, the Alarm Services Contract-fee s at issue would be wholly impossible,” with the result that “ADT’s benefit with re spect to these Alarm Services Contract-fees must occur entirely within Ohio.” {¶ 9} The final determination also rejected Defender’s alternative cl aim that it could situs the receipts at ADT’s principal place of busines s in Colorado under Ohio Adm.Code 5703-29-17(C)(4)(c), which authorizes an agent wh o is a taxpayer to elect apportionment to the “principal place of business” of its principal. The commissioner found that Defender did not qualify as an “agent” under the CAT law, and Defender did not cont est that finding on appeal. {¶ 10} On appeal, the BTA held a hearing at which Defender’s corporate
controller testified that she v erified the claimed refund amoun ts by reviewing the
internal business records on which the calculation of the refun d amounts was based. {¶ 11} The BTA agreed with the tax commissioner’s conclusion that the proper situs of ADT funding should be Ohio inasmuch as “[i]t be lies logic to argue that the purchaser (ADT) receives no benefit in Ohio from the c ontracts it purchases from Defender,” given that both Defender’s obtaining and ADT’s servicing of the contracts involves property in Ohio. BTA No. 2016-1030, 2018 W L 1372720 (Mar. 6, 2018), at *3. In support, the BTA cited provisions of Ohio Adm.Code 5703-29-17(C) that involve services rendered with respect to pr operty located in Ohio, such as appraisal services (division (5)), architecture s ervices (division (6)), and engineering services (division (20)). BTA No. 2016-1030, 2 018 WL 1372720,January Term, 2020

5 at *3. The BTA also stated that, in light of its ruling on the merits, it did not need to “further address the Tax Commissioner’s arguments about the sufficiency of the documentation underlying Defender’s refund claim.” Id. at *4. The BTA affirmed
the commissioner’s denial of the refund claim. Id. {¶ 12} Defender appealed to the Franklin County Court of Appeals, which affirmed the BTA’s decision. 2019-Ohio-725, ¶ 30. The court al so held that the tax’s imposition did not viola te the Commerce Clause. Id . at ¶ 42, 49-51. {¶ 13} Defender appealed to this court. We allowed jurisdiction as to three propositions of law:

1. The appellate standard of r eview for legal questions addressed by the Board of Tax Appeals is de novo, without
deference to the Tax Commissi oner’s determina tion thereof. 2. Gross receipts from the sale of intangible assets are sourced to the purchaser’s physical location(s) that receive an d use the assets, not the location where the assets were originated. Therefore, Defender’s receipts from the sale of Alarm Services Contracts to ADT are sitused to ADT’s physical locations outsid e Ohio where it received the Alarm Services Contracts and utilize d such Contracts by performing mon itoring services for consumers. 3. The significant risk of double taxation caused by the Tax Commissioner’s conflicting applications of R.C. 5751.033(I) violates the fair apportionmen t requirement of the dormant
Commerce Clause of the United States Constitution.

III. SUFFICIENT EVIDENCE S UPPORTS THE REFUND CLAIM {¶ 14} Before turning to the propositions of law, we consider the tax commissioner’s argument that we should dismiss this appeal as i mprovidentlyS UPREME C OURT OF O HIO

6 allowed on the grounds that “Defender never offered business re cords to show what it paid on account of its sales of Ohio contracts to ADT.” Our review of the record persuades us that the documentation and testimony are sufficien t to justify our
consideration of the substantive issues. {¶ 15} Defender presented summary doc uments showing its CAT payments relating to the receipts at issue and then, at the BTA hearing, presented the testimony of its corporate controller to verify the summary doc uments in light of underlying records. Given this, we see no reason why the absen ce of primary
documentation should deter us from reaching the legal issues wh en it did not deter the commissioner himself, in his final determination, from doin g so without any suggestion of a defect in the evidence. Thus, we conclude that dismissal on evidentiary grounds would be ina ppropriate under these circumst ances. IV. ANALYSIS A. The court of appeals correctl y reviewed the legal issues de novo without
deference to the tax commissioner {¶ 16} Defender’s first proposition of l aw asserts that the appellate standard of review for legal questions a ddressed by the BTA is de novo, without deference
to the tax commissioner’s determin ation. Defender maintains th at the court of appeals “erred by affording great deference to the Tax Commissi oner’s determination” regarding the proper situs under R.C. 5751.033(I ). See Progressive Plastics, Inc. v. Testa , 133 Ohio St.3d 490, 2012-Ohio-4759, 979 N.E.2d 280, ¶ 15 (“the proper construction and app lication” of tax statutes “pre sents a question of law, and our review in that regard is not deferential but de no vo”). While we do not dispute the applicability of the legal rule stated in Progressive Plastics , we disagree with the premise of Def ender’s argument on this point. {¶ 17} The court of appeals’ decision s hows that the court decided the legal
issue itself without deference to the tax commissioner’s determ ination. The court of appeals stated as follows:January Term, 2020

7 Based on our de novo review of the record , we find the
commissioner’s final determination to be reasonable and wellreasoned. W e adopt his findings that D efender was not an agent of ADT, that the provisions of Ohio Adm.Code 5703-29-17(C)(4)(c) are inapplicable to this matter, and that ADT’s benefit with re spect to the Alarm Services Contract-fees occurred entirely in Ohio. We find, as a matter of law , that Defender’s gross receipts from selling the Ohio-based contracts to ADT are sitused in Ohio and, theref ore, subject to Ohio’s CAT.

(Emphasis added.) 2019-Ohio- 725 at ¶ 30. Because the court of appeals, in accordance with our case law, did apply a de novo standard of r eview, we find Defender’s argument under the first proposition of law to be wi thout merit. B. Under R.C. 5751.033(I), the sit us of “ADT fundi ng” receipts is ADT’s physical locations outside Ohio {¶ 18} Defender’s second proposition of l aw presents the substantive t ax issue in this appeal. Ohio’s CAT is “levied * * * on each pers on with taxable gross receipts for the privilege of doing business in this state.” R .C. 5751.02(A). Because
business is conducted across stat e and international boundaries , imposing the tax often raises the thorny issue of how to properly allocate recei pts to Ohio for taxation. The CAT law defines “[t]axable gross receipts” as “g ross receipts sitused
to this state under section 5751.033 of the Revised Code.” R.C . 5751.01(G). {¶ 19} The parties agree that R.C. 5751.033(I) applies to the gross re ceipts at issue. The statute provides a catch-all situs for “gross re ceipts not otherwise sitused under this section,” and it states that such receipts “ shall be sitused to this state in the proportion that the purchaser’s benefit in this st ate with respect to what was purchased bears to the purchaser’s benefit everywhere with respect to whatS UPREME C OURT OF O HIO

8 was purchased.” In determining that ratio, the statute further provides that “[t]he physical location where the purchaser ultimately uses or receiv es the benefit of what was purchased shall be paramount in determining the propor tion of the benefit
in this state to the be nefit everywhere.” Id. {¶ 20} Reduced to its essence, Defender’s second proposition of law presents the following question: Do Defender’s ADT-funding rece ipts have their
situs within Ohio or outside Ohio under R.C. 5751.033(I)? The determination of situs under the statutory standa rd involves an “ ‘inference of an ultimate fact’ ” from the basic facts shown by the evidence. Marc Glassman, Inc. v. Levin , 119 Ohio St.3d 254, 2008-Ohio-3819, 893 N.E.2d 476, ¶ 7, quoting Ace Steel Baling, Inc. v. Porterfield , 19 Ohio St.2d 137, 142, 249 N.E.2d 892 (1969). And the
reasonableness of the inference from basic facts to an ultimate fact is a question of
law on review. SFZ Transp., Inc. v. Limbach , 66 Ohio St.3d 602, 604-605, 613 N.E.2d 1037 (1993).

1. R.C. 5751.033(I) establishes situs at ADT’s physical locations outside Ohio {¶ 21} Under R.C. 5751.033(I), the “paramount” consideration when determining the proportion of the benefit attributed to Ohio is “[t] he physical location where the purchaser [ADT in this case] ultimately uses or receives the
benefit of what was purchased.” Defender argues that ADT purchased intangible contract rights and that ADT’s p hysical locations outside Ohio are the places where ADT actually used and received the benefit of those contractual rights. We agree with Defender, and we conclude t hat the tax commissioner, the B TA, and the court of appeals all failed to properl y distinguish between the benef it Ohio consumers received from ADT and the benefit ADT received by purchasing co nsumer contracts from Defender. {¶ 22} What ADT’s customers acquired was the benefit of ADT’s security
services in relation to their O hio properties, and their paymen ts for those services were Ohio taxable receipts under R.C. 5751.033(I). By contrast , what ADTJanuary Term, 2020

9 purchased from Defender consisted of intangible contract rights , and the benefit derived from the purchase lay in receiving payments from Ohio c ustomers in consideration for ADT providing the contracted-for monitoring s ervices from its
locations outside Ohio. {¶ 23} The contrast of physical locations is stark. On the one hand, the physical locations at which ADT’s customers use and receive the benefit of ADT’s monitoring services are the Ohio properties protected by ADT. On the other hand, the physical locations at which ADT uses and receives the benef it of its contracts are ADT’s physical locations where it receives customer payment s and performs services for Ohio customers—all of which, on this record, are o utside Ohio. Because ADT uses and receives the benefit of the contracts it p urchased from Defender outside Ohio, Defender’s receipts from the sale of tho se contracts are not sitused to Ohio under R.C. 5751.033(I). 2. Ohio Adm.Code 5703-29-17 does not apply, nor does it furnish valuable analogies, because ADT purchases c ontracts rather than services {¶ 24} R.C. 5751.033(K) specifically authorizes the tax commissioner t o

“ adopt rules to provide additional guidance to the application o f this section, and provide alternative methods of situsing gross receipts that app ly to all persons, or subset of persons, that are engaged in similar business or trad e activities.” With respect to applying division (I) of R.C. 5751.033, the commissi oner has exercised this power by promulgating Ohio Adm.Code 5703-29-17. {¶ 25} By its terms, the administrative rule addresses services, not intangible contract rights. Division (A) states a general rule about situsing receipts from services, division (B) define s terms and states some gener al principles concerning the situsing of servi ces, and division (C) gives spe cific examples of how to determine the situs of receipts from enumerated services. I n light of this, the tax commissioner himself categorically states in his brief that “th e regulation is
irrelevant because it relates to services, not intangibles.” T his observation accordsS UPREME C OURT OF O HIO

10 with Defender’s emphasis on the tr ansactions as sales of intang ible assets and, on the record before us, we agree. {¶ 26} To be sure, Defender engages in the activity of signing up cust omers in Ohio who will mostly become customers of ADT, and that activ ity could be viewed as providing a service for ADT. But that approach runs aground on the simple fact that, under the master agreement, ADT does not pay Defender for signing up customers; it only pays Defender for those customer contracts that it purchases from Defender. Apart from actually selling a contrac t to ADT, Defender receives no “ADT funding” at all. {¶ 27} Because the administrative rule is inapplicable, the BTA erred when it analogized the present situation to the treatment of receipt s of property appraisers, architects, and engineers under Ohio Adm.Code 5703-29-17(C)(5), (6), and (20).
Under the administrative rule , the rendition of such services i n relation to property in Ohio makes the receipt of f ees by the skilled professional a n Ohio-taxable receipt. But ADT does not pay Defender for performing services in relation to Ohio property. Indeed, when Defender installs alarm systems at Ohio properties that allow ADT to provide security-monitoring services, it is the Oh io customer who pays Defender, and after receiving those payments, Defender pay s the CAT on
them itself.

3. The term “benefit” in R.C. 5751.033(I) should be interpreted according to its common, ordinary meaning, not an acquired meaning {¶ 28} The tax commissioner argues that the term “benefit” has acquire d a special meaning in United States Supreme Court cases involving due-process or commerce-clause challenges to the imposition of state excise or income taxes. According to the commissioner, “ benefit” connotes “government s ervices that make business possible and prof itable, such as ‘police and fire protection, the use of public roads and mass transit, and the other advantages of c ivilized society.’ ” Appellee’s brief at 18, quoting Goldberg v. Sweet , 488 U.S. 252, 267, 109 S.Ct.January Term, 2020

11 582, 102 L.Ed.2d 607 (1989). The commissioner reasons that the General Assembly “imported” this acquired meaning into R.C. 5751.033(I) by using the
word “benefit” in the lan guage of the statute. {¶ 29} As support for his argument, the commissioner cites Davis v. Michigan Dept. of Treasury , 489 U.S. 803, 813, 109 S.Ct. 1500, 102 L.Ed.2d 891 (1989) (“ When Congress codifies a judicially defined concept , it is presumed, absent an express statement to the contrary, that Congress inte nded to adopt the interpretation placed on that concept by the courts” [emphasis added]) and Case v. Los Angeles Lumber Prods. Co., Ltd ., 308 U.S. 106, 115-116, 60 S.Ct. 1, 84 L.Ed. 110 (1939) (interpreting the statutory phrase “fair and equitab le” in a bankruptcy statute to incorporate a “fixed p rinciple” established in court decisions). We reject the commissioner’s argument because, unlike in the cases he cit es, “benefit” in R.C. 5751.033(I) does not involve a “judicially defined” concept or a “fixed principle” established by case law. {¶ 30} Here “benefit” bears its ordinary meaning: “something that guar ds, aids, or promotes well being: advantage, good.” Webster’s Third New International Dictionary 204 (2002). R.C. 5751.033(I) uses the word “benefit” in the p hrase “benefit of what was purchased,” but Defender did not sell poli ce and fire service
to ADT when it sold the service contracts. Instead of constitu ting the benefit derived from the bargain, the availability of government servic es is merely an assumption on which the cont ract is entered into.

4. R.C. 5751.033(I) establishes situs where ADT uses or receives the benefit of the contract rights—not where ADT us es the contract rights themselves {¶ 31} The tax commissioner also asserts that ADT “uses or receives” t he intangible contract rights in Ohio to generate income for itsel f. But that is not the correct analysis under the plain language of R.C. 5751.033(I). The statute focuses
on where ADT “used or received” the benefit of the contract rights it purchasedS UPREME C OURT OF O HIO

12 from Defender, not on where ADT “used or received” the contract rights
themselves. {¶ 32} The tax commissioner points to R.C. 5751.033(F), which “allows Ohio to tax the ‘right to use’ a trademark in Ohio.” Division (F) does link tax situs to the use of intellectual property in Ohio. But this case doe s not address license fees for intellectual property, and all agree that the analysis here is controlled by R.C. 5751.033(I), not division (F). Under division (I), situs is determined not by looking at where ADT uses the cont ract rights, but where ADT “u ses or receives the benefit of ” the contract rights. {¶ 33} Likewise, the cases cited by the commissioner are inapposite. Taking Geoffrey, Inc. v. South Carolina Tax Comm ., 313 S.C. 15, 437 S.E.2d 13 (1993), as the paradigm case, we note th at the South Carolina Supreme C ourt held that the state could impose income tax on Geoffrey’s royalty in come to the extent that Geoffrey purposefully availed itself of the state’s protec tions by licensing its
trademarks for use in that state. In Geoffrey , the taxpayer was deemed to have used
the trademarks themselves in S outh Carolina but arguably receiv ed the benefit of its license agreements in its home state, Delaware. Applied to that situation, division (I) of R.C. 5751.033 would e stablish situs at the latt er, not the former.
C. We need not reach Defender’s third proposition of law {¶ 34} Because we rule in Defender’s favor on its statutory claim, we need
not reach the constitutional cla im set forth under its third pr oposition of law.
V. CONCLUSION {¶ 35} For the foregoing reasons, we reverse the judgment of the court of appeals. We also remand to the tax commissioner with instructi ons that he issue refunds for 2011, 2012, and 2013 in the amounts set forth in th e refund claim, plus the amount of any interest that may be provided for by statute. See Corrigan v.
Testa , 149 Ohio St.3d 18, 2016-Ohio-2805, 73 N.E.3d 381, ¶ 71 (cause remanded
to the tax commissioner for issuance of refunds).January Term, 2020

13 Judgment reversed
and cause remanded.
K ENNEDY , S INGER , F ISCHER , D E W INE , D ONNELLY , and S TEWART , JJ.,

concur. A RLENE S INGER , J., of the Sixth District Court of Appeals, sitting for
F RENCH , J.

_________________ Buckingham, Doolittle & Burroughs, L.L.C., Richard B. Fry III, and Steven A. Dimengo, for appellant. Dave Yost, Attorney General, Benjamin M. Flowers, Solicitor Ge neral, Michael J. Hendershot, Chief De puty Solicitor General, and Chri stine Mesirow, Assistant Attorney General, for appellee.

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