[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 

Newegg, Inc. v. Testa, Slip Opinion No. 2016-Ohio-7762.] 

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-7762

NEWEGG, 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 Newegg, Inc. v. Testa, Slip Opinion No. 2016-Ohio-7762.] 

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. 2015-0483—Submitted May 3, 2016—Decided November 17, 2016.) 

APPEAL and CROSS-APPEAL from the Board of Tax Appeals, No. 2012-0234. 

____________________ 

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. According to the tax commissioner’s 

final determination, appellant and cross-appellee, Newegg, Inc., is “the second 

largest on-line only retailer in the United States selling information technology and 
SUPREME COURT OF OHIO

2

computer electronics products.” Orders are filled from processing centers in 

California and New Jersey. Newegg appeals from the imposition of Ohio’s 

commercial-activity tax (“CAT”) on revenue it has earned from sales of computerrelated products that it ships into the state of Ohio. Like Crutchfield, Newegg 

contests its CAT assessments based on Newegg’s being operated outside Ohio, 

employing no personnel in Ohio, and maintaining no facilities in Ohio. 

{¶ 2} The six assessments at issue here cover the period from July 1, 2005, 

through a first-quarter 2011 estimate. In determining that our holding in 

Crutchfield requires us to affirm the assessments at issue here, we rely on the 

stipulation that “Newegg does not contest the amounts of actual and estimated Ohio 

gross receipts” on which the assessments are based. For tax years 2005 through 

2009, Newegg stipulated to receipts of $272,289,269, which formed the basis for 

CAT assessments totaling $447,580 for that period. The receipts for 2010 through 

March 2011 were estimated at nearly $20 million per quarter, and Newegg 

stipulated to those amounts also. Consequently, Newegg satisfied the $500,000 

sales-receipts threshold, triggering its CAT liability during that period. See R.C. 

5751.01(H)(3) and (I)(3). Newegg, 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 Newegg 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 Newegg’s 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 is not a necessary condition for 
January Term, 2016 

3

imposing the obligations of the CAT law, given that the $500,000 sales-receipts 

threshold adequately assures that the taxpayer’s nexus with Ohio is 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 

Newegg’s constitutional challenge under the Commerce Clause. It also makes 

unnecessary consideration of whether Newegg’s 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 Newegg. 

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, David W. Bertoni, and Matthew P. 

Schaefer; and Baker Hostetler and Edward J. Bernert, for appellant and crossappellee. 

 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 
SUPREME COURT OF OHIO

4

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. 

 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.

_________________