Ohio Administrative Code › Title 5703 - Department of Taxation › Chapter 5703-29 - Commercial Activity Tax › Section 5703-29-16 - Qualified distribution center

Current through all regulations passed and filed through July 1, 2024
(A) Pursuant to division (F)(2)(z) of section
			 5751.01
			 of the Revised Code, "gross receipts" excludes "qualifying distribution center
			 receipts." 
								Section
			 5751.40
			 of the Revised Code  defines "qualifying distribution center receipts"
			 and other terms used in that definition. While all the requirements of
			  section
			 
									5751.40
								 of the Revised Code must be met, it essentially provides that certain
			 receipts of a supplier from qualified property delivered to a qualified
			 distribution center are excluded from that supplier's calculation of gross
			 receipts for purposes of the commercial activity tax. The extent of this
			 exclusion is based on the Ohio delivery percentage as determined by the
			 qualified distribution center, and such percentage applies to all suppliers
			 shipping to that location regardless of the percentage of that supplier's
			 actual property that will be shipped outside the state.
(B) In order to meet the requirements to be a
			 qualified distribution center, a warehouse, a facility similar to a warehouse,
			 or a refining facility in addition to meeting all other requirements specified
			 in  section
			 
									5751.40
								 of the Revised Code, must meet both of the following requirements for
			 the qualifying period:
(1) The operator of the
			 warehouse, a facility similar to a warehouse, or the refining facility and
			 members of the operator's consolidated elected taxpayer group as described in
			 section
			 5751.011
			 of the Revised Code must have had at least five hundred million dollars in
			 cumulative costs from qualified property delivered to the distribution center
			 by its suppliers during the qualifying period. Such costs only include costs of
			 qualified property, which is tangible personal property delivered to a
			 distribution center that is shipped there solely for further shipping by the
			 distribution center to another location either within or without this state or
			 in the case of gold, silver, platinum or palladium, delivered to a refining
			 facility solely for refining to a grade and fitness acceptable for delivery to
			 a registered commodity exchange. Only the cost of the qualified property, less
			 any reductions in price (e.g., cash discounts) is considered for purposes of
			 this calculation. Any costs or reimbursements for providing a service to the
			 seller, such as management consulting services, are excluded from the
			 calculation. Further, only purchases made by members of the same consolidated
			 elected taxpayer group and received at the distribution center are included in
			 the calculation of the five hundred million dollars. All purchases from members
			 of the same consolidated elected taxpayer group must be excluded from the
			 calculation and cannot be included in the five hundred million dollar
			 threshold.
(a) For example, corporation A is
			 the operator of a distribution center. Corporation A, corporation B, and
			 corporation Z purchase qualified property that is shipped to the distribution
			 center by independent, third-party suppliers during the qualifying period.
			 Corporation A and corporation B are part of the same consolidated elected
			 taxpayer group; corporation Z is not part of corporation A's consolidated
			 elected taxpayer group. The purchases of qualified property made by corporation
			 A and corporation B that are shipped to the distribution center are aggregated
			 in the calculation of the five hundred million dollar threshold. However,
			 purchases made by corporation Z are not included in that calculation because
			 corporation Z is not part of corporation A's consolidated elected taxpayer
			 group.
(b) In contrast, assume the
			 same facts as in the previous example. The intercompany sales between
			 corporation A and corporation B or between or among any other members of the
			 operator's consolidated elected taxpayer group are not aggregated with other
			 purchases from outside suppliers to meet the five hundred million dollar
			 threshold.