Steven A. Dimengo Law Blog

Editor’s note: This is part 1 of a two-part series about tax issues affecting contractors.  Part 2 will address the classification of property – whether an improvement is real or personal property.

In a construction contract, the contractor is deemed the consumer of any tangible personal property purchased that it incorporates into real property and, thus, must pay tax on the purchase of such property. The construction contractor is the consumer even though... Read More

Any Ohio business not consistently filing an Ohio use tax return is exposed to an Ohio Department of Taxation (“Department”) investigation. If any of the following apply, and you do not regularly file an Ohio use tax return, immediate action is required:

The Iowa Supreme Court recently handed down a decision in the case of Kentucky Fried Chicken v. The Iowa Department of Revenue and Finance, affirming the imposition of Iowa’s corporate income tax on KFC, despite lacking a physical presence in the state. The price tag for KFC was nearly a quarter billion dollars.  KFC, which operates in the state solely as a licensor of... Read More

Annually, The Tax Foundation ranks the 50 states according to how friendly their tax climate is to businesses. A friendly tax climate can be especially beneficial in difficult economic times, like the present, by attracting new business to the state thereby creating economic and job growth. “Taxes matter to business. Business taxes affect business decisions, job creation and retention, plant location, competitiveness, the transparency of the tax system and the long-term health of... Read More

As described in Part 1 of this article, the scope of the manufacturing exemption from Ohio sales and use tax is determined by the beginning and end of the “manufacturing operation.” A product being manufactured is complete, thereby ending the manufacturing process, when all the... Read More

In a decision last week, the U.S. District Court for the Western District of Washington ruled that internet retail giant Amazon.com was protected from disclosing its customer names and certain other information to the North Carolina Department of Revenue. The Court ruled that the First Amendment protected the “disclosure of an individual’s reading, listening and viewing habits.” However, it appears that a state taxing authority could obtain individual customer information... Read More

An often over-looked and underutilized exemption from Ohio sales and use tax is the so-called “packaging exemption”. To claim this exemption, the business must engaged in one of several enterprises, including manufacturing or making retail sales.  This exemption is available for packaging materials and equipment, which are defined broadly. Further, since packaging material includes any property that restrains movement of the product in more than one plane of... Read More

A drop shipment is when a vendor accepts an order from a consumer for a product it does not have in stock and directs its supplier (a manufacturer or wholesaler) to ship the product directly to the vendor’s customer. The supplier then delivers the product to the consumer via common carrier or in its own trucks, or may have the consumer pick up the product from the supplier’s location. Thus, there are two sales occurring: first, the supplier (i.e., drop shipper) sells the... Read More

Churches and other places of worship have had two available  exemptions from Ohio real property taxes, but this may be changing. Property where public worship actually occurs is specifically exempt. However, since this public worship exemption does not encompass buildings used by churches for ancillary purposes, such as administrative offices, churches have historically been granted exemption for such buildings based upon a separate exemption for property used primarily for... Read More

Like other states, Ohio’s use tax is complementary to its sales tax, with tax being imposed upon the storage, use, or consumption of tangible personal property in Ohio and the receipt of the benefit of a taxable service, to the extent sales tax has not been paid.  The reality is that every Ohio resident and business operating in Ohio likely has a use tax liability arising from out-of-state purchases when the vendor did not collect Ohio tax (and,... Read More