2021 Ohio 1374
Ohio2021Background
- N.A.T. Transportation, Inc., a PUCO-certified for-hire motor carrier, purchased three trucks: two Peterbilts (versatile, used mainly for commercial/industrial/institutional containers) and one Lodal (designed for curbside residential pickup).
- N.A.T. hauls residential customers (about 7,000 total; ~1,000 under municipal contracts, ~6,000 by subscription), ~700 commercial/industrial clients, and several institutional customers; some contracts or customers specify landfill destinations.
- Each customer bill incorporates: N.A.T.’s hauling fee, landfill weight-based charges, and gate/excise fees imposed by landfills or the Ohio EPA.
- The tax commissioner assessed use tax on the three truck purchases, denying exemption under R.C. 5739.02(B)(32) (the "highway transportation for hire" exemption), relying on Rumpke; the BTA affirmed those assessments.
- Ohio Supreme Court held: waste can be "personal property" for the exemption; ownership for exemption purposes exists when the waste generator has an agreement directing disposal destination; court affirmed denial as to the Lodal truck but reversed and granted exemptions for the two Peterbilt trucks.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do trucks used to haul waste qualify for the R.C. 5739.02(B)(32) exemption (transporting personal property belonging to others for consideration)? | N.A.T.: As a PUCO-certified for-hire motor carrier that transports customers' waste to designated landfills, its trucks are primarily used to transport others' personal property and are exempt. | Tax Commissioner: Waste is not "personal property belonging to others" for this exemption (generators relinquish control/abandon ownership); Rumpke supports denial. | Waste generally can be "personal property." Ownership for exemption exists when the generator (or contract) specifies disposal destination. Exemption granted for trucks whose primary use was hauling waste with destinations controlled by customers; denied where primary users did not designate destinations. |
| What standard defines when waste "belongs to others" for the exemption? | N.A.T.: The court should recognize its contractual/PUCO-for-hire status and treat hauled waste as customers' property. | Tax Commissioner: Reliance on PUCO rule and Rumpke to argue generators abandon ownership on pickup. | Court: For R.C. 5739.02(B)(32), waste "belongs to" the generator when the generator (by agreement) specifies where it must be taken; control over destination is dispositive. |
| Applicability of Rumpke precedent here? | N.A.T.: Rumpke is distinguishable because Rumpke lacked PUCO certification and owned landfills (was in waste-disposal business). | Tax Commissioner: Rumpke shows hauling trash does not qualify as transporting others' property. | Court: Rumpke does not control; it is distinguishable on facts and did not resolve scope of "personal property" for certified for-hire carriers here. |
| Burden and primary-use proof for mixed-use vehicles | N.A.T.: Testimony showed primary uses of each truck; exemption applies to trucks primarily used to haul customers' designated-destination waste. | Tax Commissioner: N.A.T. failed to provide adequate breakdown of each truck's use. | Court: Taxpayer must show primary use per R.K.E.; testimony established Peterbilt trucks primarily served commercial/industrial customers who designate destinations (exempt); Lodal primarily served residential subscription customers who did not (no exemption). |
Key Cases Cited
- Rumpke Container Serv., Inc. v. Zaino, 94 Ohio St.3d 304, 762 N.E.2d 995 (2002) (held waste hauled by an entity in the business of waste disposal was not "personal property belonging to others" under the statute in that factual context)
- R.K.E. Trucking, Inc. v. Zaino, 98 Ohio St.3d 495, 787 N.E.2d 638 (2003) (tax exemption for vehicles requires proof of each vehicle's primary use)
- Accel, Inc. v. Testa, 152 Ohio St.3d 262, 95 N.E.3d 345 (2017) (standard of review for BTA decisions: defer to factual findings, review legal issues de novo)
- Nestle R&D Ctr., Inc. v. Levin, 122 Ohio St.3d 22, 907 N.E.2d 714 (2009) (administrative rules from agencies other than the tax commissioner do not control statutory construction of tax statutes)
- E. Mfg. Corp. v. Testa, 154 Ohio St.3d 200, 113 N.E.3d 474 (2018) (tax statutes presume sales and uses of tangible personal property are taxable absent clear exemption)