2024 Ohio 5685
Ohio2024Background
- Total Renal Care, Inc. (TRC), a subsidiary of DaVita, Inc., provides dialysis services to patients in Ohio.
- TRC also conducts certain support operations (laboratory and administrative services) outside Ohio.
- TRC originally paid Ohio commercial-activity tax (CAT) on all revenue from its Ohio sites but later sought refunds, arguing that some gross receipts should be sitused (allocated) outside Ohio due to out-of-state support services.
- The Ohio Tax Commissioner denied the refund claims; the Board of Tax Appeals (BTA) affirmed, holding all receipts were properly sitused to Ohio.
- TRC appealed to the Supreme Court of Ohio, contending that receipts for out-of-state services should not be taxed in Ohio.
Issues
| Issue | Plaintiff's Argument (TRC) | Defendant's Argument (Harris) | Held |
|---|---|---|---|
| Whether gross receipts for dialysis provided in Ohio are sitused to Ohio under CAT law | Receipts for services partly performed outside Ohio should be allocated accordingly | Statute/Rule requires situs where benefit received—here, Ohio | Receipts should be sitused to Ohio under R.C. 5751.033(I) |
| Whether administrative rule or statute controls situsing analysis | Rule (Adm.Code) should control allocation analysis | Statute (R.C. 5751.033) controls; rule conforms | No conflict—both point to situs where benefit received (Ohio) |
| Whether supporting operations (lab/admin) are distinct taxable services | Support tasks constitute separate, out-of-state services | Support tasks are ancillary, not separately purchased services | Such services are not separately taxable; receipts for dialysis only |
| Whether evidence sufficed for out-of-state allocation | Provided sufficient evidence to allocate receipts | Not pertinent since all benefit received in Ohio | Not reached—first issue dispositive |
Key Cases Cited
- Marc Glassman, Inc. v. Levin, 119 Ohio St.3d 254 (Ohio 2008) (situs determination involves factual inference from evidence)
- SFZ Transp., Inc. v. Limbach, 66 Ohio St.3d 602 (Ohio 1993) (reasonableness of inference from facts to situs is a question of law)
- Ace Steel Baling, Inc. v. Porterfield, 19 Ohio St.2d 137 (Ohio 1969) (standard for inferring ultimate facts in tax cases)