Ohio court sided with NASCAR in broadcasting tax challenge

Columbus, Ohio –

The Ohio Supreme Court ruled Tuesday that the state’s attempt to tax NASCAR for broadcasting its races in Ohio was illegal.

At issue in court was whether the state tax commissioner correctly applied those broadcasts to Ohio’s commercial activity tax during the 2005 through 2010 audit. Taxes require payments on the company’s annual sales.

The court ruled that the broadcast revenue, licensing revenue, media revenue and sponsorship fees of Daytona Beach, Florida-based NASCAR were wrongly taxed. A group of three judges in the seven-member court disagreed over licensing fees.

The state has argued that it imposes the tax on NASCAR’s commercial activities, including the sale of the organization’s Ohio broadcast rights. Tuesday’s ruling reversed the Tax Complaints Board’s decision in their favor and sent the organization’s disputed tax bill — totaling $529,520 — back to the board for adjustment. again.

NASCAR asserts that its commercial activities in Ohio such as broadcasting races and selling merchandise are carried out by other companies – such as Fox Broadcasting Co. – taxed accordingly.

It said that imposing a tax on NASCAR broadcasts in Ohio was “an unconstitutional extension of tax liability to out-of-state content providers”.

In comments written by Justice Pat DeWine, the court agreed, determining that taxing NASCAR broadcasts “is not within the jurisdiction of the tax commissioner.” That’s because its broadcast, media, and sponsorship agreements are based on flat fees that “do not change with the amount of use.”

On the matter of the license agreement, Judges Melody Stewart, Jennifer Brunner and Michael Donnelly disagreed that they were not subject to tax.

They support the tax commissioner’s decision to charge licensing fees separately from sales of NASCAR licensed products — flags, mugs, grill lids, keychains, hood ornaments, dice opaque — by its contract holder, BSI Products. NASCAR has argued that leads to a double tax.

Stewart wrote: “If a homeowner hires a plumber to fix his sink and pays the plumber the income Ohio taxed, then Ohio is perfectly right to tax what it doesn’t. the landlord paid the plumber as part of the plumber’s income.”

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