Purchaser’s Initial Receipt Controls CAT Situs Even When Goods Are Later Reshipped Out of State

Commentary on VVF Intervest, L.L.C. v. Harris, 2025-Ohio-5680 (Supreme Court of Ohio)

I. Introduction

The Supreme Court of Ohio’s decision in VVF Intervest, L.L.C. v. Harris clarifies how Ohio’s commercial-activity tax (“CAT”) situsing statute, R.C. 5751.033(E), applies to multi‑step distribution chains involving an intermediate Ohio distribution center.

The core issue: When an out-of-state manufacturer sells goods to an out-of-state brand owner, and those goods are shipped to an Ohio distribution center before ultimately being resold and shipped to retailers outside Ohio, are the manufacturer’s gross receipts from its sale “sitused” to Ohio for CAT purposes?

The Board of Tax Appeals (“BTA”) had held that because almost all of the soap ultimately left Ohio to reach retailers in other states, the gross receipts lacked an Ohio situs and VVF was entitled to a substantial CAT refund. The Supreme Court reversed, holding that situsing turns on where the purchaser in the taxpayer’s sale receives the property – not where goods eventually end up after subsequent resales.

The decision has three major components:

A textual reaffirmation that under R.C. 5751.033(E) the relevant “purchaser” is the taxpayer’s immediate customer, and situs is where that purchaser ultimately receives the goods from the taxpayer.
A procedural ruling that a taxpayer’s alternative situsing theory under the “services” provision, R.C. 5751.033(I), was not preserved in its notice of appeal to the BTA.
A robust rejection of due‑process, Commerce Clause, and Equal Protection challenges to the CAT as applied to these facts, confirming the constitutionality of R.C. 5751.033 in this setting.

Chief Justice Kennedy dissented, reading the situsing statute to treat delivery – and thus receipt – as having occurred in Kansas, not Ohio, and to treat the Ohio distribution center merely as a waystation in a continuous out-of-state flow of goods.

II. Factual and Procedural Background

A. The Parties and the Business Model

VVF Intervest, L.L.C. (“VVF”): A contract manufacturer of personal-care products (such as bar soap). It manufactures on behalf of brand owners in return for a fee.
High Ridge Brands (“HRB”): An “asset-light” brand owner, holding intellectual property and inventory but not manufacturing facilities. It owns brands such as Zest bar soap.
Tax Commissioner: Patricia Harris, the Ohio Tax Commissioner, defending the assessment and denial of VVF’s refund claim.

VVF manufactured bar soap at its Kansas City, Kansas facility for HRB. The logistics worked as follows:

VVF notified HRB when soap was ready to ship.
HRB selected and directed a third-party motor carrier to pick up the goods at VVF’s Kansas facility.
VVF prepared bills of lading showing the destination as a Columbus, Ohio distribution center and loaded the goods onto the carrier.
The goods were transported to the third-party Columbus distribution center.
HRB later received purchase orders from major retailers (Walmart, Target, etc.).
HRB then arranged further shipment from the Columbus distribution center to each retailer’s distribution center, typically outside Ohio.

Evidence showed that:

Approximately 96.9% of the goods that entered the Columbus distribution center were ultimately sent to locations outside Ohio.
The goods typically stayed in the Columbus facility for about two months before being shipped on to the retailers.
Retailers dealt with HRB, not VVF, if there were issues with shipments.

B. The Tax Period and Refund Claim

Tax period: January 1, 2010 – December 31, 2014.
VVF paid CAT on gross receipts from its sales to HRB during this period.
VVF later filed a refund claim of $349,532 (about $327,000 relating to HRB sales), arguing these receipts lacked an Ohio situs because the goods ultimately were shipped outside Ohio.

The Tax Commissioner denied the claim, reasoning that the relevant “sale at issue” was VVF’s sale to HRB, not HRB’s subsequent resale to retailers. Because HRB received the goods at the Columbus distribution center, the Commissioner concluded the receipts were properly sitused to Ohio under R.C. 5751.033(E).

VVF appealed to the BTA, which (by majority) reversed and ordered a refund for the HRB-related receipts. The BTA:

Viewed the delivery to Columbus as one leg in a continuous movement of goods that “ultimately” ended outside Ohio.
Rejected the notion that situsing must be governed by the seller’s knowledge at the time of shipment.
Held VVF had not preserved an argument under R.C. 5751.033(I) (services situsing) in its notice of appeal.
Declined to address constitutional challenges (as beyond its jurisdiction).

One BTA member dissented, viewing the majority as improperly extending the statute to account for downstream retailers rather than focusing on HRB’s receipt in Ohio.

The Tax Commissioner appealed to the Supreme Court, and VVF cross-appealed, raising:

A claim that its alternative statutory theory under R.C. 5751.033(I) was properly preserved.
Constitutional challenges under the Due Process Clause, Commerce Clause, and Equal Protection Clause if statutory relief was denied.

III. Statutory Framework: Ohio’s CAT and Situsing Rules

A. Nature of the Commercial-Activity Tax

The CAT is imposed “on each person with taxable gross receipts for the privilege of doing business in this state.” (R.C. 5751.02(A)).
Gross receipts are broadly defined as “the total amount realized by a person, without deduction for the cost of goods sold or other expenses incurred, that contributes to the production of gross income of the person.” (R.C. 5751.01(F)).
Taxable gross receipts are those “sitused to this state under [R.C. 5751.033].” (R.C. 5751.01(G)).

The CAT is:

A privilege tax (tax on the privilege of doing business in Ohio), not a sales or transactional tax; but
It uses gross receipts as the metric to measure the value of that privilege (see Ohio Grocers Assn. v. Levin, 2009-Ohio-4872).

B. The Central Provision: R.C. 5751.033(E)

R.C. 5751.033(E) governs situsing of gross receipts from sales of tangible personal property. As quoted and numbered by the Court, it provides:

Sentence 1: “Gross receipts from the sale of tangible personal property shall be sitused to this state if the property is received in this state by the purchaser.”
Sentence 2: “In the case of delivery of tangible personal property by motor carrier or by other means of transportation, the place at which such property is ultimately received after all transportation has been completed shall be considered the place where the purchaser receives the property.”
Sentence 3: “For purposes of this section, the phrase ‘delivery of tangible personal property by motor carrier or by other means of transportation’ includes the situation in which a purchaser accepts the property in this state and then transports the property directly or by other means to a location outside this state.”
Sentence 4: “Direct delivery in this state, other than for purposes of transportation, to a person or firm designated by a purchaser constitutes delivery to the purchaser in this state, and direct delivery outside this state to a person or firm designated by a purchaser does not constitute delivery to the purchaser in this state, regardless of where title passes or other conditions of sale.”

Key statutory features:

The focus is on where the purchaser (singular) receives or accepts the property.
“Purchaser” is not defined in the statute, so the Court adopts the ordinary dictionary meaning: one who acquires property for consideration.
A distinction is made between:
- Property that is received/accepted in Ohio and remains here, and
- Property that merely passes through Ohio in the course of transportation to an out-of-state destination.

C. Qualified Distribution Center (QDC) Provision: R.C. 5751.40

Although no QDC was involved in VVF’s case, R.C. 5751.40 plays an important role in the parties’ policy arguments:

A QDC is a distribution center that meets certain thresholds (more than 50% of the cost of property shipped is situsable outside Ohio and at least $500 million in property costs; R.C. 5751.40(B)(1)).
The QDC operator pays a $100,000 annual fee (R.C. 5751.40(F)).
Suppliers shipping to a certified QDC may reduce their taxable gross receipts by their “qualifying distribution center receipts” (R.C. 5751.40(D)).
These receipts are calculated using an “Ohio delivery percentage,” the ratio of property delivered to Ohio locations from the QDC to all deliveries from the QDC (R.C. 5751.40(A)(7)).

VVF relied heavily on this framework to argue that the General Assembly intended similar relief where goods flow through an Ohio warehouse en route to out-of-state customers. The Court rejected that inference, emphasizing that the QDC regime is elective, conditional, and limited.

IV. Summary of the Court’s Holdings

A. Statutory Holdings

CAT Situs under R.C. 5751.033(E): VVF’s gross receipts from its sales of soap to HRB must be sitused to Ohio because HRB, the purchaser in VVF’s sale, received the goods at the Columbus, Ohio distribution center. The statute focuses on where the purchaser in that sale receives the property, not where downstream customers ultimately receive it.
No “Second-Sale” or “Ultimate Retail Destination” Rule: The BTA erred by effectively combining VVF’s sale to HRB and HRB’s subsequent resale to retailers into a single continuous delivery process. R.C. 5751.033(E) does not permit looking to the end retail destination when analyzing the manufacturer’s receipts.
House of Seagram Controls: The Court applies its 1971 precedent, House of Seagram, Inc. v. Porterfield, interpreting nearly identical language in a corporate-franchise-tax context, and reaffirms that the situs is where the purchaser ultimately receives the property after all transportation has been completed. Here, that is Columbus, Ohio.
Alternative “Services” Situsing Argument Not Preserved: VVF’s cross-appeal argument that its transactions should be sitused under R.C. 5751.033(I) (services situsing) was not “fairly noticed” in its notice of appeal to the BTA and therefore was not properly before the Board. The Court dismisses this proposition for lack of jurisdiction.

B. Constitutional Holdings

The Court rejects all of VVF’s as-applied constitutional challenges:

Due Process: Applying the CAT here does not violate the Due Process Clause. VVF had sufficient “minimum contacts” with Ohio because it knowingly shipped goods to an Ohio distribution center at HRB’s direction, with bills of lading specifying Ohio as the destination. This goes beyond mere placement into the “stream of commerce,” distinguishing Asahi.
Commerce Clause – Substantial Nexus: Under Complete Auto, Crutchfield, and Wayfair, physical presence is not required. VVF’s substantial volume of sales into Ohio, via shipments to an Ohio distribution center, creates a substantial nexus even though VVF had no physical presence or direct customer relationships in Ohio.
Commerce Clause – Fairly Related: The tax is fairly related to the services and protections provided by Ohio. Ohio’s roads and marketplace infrastructure enabled the deliveries to the Columbus distribution center; the tax is proportionate to VVF’s Ohio-related activities.
Equal Protection: The QDC provisions do not violate equal protection. Suppliers who ship to certified QDCs are not similarly situated to suppliers who do not. In any event, granting special treatment to QDC transactions is rationally related to a legitimate goal—making Ohio more attractive as a logistics hub.

C. Disposition

The Supreme Court reverses the BTA’s decision.
VVF’s request for a refund of CAT paid on its HRB-related receipts is denied.
VVF’s first proposition of law in its cross-appeal is dismissed for lack of jurisdiction; its remaining constitutional propositions are rejected on the merits.

V. Detailed Analysis of the Court’s Legal Reasoning

A. Interpreting R.C. 5751.033(E): Focus on the Purchaser’s Receipt in the Taxpayer’s Sale

1. The Majority’s Textual Methodology

Justice Shanahan’s opinion is explicitly textualist:

The Court asks, not what the General Assembly “intended,” but what the statutory text means in context (Total Renal Care, Inc. v. Harris).
The opinion applies the “whole-text canon,” reading all four sentences of R.C. 5751.033(E) together, rather than in isolation (Scalia & Garner, Reading Law is cited).
Policy arguments are “eschewed” in favor of textual construction (see references to Great Lakes Bar Control and Stingray Pressure Pumping).

2. Why the “Second-Sale” / “Ultimate Destination” Theory Fails

The BTA had accepted VVF’s view that Columbus was just “one leg” of a continuous transportation process ending out of state, so the “ultimate” receipt occurred at the out-of-state retailers, not at Columbus.

The Supreme Court rejects this approach for two key reasons:

The statutory “purchaser” is HRB, not HRB’s customers.
R.C. 5751.033(E) repeatedly uses the term “the purchaser” – referring to the purchaser in the taxpayer’s sale. VVF’s “purchaser” is HRB. HRB received the goods in Columbus; that ends the situs inquiry for VVF’s gross receipts. HRB’s later resales are separate transactions.
The “ultimate receipt” clause stops at the end of the taxpayer’s delivery obligation.
The second sentence directs courts to look to the place where the property is “ultimately received after all transportation has been completed.” The majority interprets this to mean after the transportation associated with that sale has been completed – i.e., when HRB receives the goods, not when HRB’s downstream customers receive them.

Thus, combining VVF’s sale with HRB’s resales is seen as an improper collapse of two distinct sales.

3. Role of House of Seagram, Inc. v. Porterfield

House of Seagram, 27 Ohio St.2d 97 (1971), interpreted nearly identical language in a former corporate-franchise-tax statute. The Court in that case held:

When a taxpayer sells tangible personal property to an Ohio buyer, delivered to a common carrier outside Ohio and ultimately received in Ohio after all transportation is complete, the taxpayer has done business in Ohio, “regardless of whether the buyer or the [taxpayer] has designated the common carrier.”

The VVF majority:

Reads House of Seagram as harmonizing all parts of the statute:
- Part (I) – general rule: situs where purchaser receives the goods;
- Part (II) – defines that place as where goods are “ultimately received” after transportation;
- Part (III A) – clarifies the “accepted in Ohio but transported immediately out” scenario;
- Part (III B) – clarifies that direct out-of-state delivery to a purchaser’s designee is not, without more, delivery to the purchaser in Ohio.
Applies that structure directly to R.C. 5751.033(E), which is functionally parallel.
Rejects the dissent’s suggestion that House of Seagram was wrongly decided or textually unmoored, accusing the dissent of reading only Part (III B) instead of the statute as a whole.

Using House of Seagram, the Court concludes:

VVF sold goods to an “Ohio buyer” for tax purposes, because HRB’s receipt was in Ohio.
Even though the transfer to the motor carrier occurred in Kansas, the goods were “ultimately received” in Columbus.
Thus, the receipts from VVF’s sale are sitused to Ohio under the same logic as House of Seagram.

4. Response to the Dissent’s Interpretation of Sentences 2–4

Chief Justice Kennedy’s dissent reads the statute differently:

She emphasizes the fourth sentence, arguing that “direct delivery outside this state to a person or firm designated by a purchaser does not constitute delivery to the purchaser in this state.” Because HRB chose the carrier and delivery to the carrier happened in Kansas, she concludes delivery and receipt both occurred there.
She also relies on the second and third sentences to argue that where goods are accepted in Ohio and then transported “directly or by other means” to an out-of-state location, final receipt is outside Ohio – even if the goods sit in Ohio for two months.

The majority responds by:

Insisting that sentence 4 cannot override sentence 2’s directive that situs be determined by where the property is “ultimately received after all transportation has been completed.”
Emphasizing that the goods here were warehoused and controlled by HRB in Ohio, and were not merely passing through for immediate transshipment.
Noting that the third sentence is meant to cover “acceptance in Ohio solely for purposes of immediate transportation outside the State,” which does not match the facts here.

Doctrinally, the majority uses the “whole-text canon” to argue that the dissent elevates the last sentence above the rest, effectively nullifying the “ultimate receipt” clause.

5. Rejection of Policy-Based Arguments and the QDC Analogy

VVF argued that the Tax Commissioner’s reading would:

Convert the CAT into a de facto transactional tax by tying taxability too tightly to individual sales events.
Undermine the CAT’s “market access” rationale for measuring the privilege of doing business in Ohio.
Conflict with the policy behind the QDC regime, which generally excludes from taxable gross receipts goods that merely pass through Ohio.

The Court rejects these arguments:

The CAT inherently uses sales receipts as the metric for valuing the privilege of doing business. Separating VVF’s activities from HRB’s downstream sales preserves, not distorts, that measure.
The QDC regime is a special, elective statutory carve-out with explicit conditions and fees. If its policy benefits were intended to be broader, the General Assembly would not have structured the regime so narrowly. Expanding its scope is a legislative, not judicial, function.

In effect, the Court holds that administrative or policy discomfort with the tax consequences cannot justify an interpretation that departs from the statute’s textual focus on the purchaser’s receipt in the taxpayer’s sale.

B. Preservation of Alternative Argument Under R.C. 5751.033(I)

VVF tried, on cross-appeal, to argue that its activities should be treated as contract-manufacturing services governed by R.C. 5751.033(I) (the situsing statute for services) and a related administrative rule, Ohio Adm.Code 5703-29-17(C)(15).

The Court’s analysis turns on R.C. 5717.02(C), the statute governing notices of appeal to the BTA:

Before 2013, notices had to “specify the errors complained of,” a requirement interpreted strictly to demand “definite and specific” errors.
After 2013, the statute was amended to require only “a short and plain statement of the claimed errors … showing that the appellant is entitled to relief.”
In Obetz v. McClain, 2021-Ohio-1706, the Court held this change eliminated the “laundry list” trap and required only “fair notice” of the issues.

Applying this modern standard, the Court holds:

VVF’s notice of appeal referenced R.C. 5751.033(E) and constitutional provisions, but not R.C. 5751.033(I) or any concept suggesting a service-situsing theory.
Because (E) and (I) govern different kinds of receipts (property vs. services), mentioning (E) did not give “fair notice” that VVF also challenged situsing under (I).
Accordingly, the BTA correctly refused to consider the R.C. 5751.033(I) argument, and the Supreme Court dismisses that proposition of law for lack of jurisdiction.

C. Constitutional Analysis

1. Due Process – Minimum Contacts and Stream of Commerce

VVF argued that the Due Process Clause prohibits Ohio from taxing it because:

It had no physical presence, employees, property, or marketing in Ohio.
Title and risk of loss passed to HRB in Kansas upon delivery to the carrier.
HRB selected the Ohio distribution center and carriers.
VVF’s only connection to Ohio was knowledge that the goods’ destination was Ohio.

The Court applies the familiar two-step due-process test (T. Ryan Legg Irrevocable Trust):

There must be a definite link or “minimum connection” between the taxing state and the taxpayer/transaction.
The income attributed to the state must be rationally related to values connected with the state.

The Court focuses on the first step and invokes:

Wayfair: Physical presence is not required for due process (or for Commerce Clause nexus).
Quill and personal-jurisdiction cases: The central question is whether the taxpayer has “purposefully availed” itself of the forum’s market.

VVF relied on Asahi Metal Industry Co. v. Superior Court of California – a products-liability case involving stream-of-commerce theory – to argue that mere foreseeability that goods will end up in a state is not enough. The Court responds:

Asahi arose in a very different context (products liability and personal jurisdiction) and is rarely extended into tax cases.
Tax treatises and case compilations do not treat Asahi as central to state-tax due-process analysis.
Even if Asahi were relevant, this case is different: VVF did not merely inject products into a global stream of commerce. It intentionally prepared shipping documents to an identified Ohio destination and loaded trucks destined for Ohio.

Conclusion: VVF purposefully availed itself of the benefits of the Ohio market, so taxing its receipts connected to those Ohio deliveries does not violate due process.

2. Commerce Clause – Complete Auto Analysis

Under Complete Auto Transit, Inc. v. Brady, a state tax on interstate commerce is valid if it:

Is applied to an activity with a substantial nexus with the taxing state;
Is fairly apportioned;
Does not discriminate against interstate commerce; and
Is fairly related to services provided by the state.

VVF challenged only the first and fourth prongs.

a. Substantial Nexus

VVF argued that there was no substantial nexus because:

It had no physical presence, property, or employees in Ohio;
It did not control transportation to Ohio (HRB chose the carrier); and
It had no direct interactions with Ohio customers (only HRB).

The Court relies on its own precedent and federal law:

Crutchfield Corp. v. Testa (2016-Ohio-7760): This Court previously held that for the CAT, physical presence is not a necessary condition for substantial nexus, so long as the taxpayer meets the statutory receipts threshold.
Wayfair (2018): The U.S. Supreme Court overruled Quill’s physical-presence rule in the sales-tax context, confirming that a “modern e‑commerce” seller can be taxed without in-state physical presence.

VVF tried to distinguish these cases by arguing that those taxpayers directly interacted with in-state consumers; VVF did not. The Court rejects any customer-contact requirement:

Neither Crutchfield nor Wayfair requires direct interaction with in-state customers to establish substantial nexus.
Modern commerce includes many supply-chain models where manufacturers ship into a state for intermediate distribution without ever dealing directly with end users.
VVF’s significant volume of shipments into Ohio (meeting the $500,000 threshold) is an economic reality squarely within Crutchfield and Wayfair’s rationale.

Result: There is a substantial nexus between VVF’s activity and Ohio.

b. Fairly Related to State-Provided Services

Under cases like Commonwealth Edison Co. v. Montana and Jefferson Lines, the “fairly related” inquiry:

Does not compare the dollar value of services provided to the amount of tax paid;
Instead asks whether the tax is reasonably related to the taxpayer’s activities in the state and the benefits of “civilized society” that support those activities (roads, public safety, legal system, etc.).

VVF argued that:

It did “not conduct any activities in or directed at Ohio,” so there is no connection between its receipts and Ohio-provided benefits.
The true beneficiary of Ohio’s infrastructure and legal protections is HRB, not VVF.

The Court answers:

VVF’s goods were physically delivered into and across Ohio, using Ohio’s roads and distribution infrastructure. That is a direct benefit to VVF’s revenue-generating activity.
The fact that HRB also benefits does not negate Ohio’s ability to tax VVF’s share of the activity, as long as the tax is proportionate to VVF’s Ohio-linked receipts.
VVF cites no authority invalidating a tax under this prong where an out-of-state seller ships goods into the state at the direction of its customer.

The Court concludes that the CAT, as applied, is fairly related to services Ohio provides.

3. Equal Protection – QDC Benefits

VVF’s equal-protection challenge is premised on the QDC regime:

It hypothesizes a competitor that manufactures exactly as VVF does but ships to a certified QDC instead of a non-QDC distribution center.
The competitor’s receipts from goods flowing through the QDC would enjoy a significant CAT reduction under R.C. 5751.40, while VVF’s would not.
VVF argues that this differential treatment of “identical operations” violates the Equal Protection Clause.

The Court applies standard rational-basis review (citing Nordlinger, Columbia Gas, GTE N., Inc.):

Tax classifications are upheld if they bear any rational relationship to a legitimate state interest.
Taxpayers challenging a tax statute must “negate every conceivable basis” supporting it.
Competitors are not necessarily similarly situated for equal-protection purposes simply because they compete.

The Court rejects VVF’s claim on two grounds:

Not Similarly Situated: VVF and the hypothetical competitor are not alike in “all relevant respects.” The competitor uses a certified QDC, VVF does not, and that difference is precisely what triggers the special treatment.
Rational Basis Exists: Even without explicit legislative history, the Court can easily conceive a rational basis: encouraging large-scale distribution centers to locate in Ohio and to act as logistics hubs is a legitimate economic-development goal. Granting favorable tax treatment to suppliers using QDCs is a rational way to pursue that goal.

Thus, there is no equal-protection violation.

VI. Complex Concepts Simplified

1. What Is “Situs” of Gross Receipts?

“Situs” means the tax location or “home” of a particular receipt for tax purposes. For multi-state businesses:

Only receipts with an Ohio situs are taxed by the CAT.
R.C. 5751.033 provides rules for deciding when a receipt is “in” Ohio.
For tangible personal property, R.C. 5751.033(E) uses where the purchaser receives the property as the key test.

2. “Privilege of Doing Business” vs. Transaction Tax

Although the CAT is computed on gross receipts from individual transactions, it is technically not a tax on each transaction but a tax on the privilege of doing business in the state measured by that revenue. This matters for:

Constitutional analysis (especially Commerce Clause); and
Distinguishing CAT from sales or use taxes (which are tied more directly to particular retail transactions).

3. Minimum Contacts and “Stream of Commerce”

Under due process:

A state can tax an out-of-state entity only if that entity has “minimum contacts” with the state.
Simply putting goods into the “stream of commerce” without more might not suffice (as discussed in Asahi), especially for personal jurisdiction.
But deliberately shipping goods to a known address in the state, as VVF did for HRB’s Ohio distribution center, is a much stronger connection and generally satisfies due process in tax cases.

4. The Complete Auto Four-Part Test

This is the cornerstone of Commerce Clause analysis for state taxes:

Substantial Nexus: There must be a meaningful connection between the taxpayer’s activity and the state (e.g., significant sales into the state, even without physical presence).
Fair Apportionment: The tax must fairly reflect the portion of the taxpayer’s business actually carried on in the state.
No Discrimination: The tax cannot favor in-state businesses over out-of-state competitors.
Fairly Related: The tax must be linked in a reasonable way to the benefits and protections the state provides.

5. Qualified Distribution Centers (QDCs) in Plain Terms

QDCs are a special creature of statute designed to:

Encourage companies to use Ohio as a major distribution hub.
Offer suppliers shipping into QDCs a partial CAT “safe harbor” for goods that will leave Ohio.
Require significant scale and a fee, meaning only large operations typically qualify.

Crucially, the VVF decision makes clear:

Absent QDC status, shipments to an Ohio distribution center that then feeds out-of-state customers are still sitused to Ohio for the supplier’s receipts, so long as the purchaser receives the goods in Ohio.

VII. Practical and Doctrinal Impact

A. For Manufacturers and Suppliers Using Ohio Distribution Centers

The decision sends a clear signal:

If your customer (even if out-of-state) receives goods at an Ohio location – including a non-QDC independent warehouse – your receipts from that sale will generally be sitused to Ohio.
The fact that your customer later resells and ships almost all of those goods outside Ohio does not change the situs of your receipts.
Structuring logistics through Ohio can create significant CAT exposure even without Ohio facilities or direct Ohio customers.

B. Strategic Importance of QDC Certification

By rejecting VVF’s attempt to analogize to QDC policy, the Court has indirectly:

Increased the value of formally using QDCs where possible, as the statute provides the only clear statutory relief from CAT on “through-Ohio” distribution flows.
Signaled that non-QDC distribution centers do not get QDC-like treatment by implication or analogy.

C. Reaffirmation and Extension of House of Seagram

Doctrinally, the Court firmly:

Reaffirms the interpretive framework of House of Seagram for nearly identical language.
Rejects a more literal, sentence-by-sentence reading that would privilege the “direct delivery to a designee” clause over the “ultimate receipt” clause.
Signals that courts should read similar situsing provisions as focusing on where the purchaser in the taxpayer’s sale ultimately receives the goods, not where third parties receive them later.

D. Constitutional Boundaries of Ohio’s CAT Post–Crutchfield and Wayfair

The decision consolidates Ohio’s CAT jurisprudence by:

Confirming that large out-of-state suppliers shipping regularly into Ohio distribution centers have both due-process “minimum contacts” and a substantial nexus under Complete Auto.
Rejecting attempts to limit nexus to cases involving direct interaction with in-state consumers.
Affirming that the CAT can reach “upstream” manufacturers in multi-tier supply chains when Ohio is a significant node in that chain.

E. Procedural Lessons on Preserving Theories Before the BTA

Even under the more relaxed “short and plain statement” standard of R.C. 5717.02(C), taxpayers must:

Explicitly flag distinct statutory theories (e.g., switching from “property” situsing under R.C. 5751.033(E) to “services” situsing under R.C. 5751.033(I)).
At least mention the relevant statutory subsection or the basic concept (e.g., “contract manufacturing as a service”).

Otherwise, alternative theories may be deemed unpreserved and jurisdictionally barred from review.

VIII. Conclusion

VVF Intervest, L.L.C. v. Harris establishes and clarifies a key principle of Ohio CAT law:

For purposes of R.C. 5751.033(E), the situs of gross receipts from the sale of tangible personal property is determined by where the purchaser in the taxpayer’s sale ultimately receives the goods after the transportation for that sale is complete. Downstream resales and shipments to third parties—no matter how extensive or out-of-state—do not alter that situs.

By reaffirming House of Seagram, the Court anchors this principle in a consistent reading of structurally similar statutes. It also draws a sharp line between the statutory QDC regime and ordinary distribution-center arrangements, leaving the latter firmly within the CAT base unless and until the legislature provides otherwise.

On the constitutional front, the decision consolidates post-Crutchfield/Wayfair doctrine: substantial non-physical economic presence in Ohio—achieved through shipments to Ohio facilities at a customer’s direction—satisfies both due process and the Commerce Clause. Equal-protection scrutiny remains highly deferential in tax matters, particularly where the legislature is obviously using tax incentives to attract and structure large-scale logistics operations.

Practically, manufacturers and suppliers whose goods pass through Ohio distribution centers for multi-state distribution must now assume, absent QDC status, that Ohio can and will assert CAT jurisdiction over their receipts tied to those in-state deliveries. The decision thus both clarifies the statutory rule and effectively invites businesses to revisit their logistics, entity structuring, and QDC strategies in light of the clarified situsing standard.