Resale Exemption – Ohio BTA Denies Resale Exemption to Non-Licensed Dealer
The Ohio BTA affirmed assessing use tax on six cars that had been purchased out of state and brought into Ohio, but subsequently shipped out. In Dotzauer v. Testa, Case Nos. 2014-2030, 2014-2076 (2/27/2015), the taxpayers testified that they were “brokers/agents,” and had no intent to “use” the vehicles in Ohio or to do business in Ohio. They argued the vehicles were simply transported through Ohio on their way to a port, for delivery outside the United States. In addition, they argued that they were entitled to an exemption from use tax because they were engaged in sales for resale.
The BTA disagreed. The BTA noted that although the six vehicles were physically in Ohio at the taxpayers’ residence for periods that ranged from a few hours to less than a week while waiting to be transported out of state, the taxpayers exercised ownership and control over the vehicles.
The BTA also denied the resale exemption. The taxpayers were not licensed motor vehicle dealers, but rather “brokers/agents.” Therefore, the BTA found, by not being properly licensed to legally sell motor vehicles, the taxpayers could not “avail themselves of the exemption from the sales / use tax of such sales.”
We are concerned that the BTA denied the resale exemption because the taxpayers were not licensed since, presumably, they were not required to be licensed due to the sales not occurring in Ohio. Moreover, there are many situations where vehicles are resold via lease to related entities in the absence of licensing. Nonetheless, the resale exemption is still available. If you have questions regarding resale exemptions, contact Steve Dimengo, Rich Fry, or Casey Davis.