[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Newegg, Inc. v. Testa, Slip Opinion No. 2016-Ohio-7762.]




                                        NOTICE
     This slip opinion is subject to formal revision before it is published in an
     advance sheet of the Ohio Official Reports. Readers are requested to
     promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
     South Front Street, Columbus, Ohio 43215, of any typographical or other
     formal errors in the opinion, in order that corrections may be made before
     the opinion is published.



                         SLIP OPINION NO. 2016-OHIO-7762
  NEWEGG, INC., APPELLANT AND CROSS-APPELLEE, v. TESTA, TAX COMMR.,
                         APPELLEE AND CROSS-APPELLANT.
  [Until this opinion appears in the Ohio Official Reports advance sheets, it
  may be cited as Newegg, Inc. v. Testa, Slip Opinion No. 2016-Ohio-7762.]
Commercial-activity tax—Commerce Clause—Physical presence of an interstate
        business within Ohio is not a necessary condition for imposing the
        obligations of the commercial-activity tax.
    (No. 2015-0483—Submitted May 3, 2016—Decided November 17, 2016.)
   APPEAL and CROSS-APPEAL from the Board of Tax Appeals, No. 2012-0234.
                               ____________________
        O’NEILL, J.
        {¶ 1} We decide this case as a companion case to Crutchfield Corp. v. Testa,
__ Ohio St.3d __, 2016-Ohio-7760, __ N.E.3d __, with which this case was
consolidated for purposes of oral argument. According to the tax commissioner’s
final determination, appellant and cross-appellee, Newegg, Inc., is “the second
largest on-line only retailer in the United States selling information technology and
                             SUPREME COURT OF OHIO




computer electronics products.” Orders are filled from processing centers in
California and New Jersey.       Newegg appeals from the imposition of Ohio’s
commercial-activity tax (“CAT”) on revenue it has earned from sales of computer-
related products that it ships into the state of Ohio. Like Crutchfield, Newegg
contests its CAT assessments based on Newegg’s being operated outside Ohio,
employing no personnel in Ohio, and maintaining no facilities in Ohio.
       {¶ 2} The six assessments at issue here cover the period from July 1, 2005,
through a first-quarter 2011 estimate.        In determining that our holding in
Crutchfield requires us to affirm the assessments at issue here, we rely on the
stipulation that “Newegg does not contest the amounts of actual and estimated Ohio
gross receipts” on which the assessments are based. For tax years 2005 through
2009, Newegg stipulated to receipts of $272,289,269, which formed the basis for
CAT assessments totaling $447,580 for that period. The receipts for 2010 through
March 2011 were estimated at nearly $20 million per quarter, and Newegg
stipulated to those amounts also. Consequently, Newegg satisfied the $500,000
sales-receipts threshold, triggering its CAT liability during that period. See R.C.
5751.01(H)(3) and (I)(3). Newegg, however, asserts that Ohio’s CAT violates the
Commerce Clause of the United States Constitution and that therefore Ohio had no
authority to tax any of those receipts.
       {¶ 3} Just as in Crutchfield, we first confront a cross-appeal by the tax
commissioner concerning whether Newegg properly raised and preserved its
constitutional challenge. The circumstances of the present case being no different
from those in Crutchfield, we resolve the cross-appeal against the tax
commissioner’s position on the authority of Crutchfield. Similarly, we rely on
Crutchfield to reject Newegg’s contentions that the CAT statutes should be
construed to preclude the assessments at issue in this appeal.
       {¶ 4} In Crutchfield, we held that under the Commerce Clause, the physical
presence of an interstate business within Ohio is not a necessary condition for




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                              January Term, 2016




imposing the obligations of the CAT law, given that the $500,000 sales-receipts
threshold adequately assures that the taxpayer’s nexus with Ohio is substantial
pursuant to R.C. 5751.01(H)(3) and (I)(3). Crutchfield Corp., __ Ohio St.3d __,
2016-Ohio-7760, __ N.E.3d __, ¶ 3, 5. Applying that holding here resolves
Newegg’s constitutional challenge under the Commerce Clause. It also makes
unnecessary consideration of whether Newegg’s Internet contacts with its Ohio
customers constituted a physical presence for Commerce Clause purposes.
       {¶ 5} For the foregoing reasons, we affirm the decision of the BTA and
uphold the CAT assessments against Newegg.
                                                               Decision affirmed.
       O’CONNOR, C.J., and PFEIFER, O’DONNELL, and FRENCH, JJ., concur.
       LANZINGER and KENNEDY, JJ., dissent and would reverse the decision of
the Board of Tax Appeals for the reasons stated in the dissenting opinion in 2015-
0386, Crutchfield v. Testa.
                              _________________
       Brann & Isaacson, Martin I. Eisenstein, David W. Bertoni, and Matthew P.
Schaefer; and Baker Hostetler and Edward J. Bernert, for appellant and cross-
appellee.
       Michael DeWine, Attorney General, and Daniel W. Fausey and Christine
Mesirow, Assistant Attorneys General, for appellee and cross-appellant.
       Macey, Wilenski & Hennings, L.L.C., and Peter G. Stathopoulos; and
Robert Alt, urging reversal for amici curiae Buckeye Institute for Public Policy
Solutions, Mackinac Center for Public Policy, NetChoice, and American Catalog
Mailers Association, Inc.
       Fredrick Nicely and Nikki Dobay, urging reversal for amicus curiae Council
on State Taxation.
       Goldstein & Russell, P.C., Eric F. Citron, and Thomas C. Goldstein, urging
affirmance for amici curiae National Governors Association, National Conference




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                           SUPREME COURT OF OHIO




of State Legislatures, Council of State Governments, National Association of
Counties, National League of Cities, U.S. Conference of Mayors, International
City/County   Management     Association,   International   Municipal   Lawyers
Association, and Government Finance Officers Association.
       Bricker & Eckler, L.L.P., Mark A. Engel, and Anne Marie Sferra, urging
affirmance for amici curiae Ohio Manufacturers’ Association, Ohio State Medical
Association, Ohio Dental Association, and Ohio Chemistry Technology Council.
       Bruce Fort, urging affirmance for amicus curiae Multistate Tax
Commission.
                             _________________




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