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  • Richard C. Farrin, JD - Member

U.S. Supreme Court Denies Cert on Kentucky Supreme Court Case on Ohio Commercial Activity Tax

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On October 5, 2020, the U.S. Supreme Court denied a petition for a writ of certiorari filed by the taxpayer seeking the Court’s review of the Kentucky Supreme Court’s decision in State of Ohio, et. al., v. Great Lakes Minerals, LLC, reversing the circuit court decision and ordering the complaint against the State of Ohio and its Tax Commissioner be dismissed on sovereign immunity grounds.


The taxpayer, Great Lakes Minerals, LLC (“Great Lakes”), was a minerals processor that sold minerals at its plant in Kentucky. Great Lakes asserted that it sold and delivered its products in Kentucky and received payment for the products in Kentucky. It further asserted that it had no physical presence in Ohio. Nevertheless, Great Lakes was audited by the Ohio Department of Taxation and assessed for $325,000 in Ohio Commercial Activity Tax (“CAT”), based on the gross receipts from Great Lakes’ sales to customers who brought the products into Ohio. Great Lakes paid a portion of the assessment but petitioned the assessment.


Shortly after it filed its petition with the Ohio Tax Commissioner, Great Lakes filed a complaint in a Kentucky circuit court seeking a declaratory judgment that it was not subject to the CAT because it did not have due process nexus with Ohio and monetary damages under 42 USC 1983 for a violation of its rights under the Due Process Clause. The State moved to dismiss the complaint based on various grounds, including sovereign immunity and comity. The circuit court denied the motion to dismiss and Ohio filed an appeal with the Kentucky Court of Appeals and requested that the appeal be transferred to the Kentucky Supreme Court. The Kentucky Supreme Court granted the request to transfer jurisdiction and issued its opinion reversing the circuit court’s denial of the motion to dismiss. The Kentucky Supreme Court held that the suit against the State of Ohio and the Ohio Tax Commissioner in his official capacity should have been dismissed on sovereign immunity grounds. The Court further held that the suit against the Ohio Tax Commissioner in his personal capacity should have been dismissed on the principle of comity.


Great Lakes filed a petition for a writ of certiorari with the U.S. Supreme Court requesting that Court to accept jurisdiction of the case. As noted above, the U.S. Supreme Court denied the petition on October 5, 2020. As a result of the denial of the petition, the opinion of the Kentucky Supreme Court stands.


If you would like to discuss how State of Ohio, et. al., v. Great Lakes Minerals, LLC might apply to your business, please contact Rich Farrin, John Trippier or any other ZHF professional.

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