Cincinnati Golf Management, Inc. v. Testa

Summary

The Supreme Court of Ohio held that an independent contractor managing city-owned golf courses could not claim the city’s sales- and use-tax exemption absent proof that it was an actual purchasing agent with authority to bind the city. The court affirmed the Board of Tax Appeals’ decision upholding the use-tax assessment against Cincinnati Golf Management, Inc. The court denied as moot the tax commissioner’s motion to dismiss the city as a party for lack of standing.

Holdings

1. A sale is a sale to a political subdivision under R.C. 5739.02(B)(1) only when the political subdivision is actually the purchaser and consummates the transaction through an agent that has authority to bind the political subdivision and thereby makes the political subdivision primarily liable to the vendor.
2. Cincinnati Golf Management did not establish actual authority to bind the City of Cincinnati to the purchases at issue and therefore was not entitled to claim the city's exemption.
3. The purchases were sales to Cincinnati Golf Management, not to the City of Cincinnati, because Ohio law deems a facilities-management contractor to be the consumer of items purchased for use in performing the contract, regardless of whether title ultimately vests in the contractee.
4. The commissioner's motion to dismiss the city for lack of standing was moot because Cincinnati Golf Management had undisputed standing, the city acted only in concert with it, and resolving the city's standing would not affect jurisdiction, evidence, briefing, or the disposition.

Questions Presented

1. Whether Cincinnati Golf Management, Inc. could claim the City of Cincinnati's political-subdivision sales-and-use-tax exemption under R.C. 5739.02(B)(1) by acting as the city's purchasing agent.
2. Whether the purchases made by Cincinnati Golf Management, Inc. constituted sales to the City of Cincinnati under Ohio's broad statutory definition of sale.
3. Whether the City of Cincinnati's standing issue was moot because Cincinnati Golf Management had undisputed standing and the commissioner had raised the issue belatedly.

Disposition

affirmed