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Ohio Supreme Court Sets Oral Arguments in NASCAR Sourcing Dispute

Posted on Nov. 24, 2021

The Ohio Supreme Court has set oral arguments in a dispute over whether a portion of NASCAR's broadcast and media revenue is subject to the state commercial activity tax based on population and Nielsen ratings.

The court on November 23 scheduled oral arguments in NASCAR Holdings Inc. v. McClain for January 25, 2022. NASCAR has asked the court to vacate the tax commissioner’s final determination that the company’s broadcast and media revenue was sitused to Ohio, arguing that the Board of Tax Appeals (BTA) erred in affirming the determination after concluding that the commissioner applied the wrong statutory provision.

The commissioner sourced the broadcast and media revenue based on the portion of the NASCAR audience located in Ohio, using 2007–2009 Nielsen ratings data on the number of cable televisions in the state and outside it. 

The commissioner also sourced NASCAR’s license fees and corporate sponsor fees to Ohio based on the state’s percentage of nationwide population and sourced the other revenue streams based on the location of the race event for which the fees were paid.

NASCAR challenged the commissioner’s final determination, arguing that only revenue from agreements for sanctioned events taking place in Ohio should be sitused to the state and that nearly all the other revenue should be sitused to Florida, where the company is registered 

The BTA agreed with NASCAR that the commissioner should have sourced the broadcast revenue under Ohio Rev. Code section 5751.033(F) instead of section 5751.033(I), because subsection F relates to gross receipts from the sale of the right to use types of intellectual property while subsection I relates to gross receipts not otherwise sitused. But the BTA concluded that the apportionment would have been the same under either section’s method and affirmed the determination.

The taxpayer in NASCAR Holdings Inc. v. McClain (No. 2021-0578) is represented by attorneys from Taft Stettinius & Hollister LLP.

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