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Quotron Systems, Inc. v. Limbach, 62 Ohio St.3d 447, 584 N.E.2d 658

Facts

Quotron Systems, Inc. provides stock and commodities price information to subscribers by delivering equipment and charging for terminal access, data, and port fees. The Tax Commissioner assessed Quotron $648,633.20 in use tax for failing to collect the tax from its Ohio subscribers from July 1, 1983, to June 30, 1986. The Board of Tax Appeals affirmed this assessment, leading to the appeal to the Supreme Court.

Quotron Systems, Inc., appellant, provides price information on stocks and commodities to its subscribers. It receives current pricing information, via ticker lines, from the securities and commodities exchanges and stores the information in its computer in New York.

Issue

Whether the use tax imposed on Quotron Systems, Inc. for providing access to computer equipment constitutes a burden on interstate commerce.

Whether the use tax imposed on Quotron Systems, Inc. for providing access to computer equipment constitutes a burden on interstate commerce.

Rule

The use tax applies to the storage, use, or consumption of tangible personal property or services in Ohio, including automatic data processing and computer services as defined by Ohio Revised Code.

R.C. 5739.01 and 5739.02 tax sales of automatic data processing (“adp”) and computer services, and R.C. 5741.02 imposes a complementary use tax “ * * * on the storage, use, or other consumption in this state of tangible personal property or the benefit realized in this state of any service provided. * * * ”

Analysis

The court determined that Quotron's service of providing access to its computer equipment for stock price data fell within the definition of taxable automatic data processing and computer services. The court found a sufficient nexus between Quotron's activities and the state of Ohio, as the service was provided to subscribers located in Ohio and utilized equipment and personnel within the state. The court also concluded that the use tax did not discriminate against interstate commerce and was fairly apportioned.

Here, a definite link exists. Quotron owns equipment that it delivers to subscribers in Ohio, constructed two communication concentrators in Ohio, and employs personnel in Ohio to install and maintain equipment.

Conclusion

The Supreme Court affirmed the Board of Tax Appeals' decision, holding that Quotron was liable for the use tax assessed by the Tax Commissioner.

Accordingly, we affirm the decision of the BTA.

Who won?

The Tax Commissioner prevailed in the case, as the court upheld the imposition of the use tax on Quotron for its services provided to Ohio subscribers.

The Tax Commissioner, appellee, concluding that Quotron should have collected the tax, assessed $648,633.20, excluding penalty, in use tax against Quotron for July 1, 1983 through June 30, 1986.

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