Casey IRACs are produced by an AI that analyzes the opinion’s content to construct its analysis. While we strive for accuracy, the output may not be flawless. For a complete and precise understanding, please refer to the linked opinions above.

Keywords

appealcorporationdue process

statuteappealdue processappellantappellee

Related Cases

Wheeling Steel Corp. v. Glander, 337 U.S. 562, 69 S.Ct. 1291, 93 L.Ed. 1544, 55 Ohio Law Abs. 305, 40 O.O. 101

Facts

Wheeling Steel Corporation, organized in Delaware, and National Distillers Products Corporation, organized in Virginia, both conducted business in Ohio but were domiciled in other states. Wheeling Steel had its general offices in West Virginia and maintained sales offices in Ohio, while National Distillers operated a distillery in Ohio but managed its business from New York. Both corporations paid all required taxes in Ohio but challenged the ad valorem tax on their intangible property, arguing it violated their constitutional rights.

It is stipulated that appellants each paid all franchise or other taxes required by Ohio for admission to do business in the State and paid all taxes assessed upon real and personal property located in said State.

Issue

Did the imposition of an ad valorem tax on the intangible property of foreign corporations by the State of Ohio violate the Due Process Clause and the Commerce Clause of the Federal Constitution?

Appellants urge that the question which the Board of Tax Appeals regarded as serious should be resolved against the State on the ground that these intangibles had no situs in Ohio to sustain its power under the Due Process Clause so to tax them and also that to do so imposes an undue burden on interstate commerce in violation of the Commerce Clause.

Rule

The court applied the principles of due process and equal protection under the Fourteenth Amendment, determining that a state cannot impose taxes on intangibles without a sufficient connection to the state.

Ohio holds this tax on intangibles to be an ad valorem property tax, Bennett v. Evatt, 145 Ohio St. 587, 62 N.E.2d 345, and in no sense a franchise, privilege, occupation or income tax.

Analysis

The court analyzed the connection between the intangible property and the state of Ohio, concluding that the intangibles in question had no business situs in Ohio as they were not created, payable, or managed there. The court emphasized that the tax imposed on the foreign corporations was discriminatory, as it treated them differently from domestic corporations, which were exempt from similar taxation.

The State action and policy resulting from statute and decisions is certified to us by the appellee, the Tax Commissioner or Ohio, to be as follows: ‘* * * since the decision of the Supreme Court of Ohio in Ransom & Randolph v. Evatt, 142 Ohio St. 398, 52 N.E.2d 738 (January 12, 1944) and in obedience thereto, it has been the policy and practice of said Department of Taxation to construe and apply sections 5328-1 and 5328-2 of the General Code of Ohio…’

Conclusion

The Supreme Court of Ohio reversed the decisions of the Board of Tax Appeals, holding that the ad valorem tax on the intangible property of the foreign corporations was unconstitutional.

The judgments are reversed and the causes remanded for proceedings not inconsistent herewith.

Who won?

Wheeling Steel Corporation and National Distillers Products Corporation prevailed in the case because the court found that the tax imposed by Ohio was unconstitutional due to lack of sufficient connection to the state and discriminatory treatment compared to domestic corporations.

The State does not seriously deny this unequal application of its own tax but claims that reciprocity provisions of the statute reestablish equality.

You must be

Log In to Casey

Sign Up to Casey

Reset Your Password

Keywords

Related Cases

Hodge v. Muscatine County, 196 U.S. 276, 25 S.Ct. 237, 49 L.Ed. 477

Kansas City Power and Light Co. v. Director of Revenue, 83 S.W.3d 548

Troxler v. Breaux, 105 So.3d 944, 12-330 (La.App. 5 Cir. 11/27/12)

Midwestern Press, Inc. v. Commissioner of Taxation, 295 Minn. 59, 203 N.W.2d 344

McCutchan v. Oklahoma Tax Com’n, 191 Okla. 578, 132 P.2d 337, 1942 OK 416