263 N.E.2d 243 (Ohio 1970), 69-184, Household Finance Corp. v. Porterfield

Docket Nº:69-184.
Citation:263 N.E.2d 243, 24 Ohio St.2d 39
Opinion Judge:SCHNEIDER, J.
Party Name:HOUSEHOLD FINANCE CORP. et al., Appellants, v. PORTERFIELD, Tax Commr., Appellee.
Attorney:Lucas, Prendergast, Albright, Gibson, Brown & Newman and Rankin M. Gibson, Columbus, for appellants., Paul W. Brown, Atty. Gen., and Jon A. Ziegler, Columbus, for appellee. Messrs. Lucas, Prendergast, Albright, Gibson, Brown & Newman, and Mr. Rankin M. Gibson, for appellants., Mr. Paul W. Brown,...
Judge Panel:C. WILLIAM O'NEILL, C. J., and HERBERT, DUNCAN and CORRIGAN, JJ., concur. [ 6 ]
Case Date:October 07, 1970
Court:Supreme Court of Ohio
 
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Page 243

263 N.E.2d 243 (Ohio 1970)

24 Ohio St.2d 39

HOUSEHOLD FINANCE CORP. et al., Appellants,

v.

PORTERFIELD, Tax Commr., Appellee.

No. 69-184.

Supreme Court of Ohio.

October 7, 1970

Page 244

Syllabus by the Court

1. The 'dealer in intangibles' tax, provided for in R.C. 5725.01 et seq., may be constitutionally assessed against the issued and outstanding shares of capital stock of an incorporated dealer in intangibles, which are owned by nonresidents of Ohio, notwithstanding such dealer [24 Ohio St.2d 40] in intangibles is a foreign corporation and maintains its headquarters outside Ohio.

2. In order for domestic insurance companies, financial institutions and dealers in intangibles to claim exemption from all taxes on their property and assets other than real estate, which exemption is granted by R.C. 5725.25 and 5725.26, it is necessary for the record to show affirmatively that such entities are amenable to the (intangible) taxes provided for in R.C. 5725.01 et seq.

Lucas, Prendergast, Albright, Gibson, Brown & Newman and Rankin M. Gibson, Columbus, for appellants.

Paul W. Brown, Atty. Gen., and Jon A. Ziegler, Columbus, for appellee.

SCHNEIDER, Justice.

Household Finance Corporation (HFC) and its subsidiary corporations 1 are appealing a decision of the Board of Tax Appeals which affirmed the Tax Commissioner's [24 Ohio St.2d 41]

Page 245

final assessment of the dealer in intangibles (DIT) tax against it.

HFC is a foreign corporation and maintains its headquarters outside Ohio. It is authorized to do, and does, business in this state as a dealer in intangibles (DIT), as defined in R.C. 5725.01. 2 As such, it is required to make [24 Ohio St.2d 42] return for, collect and remit to the state of Ohio the DIT tax provided for in R.C. 5725.01 to 5725.26, inclusive.

For the purposes of this appeal, it is sufficient to say that the burden of the DIT tax falls, not upon HFC itself, but upon its issued and outstanding shares of capital stock; but only to the extent of the fair value of the capital employed (capital stock, surplus and undivided profits) in this state, measured by the ratio which the Ohio gross receipts of HFC bear to its total gross receipts from DIT business. R.C. 5725.15. 3 [24 Ohio St.2d 43]

Page 246

The first proposition advanced by HFC in this court is that the DIT tax may not be lawfully or constitutionally assessed against those issued and outstanding shares of capital stock which are owned and held by nonresidents of Ohio, and thus have a 'situs' without this state.

We reject this proposition for the reason that, as already shown, the tax in question is not imposed upon either the certificates of shares or upon the value of the shares themselves, but the tax is imposed upon the capital represented by the shares to the extent that the capital is employed in Ohio. In other words, if, as in the instant case, only 4.11722% of a DIT's gross receipts is attributable to Ohio, the basis of the tax upon each issued and outstanding share of the DIT's stock is 4.11722% of its fair value, as representative of the capital employed in Ohio.

Moreover, the DIT tax is in lieu of all other taxes on the property and assets of HFC other than its real estate situated in Ohio. R.C. 5725.26. 4

HFC contends that Certified Credit Corp. v. Bowers (1963), 174 Ohio St. 239, 188 N.E.2d 594, is not dispositive of the first question involved in this case, because there appellant was an Ohio corporation with its principal office in this state, whereas here appellant is a foreign corporation. That distinction misses the mark. In Certified Credit, the 'resident' [24 Ohio St.2d 44] DIT corporation claimed exemption for its shares held by nonresidents of Ohio, which is the same claim that is presented here. That claim was denied, and the DIT tax upon the foreign-held shares was deemed not to contravene the due process or interstate commerce clauses of the Constitution of the United States (paragraph two of the syllabus, 174 Ohio St. 239, 188 N.E.2d 594).

Additionally, two years before Certified Credit Corp., this proposition was settled, albeit sub...

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