Midwest Found. Indep. Physicians Assn. v. Tracy
Annotate this Case
Download PDF
1 Midwest Foundation Independent Physicians Association, d.b.a. 2 ChoiceCare, Appellant, v. Tracy, Tax Commr., Appellee. 3 [Cite as Midwest Found. Indep. Physicians Assn. v. Tracy (1996), _____ 4 Ohio St. 3d _____.] 5 Taxation -- Use tax on quarterly magazine published and mailed from 6 Boston, Massachusetts, to Ohio residents by Ohio health mainteance 7 organization -- R.C. 5741.02(A), applied -- Taxable use, when. 8 (No. 94-2058--Submitted September 14, 1995--Decided January 10, 9 1996.) 10 Appeal from the Board of Tax Appeals, No. 92-Z-435. 11 12 Midwest Foundation Independent Physicians Association, d.b.a. 13 ChoiceCare, appellant, operates a Cincinnati-based health maintenance 14 organization. ChoiceCare s members reside in Ohio, Kentucky, and 15 Indiana. Approximately eighty-five percent of its members lived in Ohio 16 during the audit period, January 1, 1988 through December 31, 1990. 17 ChoiceCare purchases the Health Journal Magazine, a quarterly 18 magazine published by a company in Boston, Massachusetts. ChoiceCare 19 directs the publisher to mail the magazines from Boston directly to 1 ChoiceCare s members. The magazine keeps the members abreast of 2 changes at ChoiceCare and in the health care industry. It usually contains a 3 letter from ChoiceCare s president, ideas for the health-conscious member, 4 and other health-related articles. 5 The Tax Commissioner, appellee, assessed use tax against those 6 magazines sent to Ohio residents. On appeal, the Board of Tax Appeals 7 ( BTA ) affirmed the commissioner s assessment. The BTA ruled that 8 ChoiceCare exercised a right or power incidental to ownership in Ohio by, 9 from its Ohio office, ordering, paying for, and supplying a mailing list to 10 direct delivery of, the magazine. 11 The cause is now before this court on ChoiceCare s appeal as of right. 12 13 Frost & Jacobs and Larry H. McMillin, for appellant. 14 Betty D. Montgomery, Attorney General, and James C. Sauer, 15 Assistant Attorney General, for appellee. 16 17 Per Curiam. We affirm the BTA s decision. 18 R.C. 5741.02(A) imposes a use tax on the storage, use, or other 19 consumption in this state of tangible personal property ***. R.C. 2 1 5741.01(C) defines use to mean the exercise of any right or power 2 incidental to the ownership of the thing used. 3 ChoiceCare, from its Ohio office, ordered the Boston publisher to 4 print the magazines and mail them to ChoiceCare s members in Ohio. 5 Apparently, ChoiceCare also issued payment for the magazines from Ohio. 6 ChoiceCare, thus, orchestrated the purchase and distribution of the 7 magazine to Ohio recipients. By these acts, ChoiceCare exercised rights or 8 powers incidental to the ownership of the magazines. Since ChoiceCare 9 exercised these rights or powers in Ohio, ChoiceCare owes Ohio use tax on 10 these activities. Norandex, Inc. v. Limbach (1994), 69 Ohio St. 3d 26, 630 11 N.E. 2d 329. 12 We distinguish Hoffmann-LaRoche, Inc. v. Porterfield (1968), 16 13 Ohio St. 2d 158, 45 O.O. 2d 486, 243 N.E. 2d 72, cited for support by 14 ChoiceCare. In that case, Hoffmann-LaRoche, a pharmaceutical 15 manufacturer that maintained its principal office in New Jersey and had 16 warehouses in states other than Ohio, mailed samples and promotional 17 materials to Ohio doctors and hospitals. We affirmed a BTA decision 18 reversing that assessment because Hoffmann-LaRoche divested itself of 3 1 ownership, possession, and control outside Ohio. Thus, Hoffmann-LaRoche 2 did not exercise any right or power incidental to ownership in Ohio. 3 ChoiceCare also argues that Am. S. B. No. 303, 143 Ohio Laws, Part 4 I, 1602 (effective July 18, 1990), which expanded the definition of use to 5 include distribution by the consumer, without charge, to recipients in this 6 state, prevents the commissioner from assessing ChoiceCare on purchases 7 occurring prior to its enactment. ChoiceCare contends that the instant 8 purchases were not taxable until this amendment became effective. This 9 argument has no merit. We have held above that the definition of use 10 existing during the audit period covers the instant situation without 11 bolstering from this amendment. Indeed, the amended definition appears 12 aimed at taxpayers like Hoffmann-LaRoche, which distribute items from 13 outside Ohio. 14 15 Accordingly, we affirm the decision of the BTA because it is reasonable and lawful. 16 17 18 Decision affirmed. MOYER, C.J., DOUGLAS, WRIGHT, RESNICK, F.E. SWEENEY, PFEIFER and COOK, JJ., concur. 4 1 5
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
