Ohio Commercial Activity Tax has an exclusion from gross receipts for property or money obtained or acquired as an agent in extra of the agent’s fee payment or different reimbursement. R.C. 5751.02(F)(2)(l). Aramark Corp., the taxpayer on this case, contracted with instructional, healthcare, and authorities establishments to supply meals service operations. See Aramark Corp. v. Harris, Ohio BTA Case No. 2019-2975. Aramark would buy meals and labor and incur different prices in reference to its companies. Aramark’s clients would reimburse Aramark for the prices incurred and pay a administration payment on high of the reimbursements. Aramark asserted that it ought to solely be taxed on its administration payment, because the reimbursements certified for the agent exclusion. The Tax Commissioner argued that Aramark didn’t qualify as an agent beneath the statute, and the BTA agreed.
Provisions in Aramark’s contracts disclaiming any company relationship had been deadly to its arguments it was performing as its buyer’s agent when buying meals and different provides. The agent exclusion requires the agent to have the precise authority to bind the principal. The BTA discovered that Aramark didn’t have the requisite authority as a result of the agreements expressly disclaimed any company relationship between Aramark and its clients. It additional held that the reimbursements it obtained had been a part of prices of products offered which aren’t deducted from gross receipts for CAT functions.
This case highlights that the fitting contract provisions are crucial for claiming the company exclusion.
