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While sourcing sales of tangible personal property is seemingly easier than sourcing sales of services, it is not without its difficulties. One of those issues is establishing where the product was ultimately delivered. The recent decision in <a href="https://www.supremecourt.ohio.gov/rod/docs/pdf/0/2026/2026-Ohio-74.pdf" target="_blank" rel="noreferrer noopener">Jones Apparel Group/Nine West Holdings v. Harris</a> addresses that evidentiary burden. Slip Op. No. 2026-Ohio-74 (Oh. Sup. Ct. Jan. 14, 2026).

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In Ohio, sales of tangible personal property that are delivered by motor carrier are sitused to “the place at which such property is ultimately received after all transportation is completed” for purposes of the Commercial Activity Tax. In&nbsp;Jones Apparel, the company sold merchandise to DSW, Inc. (“DSW”) that was shipped to DSW’s sole distribution center in Columbus, Ohio, whose center was not a Qualified Distribution Center. After initially situsing all the DSW sales to Ohio, Jones Apparel filed a refund claim alleging that approximately 80 percent of that merchandise was ultimately shipped outside of Ohio for sale in DSW’s retail stores across the country.

Although DSW declined to provide shipping data, Jones Apparel offered two pieces of support for its situsing outside of Ohio. First, the company offered the testimony of one of its executives that “pegged” the total shipments outside of Ohio to be at least 80 percent – stating that to have sold all of the merchandise at the Ohio retail stores would have required DSW to have sold one pair of shoes per minute. Second, Jones Apparel offered a sampling method using a three-month period in 2018 (although the audit period was 2010 through 2016).

On review, the Ohio Supreme Court stated that supporting evidence did not need to be contemporaneous with the sale. However, the majority of the Court found the support offered by Jones Apparel to be lacking. For the testimony, they held that the executive’s testimony was an “educated guess,” and he failed to explain how his non-Ohio situsing was computed. For the sampling, the Court found that the sample was outside the audit period and too short of a period (only three months compared to the seven-year audit period).

While both the majority and the dissent appeared to agree that not all of the DSW sales should be sitused to Ohio, the majority held that the burden was on the taxpayer to prove the actual amount sitused outside the state using a quantitative showing. When sourcing sales – whether for tangible personal property, services, or other sales – it is imperative to maintain documentation to support that sourcing methodology.

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This update is one in a series of updates written for the <a href="/news-and-events/the-br-state-local-tax-spotlight-february-2026/" id="41853">February 2026</a> edition of The BR State + Local Tax Spotlight.

© 2026 Blank Rome LLP. All rights reserved. Please contact Blank Rome for permission to reprint. Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.

Prove It: Evidentiary Standard for Sales Situsing

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Prove It: Evidentiary Standard for Sales Situsing

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