14 June 2018

Should bobbleheads and other promotional items be exempt from tax?


The Ohio Supreme Court has been considering whether promotional items such as bobbleheads should be exempt from sales taxes. As part of their review, the Court has spoken to attorneys for the Cincinnati Reds to determine whether promotional items are part of a resale under contract law. The six justices on the Court looked into whether the bobblehead should be considered an exempt “resale” or whether the Cincinnati Reds should be collecting and remitting sales tax. In order for a resale to occur there must be consideration received in exchange for the bobblehead. Attorney for the Cincinnati Reds, Steven Dimengo, says that the Cincinnati Reds receive consideration for the bobbleheads that are sold at the games because the fans purchase the tickets and then must show up to the game to receive any promotional items. The price of these goods are factored into the ticket price for the entire year before the season begins. Counsel for the Cincinnati Reds has argued that tickets are not subject to sales taxes and so the promotional items should not also be subject to sales taxes. On the other hand, the Board of Tax Appeals, which resolves appeals of the Tax Commissioner and county boards, believes that these promotional items are more analogous to taxable giveaways, that are subject to sales or use tax. Although the Court has not made a decision, based on questions the Court has asked the parties it appears that the Court is more in line with the Cincinnati Reds' attorney's thinking. Decisions on this issue across the country have varied as the Missouri Supreme Court decided that the Kansas City Royals are not responsible for the sales tax on their promotional items but the Wisconsin Supreme Court decided the opposite in regards to the Milwaukee Brewers.

Post was written with contributions by Nabeela Latif.

Authors