On January 14, the Ohio Supreme Court issued a decision in Nine West/Jones Apparel v. Harris1 holding that taxpayers may source sales of goods to their ultimate destination for Ohio Commercial Activity Tax (“CAT”) purposes—even if the taxpayer did not know that destination at the time of shipment. Given this decision, if taxpayers are sourcing to Ohio based on initial shipment location, they should consider filing refunds claims in Ohio if sourcing to the ultimate destination produces a benefit.
Nine West decision confirms ultimate destination sourcing in Ohio
The case involved Nine West’s wholesale sales of shoes and accessories to DSW during 2010–2016. Nine West shipped the goods at issue to DSW’s only distribution center, which was in Ohio. From there, DSW distributed the goods to its 400+ retail stores across the country. Nine West filed refund claims requesting that its CAT be recomputed to exclude receipts from goods that were ultimately distributed to DSW retail stores outside Ohio.
Despite the fact that less than 5% of DSW’s retail stores were located in Ohio, the Tax Commissioner asserted that Ohio could tax 100% of Nine West’s receipts. The Tax Commissioner reasoned that the shipping documentation listed Ohio as the destination and that the ultimate destination of the goods was irrelevant.
The issues before the Court included: 1) whether receipts are sourced based on the initial ship-to location or the ultimate destination; and 2) if ultimate destination is controlling, whether the taxpayer must have contemporaneous knowledge of the ultimate destination at the time of sale.
The Court agreed that goods are sourced to the location where they are “ultimately received after all transportation is complete”.2 Rejecting the Tax Commissioner’s position to the contrary, the Court held there is no statutory requirement that the taxpayer know the goods’ ultimate destination at the time of shipment. The Court further held that “the statute does not specify the type of documentation that must be furnished to support the claim,” and that later-acquired evidence may be used to establish ultimate destination.3
While Nine West prevailed on the legal issue of how to source its goods, a majority of the Court concluded that Nine West had failed to satisfy its burden of proof. Although Nine West provided testimony and documentation that up to 95% of the goods sold to DSW had an ultimate destination outside Ohio, the Court denied the claim because inventory records for the tax years at issue were not available.
Even though the Court denied Nine West’s refund, taxpayers should consider the tax effect of pursuing refunds or making prospective adjustments to source sales to their ultimate destination. 3 Notably, improvements in data collection and analytics may help other taxpayers overcome the evidentiary issues that Nine West faced for these tax years dating back to 2010.
1. Slip Opinion No. 2026-Ohio-74.
2. R.C. 5751.033(E).
3. In a related decision, the Court held that ultimate destination sourcing does not follow the goods indefinitely; rather, it ends when the purchaser (not the purchaser’s customer) receives the property. VVF Intervest L.L.C. v. Harris, Slip Opinion No. 2025-Ohio-5680 (Dec. 24, 2025).
Client Alert 2026-016