The Ohio Tax Commissioner ("Commissioner") recently determined that video display systems were taxable as "business fixtures" after attachment to real property. The taxpayer installed these systems to display videos or messages. The taxpayer installed the systems in sports stadiums, arenas, or building entrances. The taxpayer attached the video cabinets of these systems to the real property by welding them to the building's beams or by anchoring them to the building.
Ohio taxes sales of tangible personal property but not items that become real property after installation. Ohio defines "real property" to include land itself and all buildings, structures, improvements, and fixtures unless otherwise specified. A "fixture" is tangible personal property that has become permanently attached or affixed to land or a building, structure, or improvement which primarily benefits the realty and not the business conducted on-premises. However, a "business fixture" is a fixture that primarily benefits the business conducted on-premises, not the real property. "Business fixtures" remain tangible personal property after installation and include equipment, signs, and broadcasting systems. The video display systems functioned as equipment, signs, or broadcasting systems based on their use. The Commissioner concluded that the video display systems qualified as taxable "business fixtures" because of their use by the resident businesses after installation.