Paving the Way to Tax Refunds | Buckingham Wins Big for Ohio Heavy Highway Contractors

Highway construction workers on siteBuckingham Tax Attorneys Steve Dimengo and Rich Fry recently obtained a favorable ruling from the 9th District Court of Appeals for their client in Karvo Paving Co. v. Testa, 2019-Ohio-3974. This victory enables highway and road paving contractors to purchase traffic maintenance property, such as barrier walls, temporary traffic signs, etc., exempt from Ohio sales / use tax. The Court ruled that the traffic maintenance property was resold to the Ohio Department of Transportation during the contractor’s paving projects. “We are very proud of this result and privileged to defend our business clients from the unfair and overreaching imposition of Ohio taxes,” said Dimengo, Buckingham’s Managing Partner.



The primary issue was whether the contractor transferred possession of the traffic maintenance property to ODOT, meaning the property was resold. ODOT specified the type, quantity, and placement of the property, which it used to fulfill its public duty to safely maintain traffic on Ohio highways. Further, ODOT, through its engineers, controlled the property during the project, which remained onsite 24/7 even when the contractor was not working on that particular part of the road. The Court concluded that the contractor effectively rented the traffic maintenance property to ODOT and therefore, was entitled to the resale exemption on its purchase. Substantial refund opportunities exist for contractors that have historically paid tax on traffic maintenance property.


The Court additionally ruled that employees leased from a related party to the contractor were exempt from tax under since the companies were part of an affiliated group. R.C. 5739.01(JJ)(4), Even though the companies did not have common majority ownership – one was owned entirely by the husband and the other was majority owned by his wife – the taxpayer established both companies were controlled by the husband. The Court’s decision highlights that affiliation for this exemption may be established by common ownership or control.


Finally, the Court interpreted the casual sale exemption to include leases of property that the lessor had previously used in its own business. This is the first Ohio case finding that the casual sale exemption can apply to leased property. This issue was remanded to the Board of Tax Appeals for further proceedings.


This ruling creates multiple refund opportunities for construction contractors, especially those performing road paving and other public projects. If you have questions about claiming Ohio tax refunds based upon the resale, leased employee, or casual sale exemptions, do not hesitate to contact us.


Following up on our previous post.


Attorney Steven A. Dimengo is Managing Partner of Buckingham, Doolittle & Burroughs, LLC. He helps clients with complicated tax challenges including Ohio sales/use, income, commercial activity and federal taxes and has represented clients before the Ohio Supreme Court. Steve can be reached at [email protected] or 330.258.6460.


Richard B. Fry III is a partner and Buckingham’s Taxation Practice Group Chair. He focuses on state and local tax compliance and controversies, including Ohio and multistate sales/use tax, commercial activity tax, and personal income tax issues. Rich can be reached at [email protected] or 330.258.6423


About Buckingham, Doolittle & Burroughs:

Buckingham, Doolittle & Burroughs, LLC is a corporate law firm that counsels middle-market executives and business leaders all over Ohio and beyond. With offices in Canton, Akron, and Cleveland, Buckingham offers clients Business Law Reimagined through sophisticated and practical legal services. Serving the region for more than 100 years, Buckingham’s mission is to deliver meaningful experiences through the practice of law, exceed expectations in terms of service, counsel and business sense, and to offer continuous value to the industries, communities and clients they serve. For more information, news and updates, visit