The Toledo Mud Hens (Class AAA; International League) and Ohio are sparring over the team’s tax-exempt status, with the state arguing the team owes $553,389, including interest, in back taxes.
The taxes cover the years 2002 through 2005, which coincided with the opening of a new ballpark. Toledo Mud Hens Baseball Club Inc. is set up as nonprofit, but the state’s Department of Taxation says that didn’t exempt the team from paying sales taxes on purchases. (The team collects sales taxes on customer purchases.) The issue is under appeal with the Ohio Board of Tax Appeals. From the Toledo Blade:
The exemption would apply to purchases made by the nonprofit corporation, not to food, drinks, and souvenirs bought by fans.
“We have not been paying [sales] taxes since 1965, when the club was formed as an Ohio not-for-profit corporation,” said Joe Napoli, general manager of the Mud Hens and Toledo Walleye. “But because of the uniqueness of the corporation, we wanted to clear up any confusion. It also puts us on the same footing as the Columbus Clippers, which was structured the same way and is also exempt….
“We were audited,” Napoli said. “The triggering event was a major purchase of the ballpark, a video board. Naturally, that gets attention. When you get a video board of 700-some thousand dollars, an item of that magnitude, there are questions about why you did not pay tax on that.”
In the meantime, local legislators are proposing changes to the law that would codify the team’s tax-exempt status. That measure is wrapped up with larger changes to how the state assesses sales taxes to formerly exempt areas like business services.
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