TAX REFORM UP IN THE AIR: REDEFINING THE TEST FOR QUALIFICATION OF AN AIR CARRIER FOR SALES TAX EXEMPTION

摘要

IN EPIC AVIATION V. TESTA, the Supreme Court of Ohio examined an exception to an Ohio sales tax statute for the purchase of jet fuel by an air carrier working as a public utility service. Specifically, the court looked at whether that exception requires the air carrier to have a "certificate of public convenience and necessity from the federal government." In reviewing applicable case law, including its own prior holdings, the court found not only that the statute requires no such thing, but that its own former decisions needed clarification. The court declared that the proper test for an air carrier to qualify as a public utility service, and therefore qualify for the sales tax exception, was the common-carrier test and not the existence of sufficient agency regulation. In doing so, the court corrected a loophole that effectively prevented air carriers without a certificate of public convenience and necessity from qualifying for the exception altogether, one that likely was the result of the Airline Deregulation Act (ADA) implemented over thirty years prior. Had the court taken the easy way out and agreed with the lower courts, the exception would have no teeth and its purpose would have been thwarted. In remedying its own prior oversight, the court's decision is laudable and should serve as a model for other courts.