The Sixth Circuit Court of Appeals Refuses Request for a Rehearing on Ohio Investment Tax Credit Issue

Client Advisory

March 1, 2005
Frost Brown Todd LLC

The State of Ohio’s request to the Sixth Circuit Court of Appeals for a full court rehearing on the case that invalidated the State’s investment tax credit was refused by the Court on January 18.  Cuno v. DaimlerChrysler, Inc., 6th Cir., No. 01-3960, en banc petition denied 1/18/05.  At issue in the case was a $280 million tax incentive package that DaimlerChrysler received in 1998 to upgrade one of its auto plants located in Toledo.

The State filed the petition in September of 2004 after a three-judge appellate panel for the Sixth Circuit ruled that Ohio’s investment tax credit violates the United States Constitution.  In reaching its holding, the court found that Ohio’s investment tax credit encourages in-state investment to the detriment of investment elsewhere and therefore violates the United States Constitution’s prohibition against commerce policies that hinder free trade.

Notwithstanding the ruling, Ohio’s investment tax credit will continue to remain in effect until the case has been resolved.  The State of Ohio has 90 days from the date of the ruling to file an appeal with the United States Supreme Court.  As the Sixth Circuit Court of Appeals also has jurisdiction over Kentucky, Michigan and Tennessee, individuals in those states are also anxiously awaiting the final resolution of this case.

If you would like to learn more about the DaimlerChrysler case, Ohio’s investment tax credit or the other issues discussed above, please call Martin E. Mooney in Cincinnati at (513) 651-6979 or Robert C. Webb in Louisville at (502) 568-0313.