2006 Ohio Tax Update - Bricker & Eckler · 2006 Ohio Tax Update 6 CAT 2006-04: Cash Discounts...

2006Ohio Tax Update

Prepared By:

Mark A. Engel513.870.6565

[email protected]

Alan D. Duffy614.227.4885

[email protected]

Jonathan T. Brollier614.227.8805

[email protected]

Bricker & Eckler LLP

9075 Centre Pointe Drive, Suite 440West Chester, Ohio 45069

www.bricker.com

© Bricker & Eckler LLP

INDEX

Legislative Developments 3

Administrative Developments 5

Cases & Rulings 6

AD VALOREM TAXES

Real Property Tax: Exemptions 6

Real Property Tax: Valuation 10

Real Property Taxation: CAUV 13

Personal Property Taxation: Valuation 14

Personal Property Taxation: Classifi cation 18

Personal Property Taxation: Public Utility Property 19

Sales and Use Tax 19

Personal Income Tax 25

Corporation Franchise Tax 25

Budget Commission Disputes 26

Miscellaneous 27

2006 Ohio Tax Update

3

Legislative Developments

Tax Collection – Offers in Compromise/Payment over Time (Sub. H.B. 390): Amended section 5703.06 by adding new division (B)(4) to permit the Tax Commissioner and Attorney General to consider a request for innocent spouse relief under section 6015 of the Internal Revenue Code when determining whether a compromise or payment-over-time agreement is in the best interests of the state.

Tax Collection – Statue of Limitations for Collection (Sub. H.B. 390): Added R.C. 5703.58 to provide that the Tax Commissioner shall not assess any tax or penalty more than 10 years from the date the original return for such tax was due, including extensions. The provision does not apply to sales and use taxes, income tax withholding, or fraudulent attempts to evade tax.

Defi nitions – Internal Revenue Code (H.B. 530): Added R.C. 5701.11(A) to provide that any reference in R.C. Chapter 57 to the Internal Revenue Code “as amended” or to any other law “as amended” means the Internal Revenue Code or such law is in effect as of the date of the bill. The bill also added R.C. 5701.11(B) to permit taxpayers to irrevocably elect to apply the provisions of the Internal Revenue Code for tax years 2005 and beyond, if those provisions differ from those that would be incorporated into R.C. 5703.33 (corporate franchise tax), 5745.01 (public utility tax), or 5747.01 (income tax) by R.C. 5701.11(A).

Tax Levy Law (H.B. 530): Amends R.C. 5705.03 and 5705.195 to permit a subdivision and the county auditor to take into account the assessment percentages prescribed in section 5711.22 of the Revised Code when levying taxes and directs the Tax Commissioner to issue guidance on the use of assessment percentages.

The bill also adds R.C. 5705.211 to permit the board of education of a city, local, or exempted village school district to adopt a resolution proposing the levy of a tax in excess of the ten-mill limitation for the purpose of paying the current operating expenses of the district.

Real Property – Tax Exemptions (H.B. 530): Amends R.C. 5709.08 by adding new division (A)(2), which provides that real and personal © Bricker & Eckler LLP


4

property owned by the state, even when the property is leased or otherwise operated by a private party, and used as public service facilities described in R.C. 1501.07, as concessions or other special projects described in R.C. 1531.06(F), as refuge harbors or marine recreational facilities described in R.C. 1547.72, or areas described in R.C. 1503.03, are declared to be public property “used exclusively for a public purpose.”

The bill also adds new R.C. 5709.08, which provides that the term “political subdivision” includes the state or an agency of the state if the city, local, or exempted village school district in which the property is situated expressly consents to exempting the property from taxation.

Personal Property (H.B. 530): Amends R.C. 5711.01 to provide that the “taxable property” of a telephone, telegraph, or interexchange telecommunications company includes property subject to a sale and leaseback transaction for tax year 2007 and beyond.

Financial Institutions – Insurance Companies (H.B. 530): Adds new R.C. 5725.222 and 5729.103, which provide that insurance companies may fi le a refund claim for overpaid, illegally paid, or erroneously paid taxes or assessments with the Department of Insurance within three years after the date of the payment.

The bill also adds new R.C. 5725.98 and 5729.98, which describe the credits that insurance companies may claim when calculating the amount of tax due under R.C. Chapter 5725 and 5279.

The bill also adds R.C. 5729.101 which permits the state to impose interest on taxes assessed against foreign insurance companies.

Sales Tax – Defi nitions (H.B. 530): Adds new R.C. 5739.01(B)(12), which provides that machinery and equipment, detergents, supplies, solvents, and any other tangible personal property located at a manufacturing facility that are used in the process of removing soil, dirt, or other contaminants from, or otherwise preparing in a suitable condition for use, towels, linens, articles of clothing, fl oor mats, mop heads, or other similar items, to be supplied to a consumer as part of laundry and dry cleaning services, only when the towels, linens, articles of clothing, fl oor mats, mop heads, or other similar items belong to the provider of the services.


5

Income Tax – Defi nitions (H.B. 530): Adds new R.C. 5747.01(A)(22) and (23), which permit taxpayers to deduct amounts received during the taxable year as reimbursement for life insurance premiums under section R.C. 5919.31 of the Revised Code or as death benefi ts paid by the adjutant general under section 5919.33 of the Revised Code when computing Ohio adjusted gross income.

The bill also adds new R.C. 5747.01(FF), which provides that, for Ohio’s fi duciary income taxes, the term “trust” does not include any qualifi ed pre-income tax trust making a qualifying pre-income tax trust election to subject itself and all pass-through entities of which it is a 5% or greater owner to the commercial activity tax. The bill also adds R.C. 5751.01(E)(11) to provide that such an electing pre-income tax trust is not an excluded person for purposes of the commercial activity tax.

School District Income Tax (H.B. 530): Adds new R.C. 5748.011, which provides that a school district levying a school district income tax may exclude military pay and allowances from taxable income by adopting a resolution to this extent.

Commercial Activity Tax – Defi nitions (H.B. 530): Adds new R.C. 5751.01(F)(2)(z), which provides a defi nition of “qualifying distribution center receipts” that are excluded from the defi nition of gross receipts for the commercial activity tax.

Administrative Developments

The Department of Taxation issued the following information releases:

Commercial Activity Tax:

CAT 2006-10: Changes in Ownership (Second Version)

CAT 2006-09: Records Retention (Second Version)

CAT 2006-08: Situsing Receipts from Periodic Payments for Mobile Property (Revised 10/06)

CAT 2006-07: Qualifed Distribution Centers (Final Rule)

CAT 2006-06: Credit for Unused Franchise Tax NOLs

CAT 2006-05: Highway Transportation Services: Bright-Line Presence and Situsing (Final Rule)


6

CAT 2006-04: Cash Discounts (Final Rule)

CAT 2006-03: Defi nition of “Agent” (Final Rule)

CAT 2006-02: Exclusion for Automobile Dealers to Meet a Customer’s Preference

CAT 2006-01: Applicable Excise Tax Rates

CAT 2005-01 Defi nition of Foreign Corporation (Repealed 4/06)

Corporation Franchise Tax:

CFT 2006-01 Questions Regarding Ohio’s Manufacturing Machinery and Equipment Tax Credit and Subsequent Grant - R.C. 122.172.122.173, 5733.33 & 5747.31

Estate Tax

ET 2006-01 Estate Tax Updates as a Result of Am. Sub. H.B. 66

Income Tax

IT 2006-01 Revisions to Estimated Payment Allocation Process for Individual and School District Income Taxes

IT 2006-02 Employer Withholding Tables

IT 2006-03 Nonresident Married Filing Jointly

Cases & Rulings

AD VALOREM TAXES

Real Property Tax: ExemptionsIn Cincinnati Community Kollel v. Wilkins, B.T.A. Case Nos. 2004-K-1141 and 2004-K-1142 (January 20, 2006), app. docketed Sup. Ct. Case No. 2006-0365 (February 17, 2006), the Board of Tax Appeals affi rmed the Tax Commissioner’s denial of property tax exemption for property that the taxpayer used to provide rent-free housing to scholars at its


7

learning center. The taxpayer sought exemption under R.C. 5709.121; the Board, however, concluded that the taxpayer was a religious institution and, therefore, was ineligible to seek exemption for the property under that statute.

In Comer v. Wilkins, B.T.A. Case No. 2005-B-1599 (October 27, 2006), the Board of Tax Appeals held that the Tax Commissioner improperly denied the taxpayer’s application for remission of a late payment because he failed to forward the request to the Board of Revision, as required by R.C. 5715.39(C), after denying the request.

In Community Health Professionals, Inc. v. Wilkins, B.T.A. Case No. 2004-K-689 (May 5, 2006), app. docketed Sup. Ct. Case No. 2006-1086 (June 5, 2006), the Board of Tax Appeals granted a charitable tax exemption to property that a visiting nurses association used as administrative offi ces. The Tax Commissioner denied the claimed exemption, holding that the taxpayer did not have a clear system in place to provide services without regard to the ability to pay. The Tax Commissioner noted that the taxpayer was reimbursed for its services from various government programs and from a patient care fund it maintained, that the taxpayer did not offer services on a sliding-fee system, and did not provide adequate documentation describing the number of patients receiving free care. The Board, citing the decision of the Tenth District Court of Appeals in Miracit Development Co. v. Zaino (2006), Franklin App. No. 04AP-322, 2005-Ohio-1021, reversed the Tax Commissioner. In so doing, the Board held that the charitable tax exemption did not require the taxpayer to provide some arbitrary percentage of charity care or prevent it from seeking reimbursement from government programs designed to aid those in need.

In C.P. Snow Properties, LLC v. Wilkins, B.T.A. Case No. 2005-V-540 (September 8, 2006), the Board of Tax Appeals held that the tax exemption for former brownfi elds began in the taxable year that the Tax Commissioner ordered the property placed onto the exempt list under R.C. 5709.87 and not for the taxable year that the EPA issued its order and entered into a covenant not to sue, even though Tax Commissioner took over a year to issue his order.

In Episcopal School of Cincinnati v. Wilkins, B.T.A. Case No. 2004-R-230 (December 22, 2006), the Board of Tax Appeals granted a property tax exemption to a proposed inner city, religious affi liated


8

school that never opened. The Tax Commissioner argued that the school was never property funded, that no exempt use was realized, and the property was later sold to a for-profi t corporation. The Board concluded that the taxpayer took affi rmative steps to realize the exempt purpose such as by signing construction contracts and, although the trustee minutes indicated a realization of funding diffi culties, they also showed the trustees’ intent to continue with the project.

In Fallsway Properties, Inc. v. Wilkins, B.T.A. Case No. 2005-R-179 (May 12, 2006), the Board of Tax Appeals held that a property tax exemption for TIF-fi nanced property could only be fi led beginning on the date of the TIF, not on the date of the acquisition of the property by the taxpayer.

In First Baptist Church of Milford v. Wilkins (2006), 110 Ohio St.3d 496, the Supreme Court of Ohio affi rmed the denial of a tax exemption by the Board of Tax Appeals for property owned by a church and used by a subsidiary corporation to print Bibles and other materials. The Court held that the charitable exemption for religious institutions requires that use and ownership of property coincide and that the church could not claim tax exemption for the activities conducted by its subsidiary.

In Girls Scouts – Great Trail Council v. McAndrew, B.T.A. Case No. 2004-R-166 (January 6, 2006), app. docketed Sup. Ct. Case No. 2006-0266 (February 2, 2006), the Board of Tax Appeals granted tax exemption for a small store used by the Girl Scouts to sell scouting merchandise and other items integral to the scouting program at pre-set prices. The store made a small profi t only once in 12 years. Based on these facts, the Board concluded that the store could not be considered in competition with other commercial enterprises and was used exclusively for charitable purposes within the meaning of R.C. 5709.12(B).

In Home Missioners of America v. Wilkins, B.T.A. Case No. 2005-R-713 (December 15, 2006), the Board of Tax Appeals reluctantly affi rmed a decision of the Tax Commissioner denying property tax exemption to a 72-acre parcel of property which the taxpayer used for meditation and on which the taxpayer had erected the Stations of the Cross. The property is adjacent to other property owned by the taxpayer and used as a chapel. The taxpayer waived hearing in the matter and, as a result, the Board


9

lacked evidence to determine whether the property was used primarily for religious worship within the meaning of R.C. 5709.07. As a result, the Board affi rmed the judgment of the Tax Commissioner.

In Marino, Trustee v. Wilkins, B.T.A. Case No. 2005-P-1734 (March 17, 2006), the Board of Tax Appeals determined that it lacked jurisdiction to consider a property tax exemption application where taxes and special assessments were unpaid in the year for which the application was fi led. The Board noted that because 26.5% of the property was used for non-exempt purposes, that percentage of taxes and special assessments were not remittable.

In Strongsville Bd. of Ed. v. Wilkins (2006) 108 Ohio St. 3d 115, the Supreme Court held that when a taxpayer fi les a property tax exemption application but has not paid all non-remittable taxes in full at the time of fi ling, the Tax Commissioner lacks jurisdiction to consider the application, even if the taxpayer pays the non-remittable taxes in full before the application is formally considered.

In The Matthew Kelly Foundation v. Wilkins, B.T.A. Case No. 2005-V-676 (October 27, 2006), the Board of Tax Appeals held that the real property owned by a tax-exempt corporation promoting its founder’s inspirational message was not exempt from taxation. The foundation made a large profi t from the promotion and sale of its founder’s written and spoken words. Even though the foundation dedicated this profi t to a charitable cause, the Board concluded that the primary use of the property was to generate revenue to support the foundation’s message. The Board concluded that this was not a charitable use and denied the requested tax exemption.

In The Old West End Assoc. v. Wilkins, B.T.A. Case No. 2005-H-359 (October 27, 2006), the Board of Tax Appeals affi rmed the Tax Commissioner’s refusal to grant tax-exempt status to a historic home owned by a historic preservation society. The society used the home as a conference and event center for rental to the general public for events such as weddings and retreats. As a result, the Board concluded that the operation had the earmarks of a commercial venture and that the rental activities were charitable. Thus, the property was not used exclusively for a charitable purpose and could not be exempted form real property taxation.


10

Real Property Tax: ValuationIn Benedele v. Defi ance Cty. Bd. of Revision, B.T.A. Case No. 2006-A-911 (September 1, 2006), the Board of Tax Appeals reversed the dismissal of a valuation complaint fi led by a taxpayer for failure to prosecute. Although the taxpayer failed to attend the hearing, he included a letter from a real estate broker, prices of neighboring sales, and a map with his complaint. The Board ruled that because the taxpayer had offered some evidence to support his complaint, it was improper for the Board of Revision to have dismissed the complaint.

In Bd. of Ed. of Hilliard City Schools v. Franklin Cty. Bd. of Rev., BTA Case No. 2005-A-1178 (September 1, 2006), the Board of Tax Appeals ruled that a real estate broker whose qualifi cations as an appraiser were not established was not competent to testify regarding the value of the property in question.

In C & D Revocable Trust v. Hamilton Cty. Bd. of Rev., B.T.A. Case No. 2006-B-400, 401 (September 8, 2006), the Board of Tax Appeals affi rmed the dismissal of a valuation complaint fi led by trustees on behalf of a revocable trust complaint seeking a re-evaluation of real property held by the trust. The Board ruled that the Board of Revision properly dismissed the complaint for lack of jurisdiction because the trustee was neither the property owner nor an attorney.

In Concept Investment Group LLC v. Franklin Cty. Bd. of Rev., B.T.A. Case No. 2005-T-1267 (November 17, 2006), the Board of Tax Appeals ruled that the sales price of property purchased at auction represented the best evidence of value. The taxpayer claimed that it purchased the property under duress, that it was an uninformed buyer, and that the sales price did not represent the property’s value, due to latent defects and deferred maintenance. The Board rejected all claims, holding that the threat of forfeiture of earnest money did not rise to level of duress, that the taxpayer had the opportunity to inspect the property and was aware of its fi nancial condition, and that the existence of latent defects and deferred maintenance are not relevant when property is sold in an arm’s-length transaction.

In Dayton Supply & Tool Co. v. Montgomery Cty. Bd. of Revision (2006), 111 Ohio St. 3d 367, the Supreme Court relaxed its restrictions prohibiting persons not licensed to practice law in Ohio from fi ling


11

property tax valuation complaints with respect to property owned by corporations of which they are offi cers. In Sharon Village Ltd. v. Licking Cty. Bd. of Revision (1997), 78 Ohio St. 3d 479, the Supreme Court held that preparing and fi ling complaints was the practice of law. In Dayton Supply, the Court reiterated that holding; however, it determined that public policy considerations warranted relaxing the restrictions in the case of corporate offi cers who fi led on behalf of their corporations. It found offi cers had a fi duciary duty to their corporations; that many times only the matter of value was presented and did not require legal skills to prepare and fi le the complaint; and that fi ling a complaint may not require the examination of witnesses or making legal arguments. The Court cautioned, however, that if legal issues are involved, the corporation must be represented by an attorney who prepares and fi les the complaint and conducts the proceedings.

In Higbee Co. v. Cuyahoga Cty Bd. of Revision (2006), 107 Ohio St.3d 325, the Supreme Court reversed a decision of the Board of Tax Appeals reducing the value of a newly-constructed anchor department store due to external obsolescence. The Court found that the Board’s decision was internally inconsistent because it rejected factors used by the appraiser to calculate rental and capitalization amounts, but accepted the same factors for determining external obsolescence. The Court further held that it was unreasonable to use sales per square foot to determine value of property, because that factor was more relevant to determining the value of the business. The Court noted that determining the value of anchor stores must be done differently from other types of property, due to factors unique to the industry. Nevertheless, the Court held that for property tax purposes, the property must be valued on the basis of what a willing buyer would pay a willing seller, and for such a purpose, the most reliable evidence was the cost approach.

The Court also rejected the taxpayer’s argument of “functional obsolescence” for trade dress based on super-adequacy. The Court found there was no evidence to indicate that a purchaser would change the trade dress and held that the appraiser calculated an excessive amount of super-adequacy by including such things as excavation, site preparation, and all elements of the building, not simply the trade dress.


12

In IBM Corporation v. Franklin Cty. Bd. of Revision, Franklin App. No. 06AP-108 (Nov. 30, 2006), the Court of Appeals ruled that when a county auditor adjusts the value of property due to a clerical error, the statutory deadlines of R.C. 5715.19(A)(1) still apply. Thus notice given in April 2003 of adjustments to value for the 2000-2002 tax years could not be contested by the fi ling of a complaint since the deadlines for fi ling complaints for those years had passed.

In Jarecki v. Lucas Cty. Bd. of Revision, B.T.A. Case No. 2006-H-932 (September 22, 2006), the Board of Tax appeals affi rmed its prior holdings prohibiting a taxpayer from fi ling a valuation complaint on a parcel owned exclusively by his or her spouse.

In Lakota Local School Dist. Bd. of Ed. v. Butler Cty. Bd. of Revisions (2006), 108 Ohio St. 3d 310, the Supreme Court held that the Board of Tax Appeals abused its discretion by shifting the burden of proof in a valuation case to the appellee. The case involved a valuation complaint based on an arm’s-length sale involving property that was seller-fi nanced. The Board of Revision determined that the sales price represented the value of the property, but the Board of Tax Appeals reversed, holding that the property owner had not presented suffi cient evidence to prove the value, even through the Board of Education had presented no contrary evidence. The Court reversed the Board, ruling that the best evidence of value was the sales price.

In Mentor Exempted Village School Dist. Bd. of Ed. v. Lake Cty. Bd. of Rev., B.T.A. Case No. 2005-M-603 (May 26, 2006), dismissed on appeal ___ Ohio St. 3d ___ (November 1, 2006) and MF Real Estate Partners, LLC v. Cuyahoga Cty. Bd. of Rev., B.T.A. Case No. 2006-A-1097 (November 22, 2006), the Board of Tax Appeals held that where a property owner fi les a jurisdictionally defective valuation complaint with the Board of Revision, but later fi les a valid, second complaint before the statutory fi ling deadline, the Board of Revision has jurisdiction to consider the second complaint under R.C. 5715.19(A)(3) and the Board’s prior decision in W9/GLM Real Estate L.P. v. Portage Cty. Bd. of Rev., B.T.A. Case No. 2002-M-2136 (August 8, 2003).

In Northwestern Local Sch. Dist. Bd. of Edn. v. Clark Cty. Bd. of Rev., B.T.A. Case No. 2006-T-797 (September 1, 2006), the Board of Tax Appeals reversed a decision by the Board of Revision decreasing


13

the value of the taxpayer’s real property because the taxpayer was not the owner of the property when the complaint was fi led.

In Olympic Steel v. Cuyahoga Cty. Bd. of Rev. (2006), 110 Ohio St.3d 1242, the Supreme Court held that R.C. 5717.04 requires that a party appealing from a decision of a Board of Revision must send a copy of the notice of appeal to the Tax Commissioner by certifi ed mail in order to vest the Board of Tax Appeals with jurisdiction to consider the appeal.

In Soin v. Greene Cty. Bd. of Revision (2006), 110 Ohio St. 3d 408, the Supreme Court declined to reduce the value that the Board of Revision and the Board of Tax Appeals had set for the taxpayers’ home. The Court found no basis to reverse the Board, noting that the comparable sales used by the taxpayers’ expert witness, an appraiser, did not provide any meaningful basis of comparison to the property at issue and failed to determine the actual cost data from the construction of the taxpayers’ home.

Real Property Taxation: CAUV In Dircksen v. Greene Cty. Bd. of Revision (2006), 109 Ohio St.3d 470, the Supreme Court ruled that for noncommercial timberland to be granted CAUV status, the agricultural land to which the noncommercial timberland is contiguous, or with which it forms part of the same parcel, must independently qualify for CAUV status.

In Greene v. Knox County Bd. of Revision et al., B.T.A. Case No. 2005-T-694 (March 14, 2006), the Board of Tax Appeals ruled that the taxpayer could not seek relief from the recoupment of CAUV charges under R.C. 5713.351 because the taxpayer did not fi le a Board of Revision complaint until almost three months after the statutory fi ling deadline.

In Synergy Development, Ltd. v. Greene Cty. Bd. of Revision, B.T.A. Case No. 2005-T-585 (September 15, 2006), the Board of Tax Appeals affi rmed in part and reversed in part a decision of the Board of Revision to deny CAUV status to land used by the taxpayer as a nursery. The Board held that the portions of the property used for growing nursery stock and maintaining a water supply pond that was not used for recreational purposes and adjoining acreage of noncommercial timber used to block weather but fi lter sunlight onto the growing stock qualifi ed for CAUV status.


14

In Vernon v. Knox Cty. Bd. of Revision, B.T.A. Case No. 2008-M-778 (August 18, 2006), the Board of Tax Appeals denied CAUV status where the taxpayer had not devoted its property exclusively to agricultural use. Although the taxpayer intended to graze cattle and make hay on the land, the Board ruled that the taxpayer’s “intent carries less weight in making a determination regarding CAUV than the actual use made of the realty.”

Personal Property Taxation: ValuationIn American Identity, Inc. v. Wilkins, B.T.A. Case No. 2004-A-330 (July 28, 2006), the Board of Tax Appeals ruled that the taxpayer failed to establish that certain entries on its fi xed asset ledger, denominated as “gross-up” related to the purchase of certain assets from a prior owner, were not in fact tangible assets; however, it found the taxpayer did demonstrate that the items were fully depreciated within twenty-four months, and that a two-year useful life, as opposed to the Tax Commissioner’s prescribed life, was appropriate for the items.

In Air Products & Chemicals, Inc. v. Wilkins, B.T.A. Case No. 2005-A-20 (October 6, 2006), app. docketed Sup. Ct. No. 06-2062 (Nov. 6, 2006), the Board of Tax Appeals found that the air separation units used at the taxpayer’s industrial gas separation facility in Cleveland were subject to additional reductions in value due to functional and economic obsolescence. Economic obsolescence occurred when the taxpayer’s major customer closed; functional obsolescence, in the form of excessive energy costs that were capitalized, was also found.

Ruling on jurisdictional issues, the Board ruled that all assets that are the subject of an audit may be reviewed on appeal, and that so long as value in general was contested, the taxpayer was not limited to the reduction set forth in its return, but rather could claim a greater reduction if warranted by the evidence. In addition, the Board ruled that pre- and post-lien date conditions may be considered in determining the existence of special or unusual circumstances, or in determining the value of the assets.

In A. Schulman, Inc. v. Wilkins, B.T.A. Case No. 2004-B-370 (December 19, 2006), app. docketed Sup. Ct. No. 06-1944, (Oct. 19, 2006, and Oct. 23, 2006), the Board of Tax Appeals ruled that inventory of a fi scal-year taxpayer that was held in a foreign trade zone that was


15

created after the end of the taxpayer’s fi scal year was taxable in the following tax year. Because the FTZ was not in place at the end of the taxpayer’s fi scal year, which by law is the date on which property is listed for a given tax year, it did not insulate the taxpayer’s inventory from tax for the following tax year. The Board also held that barrels, screws, and related equipment that operated as part of a die on an extruder qualifi ed as dies that were exempt from taxation. Finally, the Board ruled against the taxpayer with respect to the appropriate Class Life to be used in determining the true value of its plastic manufacturing equipment.

In Choice One Communications of Ohio, Inc., v. Wilkins, Ohio Board Nos. 2003-K-1461 and 2004-K-409 (June 9, 2006), the Board of Tax Appeals declined to order a reduction in the value of the taxpayer’s public utility personal property. The taxpayer attempted to reduce the value of its tangible property due to obsolescence. In order to establish its claim, it presented an “obsolescence study” performed by a consultant who had been retained on a contingent fee basis to perform the study. The Board rejected the evidence for several reasons. First, an “obsolescence study” is insuffi cient to establish the value of property for tax purposes; rather, evidence must be submitted that affi rmatively establishes the value of the property in question. Second, the Board noted that a study performed by a person working on a contingent fee basis is inherently unreliable due to the consultant’s pecuniary interest in the outcome. Third, the Board rejected the Tax Commissioner’s argument that any reduction in value was limited to the reduction set forth in the taxpayer’s petition for reassessment. In addition, the Board refused to consider other issues that were raised in the appeal because those issues were not raised in writing before the Tax Commissioner as required by R.C. 5717.02.

In DaimlerChrysler Corp. v. Cuno (2006), 547 U.S. ____, 126 S. Ct. 1854, the Supreme Court of the United States ruled that the taxpayer plaintiffs did not have a “standing” to pursue litigation challenging the constitutional validity of the tax incentive package that the City of Toledo awarded to DaimlerChrysler. The decision of the Court of Appeals striking down the franchise tax credit was reversed and remanded with orders to dismiss the case. The Supreme Court reaffi rmed a long line of cases holding that taxpayers did not have


16

standing to contest the manner in which tax revenues were used. This is because any individual taxpayer’s interest is too small and speculative, and any expenditure’s effect on future revenues is so remote and uncertain, that such interests and effects provide no basis for a real case or controversy.

The Court noted plaintiffs had failed to establish any reduction in state or local revenues; in fact, the very reason for offering the incentive is to increase tax revenues. In addition, the plaintiffs were unable to show that as a result of the credit, the General Assembly would increase taxes on them. A taxpayer cannot force government to reduce its taxes if revenues increase. This is a policy decision outside the realm of the courts. Similarly, there is no assurance than any injury to the taxpayer occasioned by the grant is imminent, since government may simply elect to forego the revenue rather than increase taxes.

In Dave Dennis Dodge, Inc. v. Wilkins, B.T.A. Case Nos. 2005-K-857 & 858 (October 27, 2006), the Board of Tax Appeals ruled that where the Tax Commissioner dismissed a request for the abatement of penalties on alleged jurisdictional grounds, it was suffi cient for the taxpayer to allege that the dismissal was erroneous; it was not necessary for the taxpayer to allege that the Tax Commissioner in fact had jurisdiction. In addition, the Board refused to consider affi davits attached to the Tax Commissioner’s brief where the parties had agreed to waive a hearing and to submit the matter for a decision on the existing record.

In Fichtel & Sachs Industries, Inc. v. Wilkins (2006), 108 Ohio St. 3d 106, the Supreme Court reversed a decision of the Board of Tax Appeals and held that inventory that was packaged with other inventory was not processed, but rather qualifi ed for a reduced listing percentage for personal property tax purposes because it was held for storage only. The taxpayer received individual automobile clutch parts. Occasionally, it combined separate parts needed to replace a clutch into a single “clutch kit,” which it then sold. The Tax Commissioner argued, and the Board had agreed, that by combining the individual parts into a kit, the taxpayer had engaged in processing, so that the inventory was not held for storage only. The Supreme Court noted that “processing” connoted a change in the state or form of something so as to create a new product. It stated that the parts were not changed,


17

and that a new product was not created. It also observed that if the taxpayer had thrown the individual parts into a single box for shipment to a customer, there was no question processing had not occurred. The court refused to make a different fi nding where the parts were combined into a kit prior to being ordered by the customer.

In J.M. Smucker, LLC v. McAndrew, B.T.A. Case No. 2004-R-184 (January 20, 2006), app. docketed Sup. Ct. Case No. 2006-0355 (February 16, 2006), the Board of Tax Appeals ruled that the Tax Commissioner did not abuse his discretion when he refused to remit penalties for the late fi ling of personal property tax returns. The Board concluded that, although the late fi ling was due to an acquisition of another company by the taxpayer, requiring that the taxpayer allocate the purchase price among the assets acquired under FAS 141, because an inventory appraisal and pro forma fi nancial statements were available prior to the acquisition, no reasonable cause for the late fi ling existed.

In OSAir, Inc. v. Wilkins, B.T.A Case No. 2005-M-121 (March 3, 2006), the Board of Tax Appeals ruled that it had no jurisdiction to consider the value of property that was initially omitted from the taxpayer’s return, but was reclassifi ed and assessed upon audit. R.C. 5711.18 and R.C. 5711.31 specify that in order to contest the value of property in this situation, a written claim for deduction from net book value should have been fi led with the return. Because the claim was not made with the return, there was no jurisdiction to consider the matter of value. Interestingly, the Tax Commissioner had considered the matter of value in its review of the assessment.

In Reed Elsevier, Inc. v. Wilkins (2006), 109 Ohio St. 3d 517 and Andrew Jergens Co. v. Wilkins (2006), 109 Ohio St. 3d 396, the Supreme Court ruled that canned computer software programs were taxable as tangible personal property because the software was acquired (disk) and stored (hard drive) on tangible media. The Court abandoned the prior distinction between systems and applications software. Henceforth, essentially all software may be subject to sales and use, and personal property taxation.

In Shiloh Automotive, Inc. v. Wilkins, Ohio Board No. 2004-M-380 & 1283 (July 7, 2006), app. docketed Sup. Ct. No. 06-1384 (July 21,


18

2006 and July 31, 2006), the Board of Tax Appeals ruled the transaction between the seller and buyer was not arm’s-length because the seller and buyer were related; therefore, the allocated sales price was not indicative of the value of the assets and historic cost must be used. However, the Board did permit the use of an accelerated rate of depreciation because the assets were used when they were acquired.

In The Stanley Works v. Wilkins, B.T.A. Case No. 2004-B-1151 (December 1, 2006), the Board of Tax Appeals ruled that even though the taxpayer fi led an amended property tax return that was being reviewed in conjunction with other returns for which fi nal assessment had been requested, its failure to fi le for fi nal assessment for the year in question before the running of statute of limitations precluded further review of the return.

Personal Property Taxation: Classifi cationIn Advanced Organic, Inc. v. Wilkins, B.T.A. Case No. 2004-K-369 (August 4, 2006), the Board of Tax Appeals held that certain three-sided enclosures containing pads and built to ensure that the taxpayer’s manufacturing supplies were sheltered and not blown away, and which the taxpayer was contractually obligated to remove, were “business fi xtures” that primarily benefi ted the taxpayer’s business.

In General Electric Employees Activity Assoc. v. Hamilton Cty. Bd. of Revision, B.T.A Case No. 2005-T-1102 (September 26, 2006), the Board of Tax Appeals rejected the taxpayer’s argument that certain portions of a golf course (bunkers, irrigation system, cart paths, driving range, greens, and driving range buildings) should be classifi ed as business fi xtures and not taxed as real property. The Board ruled the taxpayer failed to describe the items in suffi cient detail to permit it to determine their classifi cation, and that the taxpayer also failed to present probative evidence of the value of these items.

In Oregon Ford Inc. v. Wilkins, B.T.A. Case No. 2005-A-111 (January 27, 2006), the Board of Tax Appeals ruled that parking lot lights at a car dealership constituted a business fi xture to be taxed as personal property. Although the lights were permanently affi xed to the land, the Board concluded the lights, which made it easier for patrons to shop for cars after daylight hours, primarily benefi ted the business conducted on the land, rather than the use of the land generally.


19

Personal Property Taxation: Public Utility Property In Columbia Gas Transmission Corp. v. Zaino, B.T.A Case No. 2003-K-1876 (October 20, 2006), app. docketed Sup. Ct. No. 2006-1443 (July 31, 2006 and Aug. 7, 2006), the Board of Tax Appeals ruled that a natural gas transmission company that made sales of natural gas to some customers that had direct tap access to its pipelines could claim the lower assessment percentage that applies to natural gas companies in determining the value of its property. Noting the statutory defi nitions of natural gas companies and transmission companies were not mutually exclusive, the Board ruled the taxpayer was entitled to take advantage of the classifi cation that resulted in a lower value for its property.

Sales and Use TaxIn Advanced Organic, Inc. v. Wilkins, B.T.A. Case No. 2004-K-369 (August 4, 2006), the Board of Tax Appeals found that the Tax Commissioner properly calculated a use tax assessment on vehicles used by the taxpayer at its manufacturing facilities based on their book value where the taxpayer itself reported the purchases for depreciation purposes at their original purchase price. The Board also held that certain three-sided enclosures containing pads and built to ensure that the taxpayer’s manufacturing supplies were sheltered and not blown away, and which the taxpayer was contractually obligated to remove, were “business fi xtures” that primarily benefi ted the taxpayer’s business.

In American Manufactured and Mobile Homes v. Wilkins, B.T.A. Case No. 2005-A-260 (June 9, 2006), the Board of Tax Appeals reversed a fi nal determination of the Tax Commissioner arising from a sales tax audit, initiated when purchasers of mobile homes from the taxpayer claimed that sales tax had been collected, but not remitted. Due to the lack of available records, the Tax Commissioner used various documents, including corporate tax returns, income statements, computerized invoices and projections prepared under the taxpayer’s fl oor plan, to estimate the taxable sales made by the taxpayer. The Board ruled that, in this case, the corporation’s tax returns were the best evidence of taxable sales and that the Tax Commissioner erroneously relied on the other documents.


20

In Ameritech Publishing, Inc. v. Wilkins (2006), 111 Ohio St.3d 114, the Supreme Court held that a paper-management fee charged to the taxpayer by a paper distributor to ensure that paper used to print telephone books arrived at the appropriate times and were of the appropriate quality, and that the paper distributors complied with applicable laws and contracts was properly included in the sales price of the paper. In reaching its conclusion, the Court rejected the taxpayer’s claim that the fee was part of a “personal service transaction” exempt from use tax by R.C. 5739.01(B)(5) because the primary purpose of the transaction was to obtain paper, not receive the paper-management services.

In Banana Joe’s, Inc. v. Wilkins, B.T.A. Case No. 2005-H-514 (October 13, 2006), the Board of Tax Appeals affi rmed the Tax Commissioner’s decision to assess sales tax against a bar and grill that had failed to maintain tax records or to assess sales tax from customers. The Board also ruled that the decision to base the assessment on the taxpayer’s vendors’ records was a reasonable means of determining sales tax liability.

In Cameo Countertops, Inc. v. Wilkins, B.T.A. Case No. 2004-V-393 (January 6, 2006), the Board of Tax Appeals concluded that a fabricator and installer of solid surface bathroom and kitchen countertops was a construction contractor within the meaning of R.C. 5739.01(B)(5) and responsible for paying use tax on the materials it purchased to fabricate its products.

In Castle Aviation, Inc. v. Wilkins (2006), 109 Ohio St. 3d 290, the Supreme Court affi rmed a decision of the Board of Tax Appeals holding that a small air freight carrier was properly liable for a use tax on its purchases of fuel, aircraft leases, maps, supplies, repairs, and publications. The taxpayer had argued that its operations qualifi ed as a public utility exempt from tax pursuant under R.C. 5739.01(E)(2). The Court disagreed, observing that, in order to qualify as a public utility, the taxpayer must be under special regulations and control by the government that control the relation between the business and the public as its customers and ruled that the ordinary regulation of a small-scale air freight carrier did not constitute such special regulation and control.


21

In Cousino Construction Co. v. Wilkins (2006), 108 Ohio St.3d 90, the Supreme Court held that a general contractor who used a sub-contractor’s janitorial and cleaning services to clean and prepare damaged properties for rehabilitation consumed those services and did not resell the services to the purchasers of the rehabilitated properties and, as a result, was unable to claim exemption under the resale exception contained in R.C. 5739.01(E).

In The Cygnus Group, Inc. v. Wilkins, B.T.A. Case No. 2005-R-481 (August 4, 2006), the Board of Tax Appeals held that the Tax Commissioner was justifi ed in using the taxpayer’s accounting records to estimate the amount of taxable sales of gym memberships, rather than its federal tax returns or other documents, where all documentation of potential sales confl icted.

In DaimlerChrysler Corp. v. Wilkins, B.T.A. Case No. 2004-T-187, 188 (August 18, 2006), the Board of Tax Appeals held that the value of goodwill repairs performed by its dealers on customer cars and for which the manufacturer paid were subject to use tax under R.C. 5741.02(A) and 5741.01(N).

In Dezanett v. Wilkins, B.T.A. Case No. 2004-R-1446 (March 10, 2006), the Board of Tax Appeals affi rmed an assessment of sales tax against the taxpayer for the failure to collect and remit sales tax. In affi rming the assessment, the Board noted that the mere fact that the taxpayer had never applied for or received a vendor’s license did not relieve him of the obligation to collect or remit sales tax.

In Grimes v. Wilkins, B.T.A. Case no. 2005-A-679 (June 9, 2006), the Board of Tax Appeals reversed a corporate offi cer sales tax assessment made against the taxpayer by the Tax Commissioner. The Board held that merely being a corporate offi cer did not make the taxpayer a “responsible person” under R.C. 5739.33 when the daily operations of the corporation were conducted by another person and no evidence existed that the taxpayer signed checks or tax returns, or even had the authority to do so. The Board further held signing a vendor’s license does not make a taxpayer a responsible person, if the document is signed at the direction of the taxpayer’s business partner, and that participation in the audit does not make the taxpayer a responsible person.


22

In J.R. Billman, Inc. v. Wilkins, B.T.A. Case No. 2005-R-594 (August 18, 2006), the Board held that a coin-operated car wash, in which the customer sits in his car while a conveyor moves his car through washing and waxing machines without any other personal property or services (such as hand drying) being part of the transaction, is exempt from sales taxation under R.C. § 5739.02(B)(44). The exemption statute does not require the consumer to wash, clean, dry, and wax the car personally for the transaction to be exempt from sales taxation.

In Marc Glassman, Inc. v. Wilkins, B.T.A. Case No. 2005-K-82 (January 20, 2006), app. docketed, Cuy. Cty. Ct. of Appeals, the Board of Tax Appeals ruled that a contract between the taxpayer and two companies, pursuant to which the companies transmitted information between the taxpayer and its patient’s insurance companies was an electronic information service under R.C. 5739.01(B)(3)(e) subject to Ohio use tax. The Board concluded that the patient information transmitted by the companies was data, inasmuch as it presented information upon which the taxpayer relied to provide pharmacy services.

In Myer v. Wilkins, B.T.A. Case No. 2005-A-127 (March 24, 2006), the Board of Tax Appeals affi rmed a fi nal determination of the Tax Commissioner that the taxpayer, a 33.3% shareholder and the secretary/treasurer of a corporation, was personally liable for unpaid sales tax. In reaching its decision, the Board rejected the taxpayer’s argument that he was not responsible for the collection and payment of sales tax, because the corporation had entered into a “blocked account” agreement with a bank, pursuant to which, the bank controlled the payment of taxes. The Board ruled that a loan agreement or other contractual relationship did not alter the taxpayer’s liability under R.C. 5739.33

In MDV Enterprises, Inc. v. Wilkins, B.T.A. Case No. 2004-A-1319 (May 5, 2006), the Board of Tax Appeals affi rmed a fi nal determination of the Tax Commissioner with respect to a sales tax audit of the taxpayer. The taxpayer challenged the fi nal determination, arguing that the Tax Commissioner lacked any basis to initiate the audit and that he did not use good faith in selecting a representative sample of sales for the audit. The Board held that the low percentage of taxable sales


23

reported by the taxpayer justifi ed initiating the audit. The Board further held that, absent some evidence supporting the taxpayer’s claimed losses from overpouring, theft, spillage and reduction in sales due to “happy hour” pricing, the Tax Commissioner properly relied on vendor sales invoices to estimate taxable sales.

In Novak v. Wilkins, B.T.A. Case No. 2005-H-410 (September 1, 2006), the Board of Tax Appeals affi rmed a fi nal determination of the Tax Commissioner that the taxpayer was a responsible person under R.C. § 5739.33. The taxpayer was a 22.5% owner and the secretary/treasurer of the corporation, had signed contracts, and even conceded liability for some of the tax years in question. Even though the taxpayer had hired another person to manage some of the corporation’s stores, the Board found that the taxpayer was a person who had knowledge of the statutory duty to fi le taxes, had the authority to write checks, or was in a position that would ordinarily be responsible for such duties.

In Peterbilt of Northwest Ohio v. Wilkins, B.T.A. Case No. 2004-A-1429 (February 10, 2006), the Board of Tax Appeals affi rmed a decision of the Tax Commissioner denying use tax exemptions claimed by the taxpayer for two motor homes and two trailers. The taxpayer claimed the vehicles were either used for transportation for hire or held for resale. The Board concluded that, because there was no evidence that the taxpayer was in the business of transportation for hire or that it held the requisite permits, it did not qualify for this exception. The Board further concluded that, because the taxpayer did not actively market the vehicles for sale but instead allowed its owners to use the vehicles in another business, the resale exception did not apply.

In Roncelli, Inc. v. Wilkins, B.T.A. Case No. 2005-R-279 (June 30, 2006), the Board of Tax Appeals ruled that the taxpayer, a commercial real estate construction contractor, was liable for use tax on carpet installed in its properties. The taxpayer argued that the carpet was purchased by the building owners, installed by subcontractors and that it simply arranged for the installation. The Board noted, however, that the contracts indicated that the taxpayer was the purchaser and that the contracts did not separately itemize sales tax. The taxpayer also argued that in Information Release ST-1994-01, the Tax Commissioner placed the burden of collecting tax on installations of carpet on the installer.


24

The Board found, however, that the taxpayer did not demonstrate that the release was applicable to it. Ruling on procedural grounds, the Board held that the taxpayer could not appeal based on the four-and-one-half year delay between the initial assessment and the fi nal assessment because the taxpayer had notice of the assessment and could not assert estoppel against the state.

In Satullo v. Wilkins (2006), 111 Ohio St. 3d 399, the Supreme Court held that a taxpayer who owned a boat dealership, but purchased a luxury yacht that he used as a personal pleasure craft, did not purchase the yacht with the intent to resell it, and, as a result, did not qualify for the resale exception in R.C. 5739.01(E).

In Time Warner Operations, Inc. v. Wilkins (2006), 111 Ohio St.3d 559, the Supreme Court held that the rental of cable boxes by a cable company to its customers did not qualify for a tax exemption pursuant to R.C. 5739.02(B)(42)(a) (formerly R.C. 5739.01(E)(2)), which exempts property used by customers directly in the rendition of a public utility service. The Court ruled that, while the statute exempted the purchase of the cable boxes by Time Warner itself, it did not apply when Time Warner sold the boxes to its customers.

In Two Moms & A Mop, Inc. v. Wilkins, B.T.A. Case No. 2005-T-1070 (October 27, 2006), the Board of Tax Appeals, citing the Supreme Court’s earlier decision in Cousino Construction Co. v. Wilkins (2006), 108 Ohio St.3d 90, held the provision of residential cleaning services was subject to sales tax. The Board further ruled that, regardless of the fact that the taxpayer’s accountant had died and left no records demonstrating the payment of sales tax collected on commercial cleaning services, the ultimate liability for the payment of tax rested with the taxpayer.

In Yellow Transportation, Inc. v. Wilkins, B.T.A. Case No. 2004-V-1113 (May 26, 2006), the Board of Tax Appeals ruled that “yard tractors” used exclusively by the taxpayer engaged in providing transportation to hire were themselves used in providing transportation for hire and exempt from use tax under R.C. 5739.02(B)(32). The taxpayer used its yard tractors to move trailers loaded with goods to their proper places before the trailers were dispatched to their fi nal destinations The Board concluded that, because the yard trailers were


25

used to transport the personal property of others, even if for very small distances, they were used to provide transportation for hire, even if not used on public roads.

Personal Income Tax

In Roth, Blair, Roberts, Strasfeld & Lodge v. Wilkins, B.T.A. Case No. 2004-M-1092 (January 9, 2006), vacated and remanded August 23, 2006, the Board of Tax Appeals ruled that the Tax Commissioner abused his discretion when he refused to remit penalties for the failure to withhold income tax when the failure to withhold was due to embezzlement by an employee of the taxpayer, the taxpayer obtained a judgment against the employee, disclosed the non-payment and made the state whole.

Corporation Franchise Tax

In The Buckeye Publishing Co. v. Wilkins, B.T.A. Case No. 2005-M-1733 (March 3, 2006), the Board of Tax Appeals dismissed an appeal arising from the Tax Commissioner’s refusal to abate a late payment penalty assessed upon the late payment of corporate franchise taxes. Although the taxpayer received a letter from an agent of the Commissioner stating that the taxpayer’s “request for abatement of the penalty is denied,” the Board ruled that the Commissioner did not issue an appealable fi nal determination because the letter was not sent by certifi ed mail or prepared for the Commissioner’s offi cial signature.

In Knust v. Wilkins (2006), 111 Ohio St. 3d 331, the Supreme Court held that the income generated from the sale of stock held in grantor trusts were properly taxable to the grantors, notwithstanding the fact that the trusts had been designated “electing small business trusts” under the Internal Revenue Code. The Court held that the election of ESBT status by a grantor trust did not change the ordinary requirement that the trust’s income is taxed to its grantor.

In National City Bank v. Wilkins (2006), 111 Ohio St.3d 485, the Supreme Court held that increases in the cash surrender value of bank-owned life insurance policies were not “appreciation” excluded from


26

the taxpayer’s net worth, but instead were properly included in its total book value for corporate franchise tax purposes. The Court reasoned that, because the cash surrender value of the policies did not increase separately from the reinvested interest and dividends, the taxpayer could not treat the interest and dividends as appreciation.

In National City Mortgage Co. v. Wilkins, B.T.A. Case Nos. 2004-T-346, -348, & -304 (September 1, 2006), the Board of Tax Appeals held that when a bank holding company owns stock in its subsidiary banks and pays franchise tax on those shares under R.C. Chapter 5733, then the shares are treated as the “other property and assets” of the holding company. As a result, the value of the stock of the subsidiary banks owned by the holding company and subject to the franchise tax is exempt from the dealer in intangibles tax provided by R.C. 5725.26.

Budget Commission Disputes

In City of East Liverpool v. Columbiana Cty. Budget Comm. et al., B.T.A. Case Nos. 2003-T-1301, 2004-T-844 & 2005-T-1474 (May 12, 2006), app. docketed Sup. Ct. Case No. 2006-1129 ( June 12, 2006), the Board of Tax Appeals rejected claims by the City of East Liverpool that the County Budget Commission had improperly apportioned and distributed Undivided Local Government Fund (“ULGF”) and Undivided Local Government Revenue Assistance Fund (“ULGRAF”) funds, where the Supreme Court had previously rejected the municipality’s argument and where a majority of a participating subdivision had adopted resolutions eliminating the requirement that the City of East Liverpool approve an alternate formula for an ULGF or ULGRAF distribution.

In City of Elyria v. Lorain Cty. Budget Comm., B.T.A. Case No. 2003-T-1533 (November 17, 2006), the Board of Tax Appeals held that the appellant political subdivisions had failed, in attempting to appeal a dispute regarding apportionment and distribution of Undivided Local Government Fund (“ULGF”) and Undivided Local Government Revenue Assistance Fund (“ULGRAF”) monies, to invoke the jurisdiction of the Board. R.C. 5747.55(C)(3) provides the procedure by which a subdivision may appeal allocations made from the ULGF


27

and ULGRAF funds and requires that the appeal must specify the exact amount of any alleged over-allocation. The appellants failed to specify how much money had been over-allocated, and the Board dismissed the appeal for lack of jurisdiction.

In City of Elyria v. Lorain Cty. Budget Comm., 2004-T-1166 (December 1, 2006), the Board of Tax Appeals heard a subsequent appeal from its earlier decision in the same case. In this appeal, the Board found that the appellants’ statements made under R.C. 5747.55(C)(3) identifi ed only those subdivisions from which they sought to recover their share of funds, not those subdivisions that they believed were over-allocated monies. By failing to comply with the guidelines for appealing allocations from the ULGF and ULGRAF, the appellants attempted to create their own formula for allocation, a remedy that is beyond the jurisdiction of the Board to consider. Thus, the Board’s dismissed the appeal again for lack of jurisdiction.

In Fairfi eld Cty. District Library et al. v. Fairfi eld Cty. Budget Comm. et al., B.T.A. Case Nos. 2003-T-1392 & 2003-T-1393 (April 7, 2006), the appellant libraries contested the decision of the County Budget Commission to allocate LLGSF funds to another library, which is controlled by a private nonprofi t foundation. The appellants argued that the foundation library was not a “public library” for purposes of R.C. 5705.28(D) and, even if it were a public library, was not a public library as of January 1, 1968, also as required by the statute. The Board concluded both that the foundation library was a public library and that R.C. 5705.28(D) required only that the library be in operation as of January 1, 1968, not that it must have been a county-wide library as of that date. Finally, the Board rejected arguments that the foundation library was unable to amend its articles or code of regulations to permit access to all members of the county.

Miscellaneous

In Ohio Blenders, Inc. v. Wilkins, B.T.A. Case No. 2005-R-117 (May 5, 2006), the Board of Tax Appeals affi rmed the dismissal of an application for a fi nal determination when the amended return serving as the basis for fi nal determination was sent by regular U.S. mail and


28

received by the Tax Commissioner after the statutory fi ling date. The Board rejected the taxpayer’s argument that it had “substantially complied” with the fi ling requirements, holding that fi ling by the deadline is a mandatory jurisdictional matter and that the placement of the amended return in regular U.S. mail did not constitute a “fi ling.”

In Strategic HR Partners v. Wilkins, B.T.A. Case No. 2005-V-100 (May 5, 2006), the Board of Tax Appeals affi rmed a fi nal determination of the Tax Commissioner that services provided by the taxpayer were taxable employment services within the meaning of R.C. 5739.01(JJ). The case, however, is notable due to its convoluted appeals history. In its decision, the Board concluded that it did not abuse its discretion when it denied a request for joint remand or opportunity for a merit hearing when the taxpayer had three previous opportunities to participate in the hearing and had declined, even when presented with an opportunity to participate.

2006 Ohio Tax Update - Bricker & Eckler · 2006 Ohio Tax Update 6 CAT 2006-04: Cash Discounts...

Documents

Transcript of 2006 Ohio Tax Update - Bricker & Eckler · 2006 Ohio Tax Update 6 CAT 2006-04: Cash Discounts...