Summary
In Decor Carpet Mills, this court, relying on R.C. 5739.01(H), denied a request for the refund of use tax where Decor's sales personnel charged sales tax on carpeting that it installed in customers' homes.
Summary of this case from Geiler Co. v. LindleyOpinion
No. 80-382
Decided December 23, 1980.
Taxation — Sales tax assessment — Use tax refund — Determination of board upheld, when.
APPEAL from the Board of Tax Appeals.
This cause involves two cases consolidated and heard by the Board of Tax Appeals with regard to a sales and use tax assessment levied against, and a use tax refund request filed by, appellant-taxpayer, Decor Carpet Mills, Inc.
During the audit periods involved, appellant was engaged in the business of the retail sale and installation of carpeting in private homes. As found by the board, sales were effected pursuant to written contracts specifying that appellant would furnish and install carpeting and padding in the home of a customer in exchange for a stated price. Occasionally, customers would enter appellant's facilities, purchase carpeting, and take the carpeting home with them. In those situations, appellant did not install the carpeting.
In one of the consolidated cases before the board, case No. F-623, appellant contested a portion of a sales and use tax assessment by the Tax Commissioner on transactions taking place during the audit period from July 1, 1973, through January 26, 1976. The transactions being contested involve situations in which appellant's sales journals indicated that sales in a certain amount had transpired between appellant and its customers, but for which there were no written contracts on file to show the precise nature of the transactions. Any transaction for which appellant had a contract on file indicating that it had sold and installed carpeting for a customer was not included in this portion of the assessment, and hence excepted from taxation under R.C. 5739.01(B). The board, following a hearing at which appellant's witness testified, affirmed the Tax Commissioner's assessment.
In the other consolidated case, No. F-716, appellant filed a request for refund of use taxes that it claims it paid to the state in error.
The Board of Tax Appeals determined in an earlier 1976 case involving this appellant, No. D-130, that appellant was a construction contractor as to carpeting that it installed during the period between July 1, 1969, and June 30, 1973, and was therefore, the consumer of the carpeting. During this period, appellant paid the use tax on the carpeting that it "used or consumed" in Ohio, and no sales tax was due when it sold and installed the carpeting. However, appellant's sales personnel did charge sales tax to customers on sales of carpeting where the appellant installed the carpeting in the customers' homes. The appellant retained the entire $39,404.36 that it had collected as sales tax from its customers. The board in this earlier case agreed with the Tax Commissioner's determination that the appellant must remit this erroneously collected amount to the state.
Appellant now seeks to have the use tax originally paid by it on the carpeting refunded in the form of a credit against its sales tax liability as determined in case No. D-130. The Tax Commissioner denied appellant's refund claim and the Board of Tax Appeals affirmed that determination.
The cause is now before this court upon an appeal as a matter of right.
Messrs. Zonak, Poulos Cain and Mr. David E. Cain, for appellant.
Mr. William J. Brown, attorney general, and Mr. Mark A. Engel, for appellee.
Appellant contends that the Board of Tax Appeals arbitrarily rejected the testimony of appellant's witness at the hearing in case No. F-623.
This court's jurisdiction under R.C. 5717.04 is limited to a determination of the reasonableness and lawfulness of the board's decision. Where the appellant-taxpayer's assertion of error is basically one concerning a factual determination by the board, this court has been unwilling to disturb such determination if there is any probative evidence in the record to support the board's decision. Alcoa v. Kosydar (1978), 54 Ohio St.2d 477, 481. Finally, there is a presumption that a sale or use of tangible personal property in this state is taxable, which leaves the burden upon the taxpayer to rebut such a presumption. National Tube Co. v. Glander (1952), 157 Ohio St. 407, paragraphs one and three of the syllabus.
After careful examination of the entire record, we find that appellant did not meet its burden of affirmatively establishing its right to the requested exception to taxation. National Tube Co. v. Glander, supra. More specifically, the probative evidence in the record demonstrates that appellant failed to prove that the disputed transactions were "construction contracts." Accordingly, appellant incurred sales and use tax liability on these transactions.
If appellant wanted to prove that the disputed sales were made pursuant to construction contracts, appellant should have (1) produced the written agreements; (2) had customers themselves testify; or (3) produced testimony from an employee with personal knowledge of the disputed transactions. Since none of these was produced, the commissioner and the board concluded that the contracts in question were retail sales that required appellant to collect sales tax from the buyers.
We find this conclusion to be reasonable and lawful. Accordingly, appellant remains responsible for payment of the sales tax on these disputed transactions.
Furthermore, the court finds the board's determination affirming the denial of appellant's refund request, in case No. F-716, to be reasonable and lawful. R.C. 5739.01(H) provides, in relevant part:
"The tax collected by the vendor from the consumer under sections 5739.01 to 5739.31 of the Revised Code, is not part of the price, but is a tax collection for the benefit of the state and of counties levying an additional sales tax pursuant to section 5739.021 of the Revised Code and of transit authorities levying an additional sales tax pursuant to section 5739.023 of the Revised Code, and except for the discount and credits authorized in section 5739.12 of the Revised Code, no person other than the state or such a county or transit authority shall derive any benefit from the collection or payment of such tax." (Emphasis added.)
This statute is dispositive of appellant's tax credit request. We find that the sales tax wrongfully collected by appellant as trustee for the state pursuant to R.C. 5739.03, is a tax collection for the benefit of the state of Ohio. To grant appellant's request for a refund of use tax in the form of a credit against its liability for the erroneously collected sales tax would impermissibly confer a tax benefit on appellant.
R.C. 5739.03 provides, in relevant part:
"Except as provided in section 5739.05 of the Revised Code, the tax imposed by or pursuant to section 5739.02, 5739.021, or 5739.023 of the Revised Code shall be paid by the consumer to the vendor, and each vendor shall collect from the consumer, as a trustee for the state of Ohio, the full and exact amount of the tax payable on each taxable sale, in the manner and at the times provided as follows:***"
Accordingly, the decision of the board denying the tax credit is affirmed.
For all the foregoing reasons, both decisions of the board are affirmed.
Decisions affirmed.
CELEBREZZE, C.J., W. BROWN, P. BROWN, SWEENEY, LOCHER, HOLMES and DOWD, JJ., concur.