Opinion
No. 31712
Decided June 15, 1949.
Taxation — Sales tax — Vendor failed to keep complete and accurate records — Section 5546-12, General Code — Presumption that all sales subject to tax — Section 5546-2, General Code — Burden on vendor claiming insufficient allowance for tax-exempt sales.
APPEAL from the Board of Tax Appeals.
The vendor filed with the Department of Taxation semiannual sales-tax returns during the four-year period beginning July 1, 1943, and ending June 30, 1947, showing total sales of $49,410.67 and total taxable sales of $7,892.47.
His semiannual sales-tax return for July 1 through December 31, 1943, showed gross sales of $1,112.60, of which he reported $615.90 as exempt and $496.70 net as taxable, or 44 per cent taxable sales.
An audit by a sales tax examiner for the Tax Commissioner disclosed that vendor's receipts or sales for that six-month period in 1943 were $17,104.31 and not $1,112.60 as reported by him.
While that audit was being made the vendor signed a written agreement for an analysis of sales slips and guest checks from November 26, 1947, through December 1, 1947, to determine the percentage relation which the taxable sales bore to gross sales for that period. The agreement recited that the percentage relationship so developed should be applied to establish the amount of taxable or nontaxable sales for the period of the audit.
During the six-day analysis period the vendor issued a sales slip for every sale of merchandise or a guest check for every sale of food, whether taxable or not, marking sales for consumption off the premises as "carried out." That analysis resulted in ratios of 73.66 per cent taxable and 26.34 per cent nontaxable sales.
The vendor produced a book containing a record of gross receipts from sales and some cash-register slips which were not broken down as to types of sales. The book or ledger of the vendor revealed that his gross sales for the four-year period from July 1, 1943, were $159,365.59, and not $49,410.67 as formerly reported by him.
The Tax Commissioner, after making an adjustment, applied the 73.66 per cent to vendor's gross sales, resulting in $117,281.89 taxable sales and a tax of $3,518.46, and, after giving a credit of $242.58 for sales-tax stamps cancelled and tax paid, made an assessment of $3,767.26, including 15 per cent penalty, for the four-year period beginning July 1, 1943.
The vendor appealed to the Board of Tax Appeals which affirmed the final assessment order of the Tax Commissioner.
The vendor thereupon perfected an appeal to this court.
Mr. O.C. Ingalls and Mr. Gene A. Jones, for appellant.
Mr. Herbert S. Duffy, attorney general, Mr. William C. Bryant and Mr. W.H. Annat, for appellee.
The vendor contended before the Board of Tax Appeals that during the period from July 1, 1943, until 1945 after the close of World War II he operated mainly a confectionery, grocery and carry-out store and that the taxable sales during that period should have been somewhere between 15 and 20 per cent for that type of business. The Board of Tax Appeals found that the sales-tax returns of the vendor for the period from July 1, 1943, to July 1, 1946, showed from 40 to 50 per cent of gross sales to be taxable, which contradicted his claim. The testimony and exhibits in the record do not support his contention that not more than 15 to 20 per cent of his gross sales were taxable during the last half of 1943, the entire year 1944, and a part of the year 1945, before he started to operate a restaurant in the latter year.
The vendor contends also that the signed agreement for an analysis to determine the percentages of taxable and nontaxable sales was procured under duress and undue influence. Although it is claimed he speaks only broken English and cannot read the English language, he testified that he had been in this country 40 or 45 years and that the agreement was read to him but he could not understand it. The testimony of the tax examiner was to the effect that the agreement was explained to the vendor and he did not object.
The next to the last paragraph of Section 5546-2, General Code, provides "it shall be presumed that all sales made in this state are subject to the tax hereby levied until the contrary is established."
The vendor in the present instance produced a book containing a record of gross receipts for the four-year audit period, but he did not keep complete and accurate records of taxable sales, tax collected or documents required by Section 5546-12, General Code.
In Obert v. Evatt, Tax Commr., 144 Ohio St. 492, 59 N.E.2d 931, in paragraph three of the syllabus, this court held:
"Where the amount of vendor's gross receipts from sales are known, the burden rests upon such vendor to show what part, if any, of such receipts resulted from sales of tax-exempt merchandise."
See, also, Edelstein v. Glander, Tax Commr., 148 Ohio St. 19, 72 N.E.2d 384, and Manton v. Glander, Tax Commr., 150 Ohio St. 198, 80 N.E.2d 755.
The vendor in the present proceeding concedes there is due from him an amount equal to one-half of that assessed, but he has failed to sustain the burden of establishing a greater percentage of exempt sales than that determined by the Tax Commissioner.
The decision of the Board of Tax Appeals is neither unreasonable nor unlawful and is, therefore, affirmed.
Decision affirmed.
WEYGANDT, C.J., MATTHIAS, HART, ZIMMERMAN, STEWART, TURNER and TAFT, JJ., concur.