Getting Counsel Involved Early can Save your Ohio Sales / Use Tax Refund

Recently, the Ohio Board of Tax Appeals (BTA) denied a taxpayer’s sales tax refund in part because it could not consider the taxpayer’s improperly submitted evidence. In Environmental Quality Management Inc. v. McClain, BTA No. 2018-1194 (August 8, 2019),  the taxpayer sought a refund for sales tax paid on software used by non-Ohio employees. The Ohio Department of Taxation (ODT) issued a Final Determination denying the refund, which the Taxpayer appealed to the ODT appeals division. At this stage, ODT requested additional documents. However, the Taxpayer did not submit all of the requested documents nor did it request a hearing before the ODT appeals division. Consequently, the ODT appeals divisions issued an unfavorable Final Determination forcing the Taxpayer to appeal to the BTA, attaching new supporting documents to its Notice of Appeal.

However, because the Taxpayer failed to request hearings with the ODT or the BTA during the appeal process, it was not permitted to present any new documentary evidence, especially because the BTA could not address the reliability or credibility of the documents without the taxpayer’s testimony that would accompany a BTA hearing if it had been held. Thus, the BTA could not consider the documentary evidence attached to the Taxpayer’s Notice of Appeal. Without any new evidence to consider, the BTA unsurprisingly affirmed the ODT’s decision and denied the Taxpayer’s refund.

Significantly, the notices of appeal to the ODT and to the BTA were submitted by non-attorneys who were not licensed to practice law in Ohio (which is required to represent clients before the BTA). Although it is unclear whether the lack of a licensed attorney was the reason that the Taxpayer did not request hearings (which are often essential in the appeals process), this case highlights the vital importance of having experienced counsel familiar with the proper procedures to be followed to successfully litigate tax disputes. Retaining effective tax counsel from the beginning of a dispute can be the difference between a full refund and an outright denial.

If you have any questions pertaining to Ohio sales / use tax disputes or procedures, please contact us.

Attorney Steven A. Dimengo is Managing Partner of Buckingham, Doolittle & Burroughs, LLC and chair of the taxation practice group. He helps clients with complicated tax challenges including Ohio sales/use, income, commercial activity and federal taxes and has successfully represented many clients before the Ohio Supreme Court. Steve can be reached at [email protected] or 330.258.6460.

Buckingham Partner Richard B. Fry III is the chair of the taxation practice group with a focus on state and local tax compliance and controversies, including Ohio and multistate sales/use tax, commercial activity tax, and personal income tax issues. He also represents clients in federal income tax controversies with the Internal Revenue Service (IRS). Rich can be reached at [email protected] or 330.258.6423

About Buckingham, Doolittle & Burroughs:

Buckingham is a corporate law firm that counsels Middle Market executives and business leaders all over Ohio and beyond. With offices in Canton, Akron, and Cleveland, Buckingham offers clients Business Law Reimagined through sophisticated and practical legal services. Serving the region for over 100 years with nearly 70 attorneys, Buckingham’s mission is to deliver meaningful experiences through the practice of law, exceed expectations in terms of service, counsel and business sense, and to offer continuous value to the industries, communities and clients they serve. See all of our news and updates by visiting our website.