The Taxation Section of the Ohio Attorney General’s Office represents the Tax Commissioner of Ohio, who is charged with administering and enforcing most of the State’s taxes, including the state income tax, state sales and use taxes, and several business and excise taxes. The Section defends the Commissioner's administrative decisions to tax assessments, refund applications, and real property exemption applications when they are appealed to the Ohio Board of Tax Appeals (the "BTA"). We also defend the Commissioner when administrative rules that he promulgated are challenged. Because the BTA’s decisions can be directly appealed to the Ohio Supreme Court or to one of the State’s courts of appeal, the Taxation Section has a significant appellate docket.
The Taxation Section also represents the Commissioner in civil proceedings, including constitutional challenges to the State’s tax laws. Recently, attorneys in the section successfully sought the dismissal of two purported class actions filed against the Commissioner that related to sales tax refunds. See Telsat, Inc. v. MicroCenter, Inc., 10th Dist. No. 10AP-229; Brown v. Levin, 10th Dist. No. 11AP-349, 2012-Ohio-5768. The Section’s attorneys defend the Tax Commissioner’s determinations of estate tax liability from challenges filed in probate courts throughout the State.
If a taxpayer has been assessed and either fails to timely appeal a decision of the Commissioner or the taxpayer’s appeal is ultimately unsuccessful, any unpaid assessment is certified by the Ohio Department of Taxation to the Attorney General’s Collection Enforcement Section.
The Taxation Section and Solicitor’s Office worked together to convince the Ohio Supreme Court that Ohio’s imposition of sales and use tax on satellite broadcasting services but not on cable broadcasting services did not violate the Commerce Clause of the United States Constitution. DIRECTV, Inc. v. Levin, 128 Ohio St.3d 68, 2010-Ohio-6279
. The satellite companies filed a petition for writ of certiorari with the United States Supreme Court. The petition was denied on June 25, 2012. This victory safeguarded annual tax revenues of approximately $45 million, and potential refund payouts of more than $125 million.
In addition, in Bay Mechanical & Elec. Corp. v. Testa, 133 Ohio St.3d 423, 2012-Ohio-4312
, the Taxation Section was successful with upholding the standard that it is a taxpayer's burden to furnish evidence that supports its claimed exemption. In this case, Bay Mechanical made a deliberate decision to refuse to furnish the necessary documentation, when the Tax Commissioner requested it, to determine whether Bay's purchases of employment services qualified for the exception from taxation for permanently assigned employees. The Supreme Court of Ohio reaffirmed its holding that the exemption is based upon the facts of each employee's assignment rather than on the presence of "magic words" in the employment-service agreements alone. Ohio tax statutes contain many exemptions, and this decision confirms that the "onus is on the taxpayer" to furnish evidence in support of the claimed exemption, and that taxpayers are required to honor the Tax Commissioner's reasonable and lawful requests for information.