OHIO BOARD OF TAX APPEALS

Transcription

1 OHIO BOARD OF TAX APPEALS J.L. Billman, Inc., vs. William W. Wilkins, Tax Commissioner, Appellant, Appellees. CASE NO R-594 (SALES TAX DECISION AND ORDER APPEARANCES: For the Appellant For the Appellee - Johrendt, Cook & Eberhart John W. Cook 471 East Broad Street, Suite 800 Columbus, OH Jim Petro Attorney General of Ohio Cheryl D. Pokorny Assistant Attorney General, Taxation Section State Office Tower 16 th Floor 30 East Broad Street Columbus, OH Entered August 18, 2006 Ms. Margulies and Mr. Dunlap concur. Mr. Eberhart not participating. This matter is before the Board of Tax Appeals upon a notice of appeal filed by J.L. Billman, Inc. ( Billman. Billman appeals a final determination of the Tax Commissioner, in which the commissioner denied the appellant s petition for reassessment and affirmed a previously issued sales tax assessment, number , for $41,436.87, including tax and preassessment interest, for the period July 1, 2000 through December 31, 2003.

2 The matter is submitted to the Board of Tax Appeals upon the notice of appeal, the statutory transcript ( S.T. certified to the board by the Tax Commissioner, the record of the hearing ( H.R. before this board, and the briefs of counsel. At the hearing before this board, the appellant called Jerry L. Billman, its president, as a witness on its behalf. The Tax Commissioner was represented by counsel, but presented no witnesses or additional documentation other than cross-examination. The following facts are uncontroverted. The appellant operates two gas stations, two convenience stores, and an automated car wash. S.T. at 1. The only issue remaining before this board is whether the car wash sales are exempt from sales tax. The car wash is activated by a coin-operated, push-button device. H.R. at 11. After depositing the coins, the customer drives the automobile onto a conveyor that draws it through the automatic car wash, which dispenses water, soap, other cleaning agents, and wax. Id. At the end of the car wash, the customer drives the car out of the car wash. Id. The appellant provides no other personal property or personal service in connection with this car wash, and the customer never leaves the vehicle. H.R. at 12, 13. Appellant argues that the car wash sales are exempt from sales tax pursuant to R.C (B(44 1 as sales conducted through a coin-operated device. However, the Tax Commissioner maintains that this exemption does not apply to an automated car wash because the customer does not personally clean the vehicle, so the consumer does not use the equipment as required by the statute. 2

3 First, the board notes that the findings of the Tax Commissioner are presumptively valid. Alcan Aluminum Corp. v. Limbach (1989, 42 Ohio St.3d 121, 123. Consequently, it is incumbent upon a taxpayer challenging a determination of the Tax Commissioner to rebut that presumption. Belgrade Gardens v. Kosydar (1974, 38 Ohio St.2d 135, 143; Midwest Transfer Co. v. Porterfield (1968, 13 Ohio St.2d 138, 142. The taxpayer has the duty to come forward and prove the commissioner s findings are unreasonable, unlawful, or erroneous. Federated Dept. Stores, Inc. v. Lindley (1983, 5 Ohio St.3d 213, 215, Manfredi Motor Transit Co. v. Limbach (Aug. 17, 1990, BTA No F-279, unreported. When no competent and probative evidence is presented by the appellant to show that the commissioner s findings are incorrect, then the Board of Tax Appeals must affirm the Tax Commissioner s findings. Hatchadorian v. Lindley (1986, 21 Ohio St.3d 66; Averill v. Limbach (Aug. 23, 1991, BTA No C-1647, unreported. The state of Ohio levies an excise tax on each retail sale made in Ohio, unless the transaction is specifically exempted. R.C (C. R.C (B defines sale and selling as: Sale and selling include all of the following transactions for a consideration in any manner, whether absolutely or conditionally, whether for a price or rental, in money or by exchange, and by any means whatsoever: *** 1 During the audit period, the coin-operated car wash exemption was found in R.C (E(15. However, R.C (B(44, enacted under House Bill 95 and effective July 1, 2003, moved the exemption from R.C (E(15 to R.C (B(44. 3

4 (3 All transactions by which: (c The service of washing, cleaning, waxing, polishing, or painting a motor vehicle is or is to be furnished, ***. R.C (B(44 provides for an exemption for car washes that are activated using a coin-operated device. Specifically, the statute reads as follows: Sales conducted through a coin operated device that activates *** equipment that dispenses water, whether or not in combination with soap or other cleaning agents or wax, to the consumer for the consumer s use on the premises in washing, cleaning, or waxing a motor vehicle, provided no other personal property or personal service is provided as part of the transaction, are not retail sales or sales at retail. Statutes relating to an exemption from taxation are to be strictly construed, and one claiming such exemption must affirmatively establish his right thereto. Bird and Son, Inc. v. Limbach (1989, 45 Ohio St.3d 76, 78, Canton Malleable Iron Co. v. Porterfield (1972, 38 Ohio St.2d 53, Natl. Tube Co. v. Glander (1952, 157 Ohio St. 407, paragraph two of the syllabus. In the present case, the appellant s car wash is activated by a coin-operated device. Once activated, the car wash equipment dispenses water in combination with soap, other cleaning agents, and wax. The crux of the problem lies in the interpretation of the statutory phrase for the consumer s use *** in washing, cleaning, or waxing a motor vehicle. We must determine whether that phrase requires that the customer physically wash his or her own vehicle, or instead, that an automated car wash falls under the exemption language. 4

5 Black s Law Dictionary defines use as the application or employment of something. Black s Law Dictionary (7 th Ed Webster s Third New International Dictionary defines use as the act or practice of using something: Employment. Webster s Third New International Dictionary ( Similar, but distinguishable, circumstances to those of the instant case are found in Zip Zap of Ashtabula, Inc. v. Limbach (June 29, 1990, BTA No C-1178, unreported. In that case, the appellant operated an automated car wash that was coinactivated and used a machine to clean and wax the exterior of the cars. The appellant neither charged nor collected tax for the exterior wash and wax. The board found that these activities were retail sales subject to the sales tax. However, there is one significant distinguishing fact in Zip Zap from the facts before us. The vehicles in Zip Zap were hand dried upon leaving the automated car wash. This was a personal service that eliminated the application of the exemption. Therefore, the car washes were deemed taxable. To be entitled to the exemption, the statute requires that the car wash be activated by a coin-operated device. The appellant s car wash meets this criterion. Furthermore, the statute requires that the coin-operated device activate equipment that dispenses water, soap, or wax, which the appellant s car wash does. In addition, the statute requires that the car wash be for the consumer s use on the premises in washing, cleaning, or waxing a motor vehicle. In the present case, the consumer uses the automated equipment to wash a motor vehicle. Finally, the statute requires that the car wash 5

6 vendor provide no other personal property or personal service as part of the transaction. The appellant has no employees that perform any services, such as hand drying, to the vehicles. It is this board s conclusion that the customer uses the coin-activated equipment to wash his or her vehicle without any additional personal property or personal service added to the transaction. Based upon the statute, the dictionary definitions, and the case law, the board concludes that the exemption statute does not require the consumer to personally wash, clean, or wax a motor vehicle. Therefore, we find that the appellant s car wash sales are exempt from sales tax pursuant to R.C (B(44. Based upon our conclusion, we need not address any further issues raised in this matter. Therefore, based upon the foregoing, the board finds that Billman satisfied its burden of proof in demonstrating that the Tax Commissioner erred in making his assessment. Accordingly, it is the decision and order of the Board of Tax Appeals that the decision of the Tax Commissioner must be, and hereby is, reversed. ohiosearchkeybta 6