Cincinnati Fed. S. & L. Co. v. McClain

Summary

The Supreme Court of Ohio reviewed the denial of Cincinnati Federal Savings & Loan Co.’s sales-tax refund claim concerning computerized services provided by Fiserv. The court held that software customization under R.C. 5739.01(Y)(2)(e) is a distinct personal or professional service rather than a tax exemption, and that the Board of Tax Appeals erred by failing to apply the true-object test to individual charges. The court affirmed the ruling regarding accounting services under R.C. 5739.01(Y)(2)(a), vacated it in part, and remanded for further proceedings.

Holdings

1. Ohio Revised Code section 5739.01(Y)(2)(e) identifies a distinct personal or professional service rather than a tax exemption from the definitions of taxable automatic data processing and electronic information services. When a transaction combines taxable computer-related services with software customization, the Board of Tax Appeals must apply the statutory true-object test to the specific charges and determine whether the consumer's true object was software customization or the receipt of automatic data processing or electronic information services.
2. Fiserv's automatic data processing and electronic information services were taxable because the record did not show that Fiserv provided accounting-related services performed by individuals or professional accounting services requiring licensure. The bank therefore failed to prove that it purchased nontaxable accounting services.
3. The BTA's conclusion rejecting the accounting-services refund claim was supported by the record and was not unreasonable or unlawful.

Questions Presented

1. Whether Fiserv's software-customization services were nontaxable personal or professional services under Ohio Revised Code section 5739.01(Y)(2)(e), and whether the Board of Tax Appeals properly analyzed the transaction.
2. Whether Fiserv's computerized data-processing and electronic-information services were nontaxable accounting services under Ohio Revised Code section 5739.01(Y)(2)(a).
3. Whether the Board of Tax Appeals' findings concerning the accounting-services claim were supported by probative evidence.

Disposition

reversed_and_remanded