Summary
In Delicatessens, the court found that the cash register tapes at issue "reveal only daily totals of each of three categories of sales" and were "not sufficiently detailed to allow the Tax Commissioner to determine if sales taxes which should have been charged * * * were actually collected and remitted * * *." (Citation omitted.)
Summary of this case from Thorbahn Enters. v. Ohio Dep't of TaxationOpinion
No. 75-1201
Decided June 8, 1976.
Taxation — Sales tax — Test check — Taxpayer's records inadequate, when — R.C. 5739.11, construed.
APPEAL from the Board of Tax Appeals.
National Delicatessens, Inc., appellant herein, operates a restaurant and carryout business.
During the audit period of March 1, 1971, to December 31, 1973, appellant employed waitresses who took food orders for both carry-out and on-the-premises consumption. The waitresses would give the customers guest checks which were taken to the cash register and paid. In addition, separate guest checks were made out for other carryout sales. The cash register had keys which recorded waitress (taxable) sales, carryout (nontaxable) sales, and sales tax. The register did not record each transaction, but only produced a tape which summarized the amounts rung up by each key. Although the practice was to retain the guest checks, they were at times given to customers as receipts.
After the Tax Commissioner's agent determined that the tapes were inadequate, he requested guest checks for a given week. It became apparent that some guest checks were missing. After again requesting and receiving another week's guest checks which were incomplete, the agent found it necessary to conduct a test check.
Based upon that check for the week of May 1, 1974, the Tax Commissioner concluded that appellant's ratio of no-taxable sales to total sales was 28.257 percent and that its effective rate of taxation was 4.16 percent, and assessed appellant accordingly.
The Board of Tax Appeals affirmed that assessment, and the cause is now before this court as a matter of right.
Christy Stehle Co., L.P.A., and Mr. William L. Stehle, for appellant.
Mr. William J. Brown, attorney general, and Ms. J. Elaine Bialczak, for appellee.
Appellant contends that its records were "substantially complete and accurate" and that the Tax Commissioner lacked authority to institute the test check herein. This court finds that contention to be without merit.
First, appellant's cash register tapes and guest checks were inadequate based upon statutory requirements and this court's decision in McDonald's v. Kosydar (1975), 43 Ohio St.2d 5. R.C. 5739.10 authorizes the Tax Commissioner to conduct a test check when a vendor fails to comply with the requirements of R.C. 5739.11 that it keep "complete and accurate records of sales, together with a record of the tax collected thereon."
In McDonald's, supra, this court held, at page 8, that "the record-keeping requirements within R.C. 5739.11 must be construed in a manner which will allow the Tax Commissioner to determine if sales taxes which should have been charged by vendors were actually collected and remitted to the state Treasurer * * * [and] in order to be `adequate,' a vendor's records must enable the Tax Commissioner to ascertain if the proper sales tax was collected according to law."
As in McDonald's, the cash register tapes here are inadequate. Appellant's tapes reveal only daily totals for each of three categories of sales. Such information is not sufficiently detailed to "allow the Tax Commissioner to determine if sales taxes which should have been charged * * * were actually collected and remitted * * *." Further, appellant's guest checks were found to be incomplete.
Appellant contends further that the test check was not conducted "for a representative period," as required by R.C. 5739.10 and 5739.13.
However, the record indicates that the Tax Commissioner's agent consulted with the taxpayer and, together, they selected the week of May 1, 1974. Appellant has not shown that the test check was not conducted "under conditions, which approximate, as nearly as possible, the conditions under which the business was operated by the taxpayer during the audit period." Cherry Street Corp. v. Porterfield (1971), 27 Ohio St.2d 260.
Therefore, appellant, having "failed to carry out * * * [its] burden of proving which of * * * [its] sales are exempt ( Cherry Street Corp., supra), the decision of the Board of Tax Appeals is neither unreasonable nor unlawful, and is, therefore, affirmed.
Decision affirmed.
O'NEILL, C.J., HERBERT, CORRIGAN, STERN, CELEBREZZE, W. BROWN and P. BROWN, JJ., concur.