Opinion
No. 80-994
Decided April 22, 1981.
Taxation — Sales tax — Claimed erroneous overpayment by vendor — Determination — Evidence — Duty of Tax Commissioner to investigate — R.C. 5739.07.
APPEAL from the Board of Tax Appeals.
This appeal by the Tax Commissioner is from a determination by the Board of Tax Appeals (board) allowing the appellee's, Springdale Plant Farm, Inc. (taxpayer), application for a refund, based upon a claimed erroneous payment of sales taxes on the proceeds of a bank loan.
The taxpayer runs a floral shop on a cash basis. It regularly makes deposits of cash received in the daily course of its business in a bank account at Central Trust Company, Cincinnati, Ohio, which account serves as its record of total sales. Consequently, it used the total deposits credited to the account in determining the amount of sales tax it owes the state. The taxpayer keeps no other records.
The taxpayer now claims that it overstated its sales on its sales tax returns for July 1976, and September 1976, because it deposited to that account the net proceeds of loans obtained from the Central Trust Company.
The Tax Commissioner's statutory transcript contains two photocopies of the tax returns relating to the months of July and September 1976. The July 1976 return reflects reported gross sales of $20,849, which is the same figure reflected on the bank statement of the Central Trust Company relating to the taxpayer as the total deposits for the month, together with the deposit figures from which the total was derived. The September 1976 return reflects reported gross sales of $13,047.16, which is the same figure reflected on the bank's statement relating to the taxpayer as total deposits for September, together with the detailed deposit figures.
The bank statement for July 1976 shows a deposit on July 13, 1976, in the amount of $9,766.19, and the bank statement for September 1976 shows a deposit on September 16, 1976, of $4,729.30. The taxpayer states that both amounts represent the net proceeds of the two loans made by the bank to the taxpayer. A letter, dated July 25, 1978, signed by a vice-president of the bank corroborates these amounts. An affidavit by taxpayer's attorney who prepared the returns states that he erroneously included the loan proceeds in the amount of gross sales.
The taxpayer filed an application for a refund, which the commissioner denied for the reason that the taxpayer had insufficient records to make a determination whether there had been an overpayment.
An appeal was then taken to the Board of Tax Appeals. The case was submitted upon the statutory transcript and the briefs of the parties. The board reversed the commissioner, and the cause is now before this court on an appeal as of right.
Messrs. Toluas Kraus and Mr. Marvin H. Kraus, for appellee.
Mr. William J. Brown, attorney general, and Mr. James C. Sauer, for appellant.
The commissioner contends that a vendor who seeks a refund of taxes pursuant to R.C. 5739.07 must be able to establish the nature of the claimed error on overreporting taxes and must maintain records sufficient to allow the commissioner to determine the amount of the refund due.
It is apparent from an examination of the statutory transcript that the commissioner accepted the taxpayer's figures as to its total taxable sales for the period in question. The documentary evidence used to corroborate the fact that loans were made and the proceeds deposited in the taxpayer's account was not challenged as being either inaccurate or in error. In short, the commissioner accepted the taxpayer's evidence, but yet denied the claim for overpayment for the reason that the taxpayer's failure to maintain primary records of sales pursuant to R.C. 5739.11 made it impossible to determine the accuracy of the claim. The absence of such record, however, does not preclude a refund to a taxpayer who has erroneously overpaid sales tax. Belgrade Gardens v. Kosydar (1974), 38 Ohio St.2d 135.
R.C. 5739.07 provides in pertinent part:
"The treasurer of state shall refund to vendors the amount of taxes paid illegally or erroneously * * *. On filing of such application the commissioner shall determine the amount of refund due and certify such amount to the auditor of state and treasurer of state * * *."
Thus, it is incumbent upon the commissioner to investigate the facts in connection with such a claim and if he finds there has been an overpayment, the taxpayer must be granted a certificate of abatement. Belgrade Gardens v. Kosydar, supra.
If the maintenance of primary records is not a precondition to receiving a refund for overpayment, the commissioner must satisfy the above requirement by considering any reliable and credible evidence of record. The documentary evidence contained in the statutory transcript stands unchallenged. Indeed, we must conclude that it was accepted by the commissioner as adequately supporting the facts asserted by the taxpayer in its claim for refund.
Accordingly, we find it has been established that the gross sales figures on the taxpayer's return erroneously included the loan proceeds in the amount of $14,495.49 and that the taxpayer is entitled to the refund claimed.
The decision of the Board of Tax Appeals is affirmed.
Decision affirmed.
CELEBREZZE, C.J., W. BROWN, P. BROWN, SWEENEY, LOCHER, VICTOR and C. BROWN, JJ., concur.
VICTOR, J., of the Ninth Appellate District, sitting for HOLMES, J.