Ohio Board Rules True Object Determines Taxability of Services
CheckFree, a financial services provider in Ohio, sought a refund of over $2 million in sales and use tax paid between July 1, 2011, and June 30, 2015, arguing that its payment authorization and bill payment services are not taxable in Ohio. The Department of Taxation denied the claim, asserting that CheckFree failed to prove its services qualified as personal or professional rather than taxable Automatic Data Processing (ADP).
On appeal, the Tax Commissioner contended that CheckFree’s services included multiple components, requiring a “true object” analysis. The Board of Tax Appeals rejected CheckFree’s argument that its services were inseparable, instead examining each component individually. The Board ruled that since many services were automated and did not involve human intervention, they could not be classified as personal or professional services.
Ultimately, the Board vacated the final determination and remanded the case to the Commissioner to reassess the true object of each service and determine if any refund was warranted.
Case No. 2019-43, CheckFree Services Corp. v. Patricia Harris, Tax Commissioner of Ohio, Ohio Bd. of Tax App., 3-0 decision, Oct. 10, 2024.
Ohio Board Rules True Object Determines Taxability of Services
