Sales/Use/Indirect:
Ohio Board of Tax Appeals Says Services are Not Taxable when True Object is Data Authorization
Case No. 2019-43, Ohio Bd. of Tax App. (10/10/24). In a case involving a financial services company providing certain debit authorization and disbursement authorization services that involve various steps and parties, the Ohio Board of Tax Appeals (Board) held that when the “true object” of the provided service is data authorization, the transaction is not taxable, rather than taxable as automatic data processing (ADP), electronic information services (EIS), or computer services under Ohio law. However, the Board explained that when parties contract regarding a bundle of services (as was the case here), to the extent that the record contains separately stated charges, the true object of each item must be considered and “not merely the true object of the contract as a whole.” Because the record in this case showed “there are several additional services that are offered alongside the data authorization service,” the Board remanded the matter to the Ohio Tax Commissioner “to first consider the taxability of each item” to determine whether it meets the definition of a taxable ADP, EIS, or computer service. Please contact us with any questions.
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