Recently, the Ohio Board of Tax Appeals (BTA) denied a taxpayer’s sales tax refund in part because it could not consider the taxpayer’s improperly submitted evidence. In Environmental Quality Management Inc. v. McClain, BTA No. 2018-1194 (August 8, 2019), the taxpayer sought a refund for sales tax paid on software used by non-Ohio employees. The Ohio Department of Taxation (ODT) issued a Final Determination denying the refund, which the Taxpayer appealed to the ODT appeals division. At this stage, ODT requested additional documents. However, the Taxpayer did not submit all of the requested documents nor did it request a hearing before the ODT appeals division. Consequently, the ODT appeals divisions issued an unfavorable Final Determination forcing the Taxpayer to appeal to the BTA, attaching new supporting documents to its Notice of Appeal.
However, because the Taxpayer failed to request hearings with the ODT or the BTA during the appeal process, it was not permitted to present any new documentary evidence, especially because the BTA could not address the reliability or credibility of the documents without the taxpayer’s testimony that would accompany a BTA hearing if it had been held. Thus, the BTA could not consider the documentary evidence attached to the Taxpayer’s Notice of Appeal. Without any new evidence to consider, the BTA unsurprisingly affirmed the ODT’s decision and denied the Taxpayer’s refund.
Significantly, the notices of appeal to the ODT and to the BTA were submitted by non-attorneys who were not licensed to practice law in Ohio (which is required to represent clients before the BTA). Although it is unclear whether the lack of a licensed attorney was the reason that the Taxpayer did not request hearings (which are often essential in the appeals process), this case highlights the vital importance of having experienced counsel familiar with the proper procedures to be followed to successfully litigate tax disputes. Retaining effective tax counsel from the beginning of a dispute can be the difference between a full refund and an outright denial.
