Amerestate, Inc. v. Tracy, 94-1426

• Decision Date: 24 May 1995
• Docket Number: No. 94-1426,94-1426
• Citation: 648 N.E.2d 1336,72 Ohio St.3d 222
• Parties: AMERESTATE, INC., Appellant, v. TRACY, Tax Commr., Appellee.
• Court: Ohio Supreme Court

Page 222

72 Ohio St.3d 222

648 N.E.2d 1336

AMERESTATE, INC., Appellant, v. TRACY, Tax Commr., Appellee.

No. 94-1426.

Supreme Court of Ohio.

Submitted Feb. 16, 1995.

Decided May 24, 1995.

Appellant, Amerestate, Inc., collects real estate sales information and other data from county court records, post offices, census reports and appraisers' reports. Based on the data that it organizes, sorts and stores, Amerestate produces and sells "The Real Estate Pace" reports and other publications. It also sells access to "PaceNet," its computer data base. Under the PaceNet Computer Access Agreement, a customer is given "remote terminal access" to the information in Amerestate's computer data base and the right to "download and print" such information for the customer's own use in real estate appraisals or listings.

The Tax Commissioner assessed sales and use taxes on Amerstate's transactions with customers who purchased the reports or accessed PaceNet, for the audit period July 1, 1986 through September 30, 1989. Amerestate appealed to the Board of Tax Appeals ("BTA"), which affirmed the assessment based upon Emery Industries, Inc. v. Limbach (1989), 43 Ohio St.3d 134, 539 N.E.2d 608, and Quotron Systems, Inc. v. Limbach (1992), 62 Ohio St.3d 447, 584 N.E.2d 658.

The cause is now before this court upon an appeal as of right.

Keating, Muething & Klekamp, J. Neal Gardner, and Paul D. Dorger, Cincinnati, for appellant.

Betty D. Montgomery, Atty. Gen., and James C. Sauer, Asst. Atty. Gen., for appellee.

PER CURIAM.

Amerestate claims that its transactions with customers are nontaxable "personal service transactions" under R.C. 5739.01(B), with regards to its Pace real estate reports and other publications, and that the automatic data processing and computer service transactions involving PaceNet are nontaxable transactions under R.C. 5739.01(B) and former 5739.01(Y)(1), now renumbered (Y)(1)(a). The BTA rejected these claims.

Under former R.C. 5739.01(B), "sales" include:

" * * * all of the following transactions for a consideration in any manner * * *:

" * * *

"(3) All transactions by which:

" * * *

"(e) Automatic data processing and computer services are or are to be provided for use in business when the true object of the transaction is the receipt by the consumer of automatic data processing or computer services rather than the receipt of personal or professional services to which automatic data processing or computer services are incidental or supplemental. * * *

" * * *

"(5) * * * Other than as provided in this section, 'sale' and 'selling' do not include professional * * * or personal service transactions which involve the transfer of tangible personal property as an inconsequential element, for which no separate charges are made."

In the fourth paragraph of the syllabus of Emery Industries, supra, we construed R.C. 5739.01(B) and held:

"In a professional * * * or personal service transaction in which the charge for the services is not separated from the charge for the property, if the overriding purpose of the purchaser is to obtain tangible personal property produced by the service, the transfer of the property is a consequential element of the transaction and the entire transaction is taxable. If the purchaser's overriding purpose is to receive the service, the transfer of the personal property is an inconsequential element of the transaction, and the entire transaction is not taxable. * * * "

In Emery Industries, supra, at 139, 539 N.E.2d at 613, we said:

"The true object test seeks the essential reason the buyer enters the...