Moore Personnel Serv., Inc. v. Zaino

• Decision Date: 26 March 2003
• Docket Number: No. 2002-0810.,2002-0810.
• Citation: 784 N.E.2d 1178,2003 Ohio 1089,98 Ohio St.3d 337
• Parties: MOORE PERSONNEL SERVICES, INC., Appellee, v. ZAINO, Tax Commr., Appellant.
• Court: Ohio Supreme Court

784 N.E.2d 1178

98 Ohio St.3d 337

2003 Ohio 1089

MOORE PERSONNEL SERVICES, INC., Appellee, v. ZAINO, Tax Commr., Appellant.

No. 2002-0810.

Supreme Court of Ohio.

Submitted February 26, 2003.

Decided March 26, 2003.

Jim Petro, Attorney General, and Robert C. Maier, Assistant Attorney General, for appellant.

PER CURIAM.

{¶ 1} Appellant, Tax Commissioner, assessed a sales tax against appellee, Moore Personnel Services, Inc. ("Moore"), for certain services it provided to some of its clients for the audit period January 1, 1994, to December 31, 1996. Moore had understandings, but no written contracts, with these clients that it would become the employer of persons designated by the clients. Moore did not interview or test the persons designated by the clients. The clients determined whom they wanted to work for them and sent those persons to Moore. The persons sent would fill out paperwork to become Moore employees.

{¶ 2} The persons sent to Moore by its clients were put on Moore's payroll. Moore paid these employees wages after it received time slips from the clients. Moore paid all taxes and other fees based on the employees' earnings. Moore did not charge the employees a fee for being on its payroll; rather, Moore's clients paid Moore a fee for its services.

{¶ 3} The Tax Commissioner assessed a sales tax against Moore for the services described above. Moore filed for a petition for reassessment. After a hearing, the Tax Commissioner denied Moore's petition. Moore appealed to the Board of Tax Appeals ("BTA"). Following a hearing at which Michael D. Moore, owner of Moore Personnel Services, Inc., testified, the BTA reversed the commissioner. The BTA found that such services did not constitute employment services, because Moore did not provide or supply employees to its customers but instead provided nontaxable payroll and personnel services.

{¶ 4} This cause is now before this court as an appeal of right.

{¶ 5} The Tax Commissioner contends that the service that Moore performed for its clients is subject to the Ohio sales tax as an "employment service," as that term is defined in the Ohio Revised Code. We agree.

{¶ 6} The tax in question is levied by R.C. 5739.02, which levies a sales tax "on each retail sale made in this state." The term "retail sale" is defined in R.C. 5739.01(E) as including all "sales," unless specifically excepted. A "sale" is defined in R.C. 5739.01(B)(3)(k) as including all transactions for a consideration by which an [e]mployment service is or is to be provided."

{¶ 7} The facts in this case relevant to determining whether Moore was performing a taxable employment service are not in dispute. What is in dispute is the ultimate fact inferred from those underlying facts. In discussing whether this court has jurisdiction to review ultimate facts, as distinguished from basic facts, we stated in Ace Steel Baling, Inc. v. Porterfield (1969), 19 Ohio St.2d 137, 142, 48 0.0.2d 169, 249 N.E.2d 892, "The decision of the [BTA] derived from an inference of an ultimate fact, i.e., a factual conclusion derived from given basic facts. The reasonableness of such an inference is a question appropriate for judicial determination. `What the evidence in a case tends to prove, is a question of law; and when all the facts are admitted which the evidence tends to prove, the effect of such facts raises a question of law only.' Turner v. Turner (1867), 17 Ohio St. 449, 452 . See also, Southern Pacific Co. v. Pub. Util. Comm. (1953), 41 Ca1.2d 354, 362, 260 P.2d 70."

{¶ 8} To determine whether Moore was providing a taxable employment service, the facts must be compared to the definition of "employment service" in R.C. 5739.01(JJ), which provides:

{¶ 9} "`Employment service' means providing or supplying personnel, on a temporary or long-term basis, to perform work or labor under the supervision or control of another, when the personnel so supplied receive their wages, salary, or other compensation from the provider of the service. `Employment service' does not include:

{¶ 10} "(1) Acting as a contractor or subcontractor, where the personnel performing the work are not under the direct control of the purchaser.

{¶ 11} "(2) Medical and health care services.

{¶ 12} "(3) Supplying personnel to a purchaser pursuant to a contract of at least one year between the service provider and the purchaser that specifies that each employee covered under the contract is assigned to the purchaser on a permanent basis.

{¶ 13} "(4) Transactions between members of an affiliated group, as defined in division (B)(3)(e) of this section."

{¶ 14} To satisfy the definition of "employment service," a service must meet three separate requirements: (1) it must provide or supply personnel on a temporary or long-term basis, (2) the personnel must perform work or labor under the supervision or control of another, and (3) the personnel must receive their wages, salary, or other compensation from the provider of the service. Only the first requirement is in dispute in this case. Therefore, the resolution of this case is determined by whether Moore was "supplying or providing" personnel as those words are used in the definition of "employment service."

{¶ 15} The words "providing" and "supplying" are not defined in the statute. However, when words are not defined in a statute they are to be given their common and ordinary meaning absent a contrary legislative intent. State v. Conyers (1999), 87 Ohio St.3d 246, 249, 719 N.E.2d 535. In addition, R.C. 1.42 provides that the terms used in statutes "shall be read in context and construed according to the rules of grammar and common usage."

{¶ 16} In Sowers v. Schaeffer (1949), 152 Ohio St. 65, 68, 39 0.0. 383, 87 N.E.2d 257, we stated that "[a]s defined in the Oxford English Dictionary (1933), the word `provide' means `to supply or furnish for use.'" In another sales tax case, Key Serv. Corp. v. Zaino (2002), 95 Ohio St.3d 11, 14, 764 N.E.2d 1015, we used Webster's Third New International Dictionary (1993) to define the word "provide" as "to supply for use."

{¶ 17} In Van Dyne Crotty Co. v. Limbach (1990), 53 Ohio St.3d 3, 4, 558 N.E.2d 44, also a sales tax case, we stated that "[a]ccording to...