Union Metal Mfg. Co. v. Kosydar, 73-582

• Decision Date: 24 April 1974
• Docket Number: No. 73-582,73-582
• Citation: 67 O.O.2d 72,38 Ohio St.2d 53,310 N.E.2d 249
• Parties: , 67 O.O.2d 72 The UNION METAL MFG. CO., Appellee, v. KOSYDAR, Tax Commr., Appellant.
• Court: Ohio Supreme Court

Page 53

38 Ohio St.2d 53

310 N.E.2d 249, 67 O.O.2d 72

The UNION METAL MFG. CO., Appellee, v. KOSYDAR, Tax Commr., Appellant.

No. 73-582.

Supreme Court of Ohio.

April 24, 1974.

Syllabus by the Court

1. In any sale claimed to be exempt from sales taxes under R.C. 5739.01(E), or 5739.02, except for those sales described in R.C. 5739.02(B)(1) to (B)(11), inclusive, the vendor and the consumer are mutually responsible to insure that a properly executed exemption certificate, covering the transaction, is furnished and obtained within the period for filing the return for the period in which such sale is consummated. (R.C. 5739.03 construed.)

2. If an exemption certificate required by R.C. 5739.03 is not timely furnished or obtained, it will be presumed that all sales are taxable, and that presumption will not be overcome by evidence consisting solely of exemption certificates or other equivalent verification, procured within 60 days of the giving of notice by the Tax Commissioner (R.C. 5739.03 construed and applied.)

In June 1970, appellant Tax Commissioner initated a sales and use tax audit of appellee, The Union Metal Manufacturing Company. After finding that a number of sales made by appellee under claim of exemption were not covered by exemption certificates, the commissioner, on July 16, 1970, issued a notice of intent to levy a tax assessment (commonly known as a '60-day letter'). That notice stated, in part:

'* * * You (Union Metal) have, therefore, sixty days in which to establish that any sales in question are not subject to the tax. This cannot be done by obtaining an exemption certificate at this time. A statement from the purchaser, furnishing information concerning the exact use of each item involved, would, however, be given consideration.'

Appellee offered four categories of evidence to establish the tax-exempt status of its questioned transactions. With minor exceptions, the commissioner rejected all the proffered proof as insufficient, and the Board of Tax Appeals sustained his position as to three of the four categories. ¹ Those were (1) Ohio exemption certificates, (2) letters from purchasers, stating that the items bought were being used directly in manufacturing, or were purchased for resale, and (3) copies of invoices, on which the purchaser had certified that the products were purchased for direct use in manufacturing.

The Court of Appeals reversed the decision of the board, holding that appellee's submitted evidence in the three disputed categories was sufficient to establish the tax-exempt status of the transactions involved.

The cause is not before this court pursuant to the allowance of a motion to certify the record.

Black, McCuskey, Souers & Arbaugh, and Charles J. Tyburski, Canton, for appellee.

William J. Brown, Atty. Gen., and Maryann B. Gall, Columbus, for appellant.

STERN, Justice.

We face here a question left open by our recent decision in Dayton Sash & Door Co. v. Kosydar (1973), 36 Ohio St.2d 120, 304 N.E.2d 388, i. e., whether exemption certificates and other equivalent verification, obtained within the 60-day period prescribed by R.C. 5739.03, are sufficient to establish the exempt status of sales questioned by a 60-day letter.

R.C. 5739.03, as applicable, provides:

'If any sale is claimed to be exempt under division (E) of section 5739.01 of the Revised Code or under section 5739.02 of the Revised Code, with the exception of divisions (B)(1) to (B)(11), inclusive of section 5739.02, the consumer must furnish to the vendor, and the vendor must obtain from the consumer, a certificate specifying the reason that the sale is not legally subject to the tax. * * * If no certificate is furnished or obtained within the period for filing the return for the period in which such sale is consummated, it shall be presumed that the tax applies. The failure to have so furnished, or to have so obtained, a certificate shall not prevent a vendor or consumer from establishing that the sale is not subject to the tax within sixty days of the giving of...